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How the Workstem System Deduct Child Support in Employee's Payroll

This guide will explain how the Workstem system integrates child support calculations into the employee pay run process, ensuring accurate deductions and payments.

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Written by Workstem CS
Updated over a month ago

The 2 Modules of Child Support Deductions

1. Deductions Under Section 72 A (Garnishee) Notice

  • a cents in the dollar amount - To pay an amount of in every dollar earned

For example, one of the employees, Ethan Davis, is required to make direct payments to the Child Support Registrar under Section 72A. The amount to be paid is $0.19 for every dollar earned, with an outstanding debt of $27,192.00.

To deduct the child support amount from the employee's payroll, you must first enter two fixed salary fields in the employee master file: Child Support By Percentage (based on the percentage to be paid) and Child Support Deduction(based on the total debt amount).

When calculating the employee's pay run, the child support deduction will be calculated as $1,890 * 0.19 = $359.10.

2. Notice to commence child support deductions

  • Protected Earnings Amount when deducting child support (PEA)

Pay Cycle

PEA Calculation

Weekly

$534.23

Monthly

$76.31857 x 30.4375 days per month = $2,322.95

Fornightly

$534.23 x 2 weeks = $1,068.46

Daily

$534.23 ÷ 7 days = $76.31857

4 weekly

$534.23 x 4 weeks = $2,136.92

Example for making basic deduction

For example, one of the employees, Ethan Davis, is required to pay child support in the amount of $199.35, with a protected earnings amount of $1,029.

To calculate his child support deduction in Workstem, you will need to enter the child support amount and protected earnings as fixed salary data in the employee's master file accordingly.

Then, calculate the pay run to determine the child support deduction amount.

  1. Gross Weekly Pay = $1,890

  2. Net Pay = Gross Pay - Tax Withheld Amount
    = $1,890 - $539 = $1,351

  3. Set Aside Protected Earnings Amount (PEA) = Net Pay - PEA
    = $1,351 - $1,029 = $322

  4. Deduct Child Support = Amount to Set Aside for Child Support - Child Support Amount
    = $322 - $199.35 = $122.65

  5. Add PEA Back = Remaining Amount + PEA
    = $122.65 + $1,029 = $1,151.65

So, after deducting the child support amount, the final net pay after applying the protected earnings amount is $1,151.65.

Example when you’re unable to deduct the full amount because of PEA

If employee Ethan Davis gross pay for this month is only $1,324.80, the calculation for his child support deduction for that month should be:

Gross Weekly Pay = $1,324.80

  1. Net Pay = Gross Pay - Tax Withheld Amount
    = $1,324.80 - $122 = $1,202.80

  2. Set Aside Protected Earnings Amount (PEA) = Net Pay - PEA
    = $1,202.80 - $1,029 = $173.80

  3. Deduct Child Support = Amount to Set Aside for Child Support - Child Support Amount
    = $173.80 - $199.35 = -$25.2 (as deducting $199.35 would leave Ethan with less than the PEA of $1,029)

  4. Add PEA Back
    = $1,029

In this case, you cannot deduct the full amount as it would leave Ethan with less than the protected earnings amount (PEA). Therefore, $173.80 will be deducted for Ethan's child support instead of $199.35, and the final net pay will remain the same as his protected earnings amount (PEA), which is $1,029.

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