Question

Geraldine Wolfe is a supervisor at Fantastigifts. She has an annual salary of $43,500, paid biweekly, and a garnishment for consumer credit of $415. Assuming that her disposable income is 80 percent of her gross pay per period, does the garnishment follow the CCPA? If not, what is the maximum garnishment allowed for Geraldine’s consumer credit garnishment?

Does the garnishment follow the CCPA?
Maximum garnishment allowed:

Which of the following is true about fringe benefits? (You may select more than one answer.)

• The amount of the fringe benefit is never subject to income tax.unanswered
• They are only available for employees.unanswered
• They represent additional cash paid directly to employees.unanswered
• They represent additional compensation given for services performed.

Answer 1

Answer 1:

No, garnishment doesn't follow the CCPA.

In the given question,

Salary is paid biweekly, therefore number of periods per year is 26

Geraldine's gross pay per period = $43,500 / 26 = $1,673.08

Now, Disposable income is 80% of gross pay per period = $1,673.08 x 80% = $1,338.46

Consumer credit is allowed to maximum garnishment of 25% of disposable income i.e. $1,338.46 x 25% = $334.62

Further, as per CCPA the maximum weekly garnishment is calculated as the lesser of:

• the amount by which the disposable income exceeds 30 times the federal minimum hourly wage i.e. $7.25 an hour currently. Or,
• 25% of disposable income i.e. calculated above $334.62

Thus, maximum garnishment allowed to Geraldine is $334.62

Answer 2:

Option (2) is correct. Fringe benefits refers to the benefits given to employees of an organization such as education allowance, medical insurance, company's vehicle, housing allowance, etc. These are the benefits given to the employees only apart from their salary.

Option (1) is incorrect because fringe benefits are subject to income tax i.e. 30% tax rate.

Option (3) is incorrect because fringe benefits represents non-cash form. They are paid in non-cash to the employees.

Option (4) is also incorrect. Fringe Benefits are not additional compensation, but are paid outside compensation to the employees of an organization.

Good Luck!