Disposable earnings are money left over after taxes and other payment responsibilities have been satisfied. In addition to the statutory payroll deductions for taxes and Social Security, there may be other financial responsibilities that must meet. Disposable earnings may be spent or invested as the person sees fit.
How are Disposable Earnings Calculated?
To calculate disposable income, you need to take the required deductions out of gross income. Social Security, state income tax, federal income tax, and state disability insurance are some legal deductions. Remember that the calculation does not include health insurance deductions, 401(k) contributions, and support payments like child support.
