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Administrator Guide
Last Updated: 2024-05-03
Setup Considerations: Income Withholding Orders (USA)

Setup Considerations: Income Withholding Orders (USA)

You can use this topic to help make decisions when planning your configuration and use of USA income withholding orders (IWOs). It explains:
  • Why to set it up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What It Is

Workday enables you to process these types of IWOs using rules that follow state and federal legislation:
  • Bankruptcy
  • Creditor Garnishment
  • Federal Administrative Wage Garnishment
  • Federal Student Loan
  • Federal Tax Levy
  • State Tax Levy
  • Support Order (including Lump Sum)
  • Wage Assignment

Business Benefits

Workday makes it easy to comply with withholding order requirements by:
  • Determining the amount to withhold from the employee’s disposable earnings, including arrears and any agency and employer fees.
  • Applying withholding limits and setting priorities for what to withhold.
  • Updating the IWO calculation rules in accordance with federal and state changes.
  • Providing visibility into the calculation rules that Workday uses to calculate IWOs, by tax authority and withholding order type.
  • Providing Workday-delivered statutory pay components for each withholding type.
  • Dynamically displaying the required fields for each type of IWO you record.
  • Beginning automatic deductions during payroll processing once you record the IWO.
  • Calculating multiple IWOs based on the rules for that order type and state.
  • Aggregating IWO amounts to avoid exceeding limits for a type of withholding order.
  • Enabling you to participate in the system-to-system eIWO program with the Office of Child Support Enforcement (OCSE).
You can also attach a document to the IWO in Workday, such as the issued order to:
  • Eliminate the need for paper.
  • Provide the flexibility for multiple payroll administrators to view the issued order.

Use Cases

  • Payroll administrators can view active and inactive withholding orders directly from the worker's profile.
  • For employees that have multiple IWOs with the amount to withhold exceeding the maximum withholding limit, Workday uses statutory rules to calculate what to withhold per order.
  • You can override the tax authority for Creditor Garnishment, State Tax Levy, Support Order, and Wage Assignment orders.
  • You can override withholding order priority for workers with multiple withholding orders.
  • When you receive an official amended support order for a worker who already has a support order in Workday, you can enter the amended order details with different dates. Workday creates a new record for the amended order, and retains the original order for tracking purposes.
  • When workers transfer companies or you create a new company relationship, you can copy their IWOs from 1 company to another.

Questions to Consider

Questions
Considerations
Does the worker have past due amounts?
When recording a support order for a worker, you can enter the past due amount. In the order details, record the current child or spouse support and the past due child or spousal support amounts. Workday calculates the max amount that's available to withhold, and limits the deduction to that amount.
For workers with multiple withholding orders, which one is of higher priority?
When a worker has multiple income withholding orders, Workday assigns a processing priority to each order based on the rules of the issuing agencies. You can override this priority from the related actions of the withholding order as needed.

Recommendations

If necessary, ensure that IWOs are valid by contacting the issuing court or agency.
Notify the worker of the order, and ensure they understand how it will affect their net pay.
Terminate IWOs for terminated employees after you process their final check.

Requirements

Load active IWOs for the employees into Workday.
Add earnings and nonstatutory deductions to the pay component groups Workday uses to calculate disposable income.
Set up an account with the OSCE to participate in the system-to-system eIWO program.

Limitations

Workers can't view their IWOs in Workday.
You can't delete IWOs that Workday is calculating as part of a payroll, even if the payroll calculation isn't complete yet. You can inactivate the order instead.
Workday doesn't support income withholding orders for workers who have an international assignment position in the U.S.

Tenant Setup

(Optional) Define IDs for deduction recipients, that Workday will use during processing and with integrations on the
Edit Tenant Setup - Financials
 task.

Security

Domains
Worker Data: Payroll (Income Withholding Orders)
 in the Core Payroll functional area.
Enables you to record information for a third-party deduction recipient in Workday, view IWOs by worker, and override IWO priority for workers with multiple IWOs.
Set Up: Payroll (Calculations - Payroll Specific)
 in the Core Payroll functional area.
Enables you to set up pay component groups to calculate disposable income.
Worker Data: Payroll (Income Withholding Orders) - USA
 in the USA Payroll functional area.
Enables you to record, amend, terminate, and view USA income withholding orders.
Reports: Results for Worker (Pay Calculation) - USA
 in the USA Payroll functional area.
Enables you to review payroll results, where you can audit withholding order results.
Set Up: Payroll (Income Withholding Orders)
 in the Core Payroll functional area.
Enables you to view IWO data and allocation.
Process: Payroll (Income Withholding Orders) - USA
 in the USA Payroll functional area.
Security Configuration
 in the System functional area.
Enables you to complete and submit a profile application to the OCSE for approval to participate in the system-to-system eIWO program and process eIWOs.
Setup: Payroll (Income Withholding Orders)
 in the USA Payroll functional area.
Enables you to override the Workday-assigned default IWO rule.

Business Processes

You can use these business processes for copying IWOs for a single or multiple workers:
  • Copy Withholding Orders for Worker
  • Copy Withholding Orders for Workers

Reporting

Reports
Considerations
All Payroll Withholding Order Data
Displays calculation rules for calculating IWOs by tax authority and order type. Includes information on:
  • Withholding limits.
  • Calculation methods.
  • Prioritization.
View Payroll Withholding Order Data
Displays an overview of the IWO information that Workday maintains, such as:
  • Calculation rules, as-of a date.
  • Compliance updates by country and IWO type.
Withholding Orders for Worker
Enables you to edit, delete, change the processing priority, and view deduction history of an IWO.
Pay Calculation Results - Deduction Register
View IWO deductions in one or more periods, pay run groups, or pay groups.
You can create custom reports from these report data sources:
  • All Payroll Withholding Order Tax Authority Rules
  • All Withholding Orders
  • Payroll Tax Withholding Form Data for BIRT

Integrations

You can use these web services when creating a custom integration for IWO processing to or from a third-party application:
  • Put Deduction Recipients
     loads deduction recipient information into Workday.
  • Get Deduction Recipients
     retrieves information from Workday.
Use these web services to integrate with third-party vendors that manage withholding orders, and to override the Workday-assigned default IWO rule:
  • Put Payroll Involuntary Withholding Order
  • Get Payroll Involuntary Withholding Orders
Use these integrations to retrieve and respond to eIWO files from the OSCE web portal:
  • Electronic Income Withholding Order Inbound
     imports eIWO files in XML format and as image-ready PDFs.
  • Electronic Income Withholding Order Outbound
     generates IWO acknowledgment records and sends them to the OCSE portal.

Connections and Touchpoints

Create and set up bank accounts to pay third-party deduction recipients.
Record a
Business Number
 tax ID for the worker's company.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.

Other Impacts

No impact.