Paid a Big Bonus! But Is Child Support Withholding Required?
Should you withhold child support from a bonus or other lump-sum payment you’re about to make to an employee?
You’ll be able to get an answer to that question from your state child support agency more quickly than in the past.
That’s thanks to technology changes the federal Office of Child Support Services (OCSS) has planned.
The OCSS recently provided details on a major software release it has scheduled. Release 25-02 will impact several systems, including lump-sum reporting.
Employer Reporting Portal
Once the changes are in place, state users will be able to respond directly to employers regarding whether a lump sum they’ve entered in the Employer Reporting Portal application matches the Debt Inquiry application.
This direct communication will streamline and speed up lump-sum processing, OCSS noted in Operations, Maintenance, and Enhancements for OCSS Systems.
Employers will find out whether they should:
- release the lump-sum payment, or
- withhold child support from some or all of the payment.
If it’s the latter, the state agency will inform Payroll of the arrearage amount, the percentage to withhold from the lump-sum payment and any additional instructions.
Meanwhile, employers will be able to view state responses and acknowledge a lump-sum match.
The changes will help make it clear whether employers should withhold child support from a lump-sum payment, such as a bonus.
Remember, while under the Fair Labor Standards Act, Payroll needs to consider whether a bonus is discretionary or nondiscretionary for overtime purposes, the distinction doesn’t come into play with income withholding orders. So, be prepared for the OCSS to inform you that you need to withhold child support, no matter what type of bonus you’re offering employees as an incentive.
Another benefit of the software enhancement? Employers will receive daily notifications that state responses are available on the Employer Reporting Portal. This will help ensure communication and action, according to the OCSS.
The expected release date is July 2025.
Other Technology Updates
Other changes included in Release 25-02 were prompted by one of President Trump’s executive orders — i.e., Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.
Executive Order 14168, which Trump signed on January 20, 2025, states that agency forms that require an individual’s sex “shall list male or female, and shall not request gender identity.”
As a result, OCSS is making changes that should be in effect by October 2025.
Specifically, OCSS is updating the Federal Parent Locator Service portal and related documentation to change references of gender to sex. Acceptable values in Sex fields will be Female (F), Male (M) or space.
The federal agency will also be revising the electronic National Medical Support Notice batch process. State users will no longer be able to input Unknown (U) in the Sex field. The accepted values will be Female (F) or Male (M).
Electronic Child Support Notices
In related news from the OCSS, the number of employers using electronic Income Withholding Orders (IWOs) has continued to rise over the past few years.
In fact, the number of employers using e-IWO Online has reached over 1,000.
This option on the Child Support Portal allows employers to download income withholding orders. According to the federal agency, one benefit to employers using e-IWOs is fewer errors than with manual processing.
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