How to Account for Child Support Payments

If your business employs someone with a child support garnishment order, you are legally required to deduct the child support payment due from the employee's payroll checks and remit the payments to the appropriate state agency. Some states also allow you to charge the employee a fee for the administrative time and costs associated with processing the child support payment. Whether your business uses the cash or accrual method of accounting, the journal entries for child support payments are recorded the same on the accounting general ledger.

Create a Child Support Payable account in the liability section of the accounting general ledger.

Increase the Child Support Payable account by the amount of child support garnishment withheld from the employee's payroll check.

Increase the Miscellaneous Income account by the amount of any processing fee withheld from the employee's check for processing the child support garnishment.

Prepare a check for the garnishment to the appropriate state agency.

Record the entire amount of the check to the state reporting agency as a decrease to the checking account.

Record the entire amount of the check to the state reporting agency as a decrease to the Child Support Payable account. Issuing the check to the state will return the Child Support Payable balance to zero.