Calculating Garnishment Taxation

For the state territory, two garnishment types are available that affect tax calculations: child support and spousal support. For the historical territories, the only garnishment that affects tax calculation is the spouse support garnishment.

If a payee has a child support garnishment, the system estimates the annual value for this garnishment (or estimates the value for the remainder of the contract). Then, the system calculates separate contribution amounts for the garnishment and for the remainder of the taxable net base. Like the calculation used for standard state territory withholding, the calculation for payees with child support garnishments is Quota 1 − Quota 2. In the case of garnishment taxation, however, Quota 1 = Quota 1.1 + Quota 1.2 where Quota 1.1 is the result of a bracket applied to the garnishment amount and Quota 1.2 is the result of the bracket applied to the taxable net base.

For example, assume a taxable net base of 22.625,19 EUR and an estimated annual garnishment amount of 2.704,55 EUR. The bracket calculations would be applied to 2.704,55 EUR and 22.625,19 EUR separately generating two contribution amounts, TAX VR CT1 IRPF (Quota 1.1) and TAX VR CT2 IRPF (Quota 1.2). The system then combines these amounts into TAX VR CT IRPF (Quota 1), which is used to calculate the tax percentage.

In addition, when calculating Quota 2 by applying the brackets to the personal and familiar minimum reductions, the system adds a fixed statutory amount.

For the state territory, the system subtracts the spouse support garnishment annual estimation from TAX VR RNT as a special reduction.

See Estimating the Social Security Contribution.

For the historical territories, the system subtracts the spouse support garnishment from the annual income to calculate the taxable base.