What are "disposable earnings"?
Answer in detail:
This term is defined to include only those earnings which are left after all deductions required by law are taken from the employee's check. Hence, amounts required to be withheld for social security and income taxes would not be included in disposable earnings. On the other hand, amounts withheld from earnings at the employee's request or through an agreement with a labor union (union dues) or similar organization are included in disposable earnings, because they are not considered deductions required by law for purposes of income garnishment. In determining the maximum amount subject to child support withholdings, garnishments presently being deducted are also included in disposable earnings.
Example: An employee's gross wages for the week are $250. From this amount, the employer withholds $40. in federal, state and local income taxes; $20. in social security taxes; $10. in union dues,$50. for insurance and $5 for the United Way. The employee has no present spouse or dependent child other than the one for whom support has been ordered, and he or she is not more than 12 weeks behind in the payment of support.
The employee's disposable earnings for the week are $190. ($250. less $60.). The maximum amount that may be withheld from his or her check to comply with child support withholding law is $114. (60% of $190.).
Exception: If a medical support order is currently enforceable, the child support obligation, the employer's fee and the portion of insurance for the child(ren) included in the Medical Support Order are not to exceed the maximum percentage allowed by law.
B. Tax levies, if received prior to a child support order, takes precedence over the child support. If the tax levi already takes 50% of the NCP's disposable income then child support cannot be deducted in addition to same. It is the date that the child support order is established, and not the date the withholding order/notice is served on the employer, that determines precedence.
C. Tips not paid by the employer are not included in the wages paid by employer for purposes of calculating limitations.
STATE OF INDIANA - DEPARTMENT OF CHILD SERVICES