Fundamental Payroll Certification Practice Exam – Complete Prep Guide

Garnishment refers to a legal process through which a portion of an individual's earnings is withheld to pay off a debt owed to creditors. This typically happens when a court order is issued, allowing creditors to claim a portion of an employee's wages directly from their employer. The process generally applies to various debts, including child support, student loans, and tax obligations, among others.

In this context, it is important to distinguish garnishment from other financial deductions. Voluntary deductions for retirement savings represent employee choices to save and invest for future retirement. A tax incentive, on the other hand, provides benefits to employees related to their income taxes rather than addressing debt obligations. Lastly, an involuntary savings plan suggests a mechanism that is not directly associated with repaying debts and does not involve legal proceedings. Therefore, the correct definition of garnishment highlights its role as a method for creditors to collect debts through a court-sanctioned process.