Glossary
Payroll

Garnishment

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

Garnishment is a court-ordered deduction from an employee’s wages to pay off a debt or legal obligation.
Garnishment is a legal process by which a portion of an employee’s wages are withheld by their employer to satisfy a debt or court order. Common reasons for garnishment include unpaid taxes, child support, or defaulted loans. The employer is legally obligated to deduct the specified amount from the employee’s paycheck and remit it directly to the appropriate agency or creditor. Payroll departments must carefully manage garnishments to ensure compliance with federal and state laws, protect employee confidentiality, and avoid penalties. Garnishments are subject to specific limits to ensure employees retain enough income for living expenses. Accurate recordkeeping and timely payments are essential components of garnishment management.

Key Takeaways

  • Garnishments are mandated by court order or government agencies.
  • Employers must withhold and remit specified amounts from paychecks.
  • Failure to comply can result in penalties.
  • Accurate recordkeeping is crucial.

Why It Matters

Garnishments affect payroll accuracy, legal compliance, and employee trust.

Real World Example

A nonprofit organization employs a staff member who owes back child support. The state issues a garnishment order to the nonprofit, requiring it to withhold $150 from the employee’s biweekly paycheck. The payroll administrator ensures this amount is deducted before calculating the employee’s net pay. Each pay period, the withheld funds are remitted to the state agency. The nonprofit uses Aplos to record the garnishment liability and payment, ensuring proper accounting and compliance with legal requirements.

How Aplos Helps

Within Aplos, users can track payroll expenses and ensure that garnishments are properly recorded as liabilities and payments. While Aplos does not process payroll, it helps nonprofit organizations manage the accounting for garnishments, ensuring financial statements accurately reflect these obligations and payments.
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Frequently Asked Questions

What is wage garnishment?

Wage garnishment is a legal process where an employer withholds a portion of an employee’s earnings to pay a debt as directed by a court or government agency.

Who is responsible for handling garnishments?

Employers are responsible for withholding and remitting garnished wages according to the court’s instructions, and must ensure compliance with all applicable laws.

How does Aplos help with garnishments?

Aplos enables nonprofits to accurately record payroll garnishments as liabilities and payments within their accounting system, ensuring compliance and transparency.

Are there limits to how much can be garnished?

Yes, federal and state laws set limits to protect employees, ensuring a portion of their wages remains exempt from garnishment.

What happens if an employer ignores a garnishment order?

Failure to comply with a garnishment order can result in legal penalties for the employer, including fines and liability for the full debt amount.

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IRS Form 941
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