State Disbursement Unit: Paying, Receiving, and Tracking Child Support

A State Disbursement Unit, or SDU, is the office each state is federally required to operate for collecting child support payments and sending them on to the parent owed support.¹ Nearly every child support dollar paid through wage withholding, and most paid directly by a parent, moves through the SDU. It handles the accounting, tracks what has been paid against what is owed, and keeps the record both parents can point to if a dispute comes up later.

Information You Need to Use the SDU

Before a payment can be sent or received, the SDU needs to connect it to the right court order. The key piece is your Case ID or Member ID, a state-issued number tied to your specific support case. It appears on your original court order or final judgment. If you can’t find yours, your local child support agency can look it up.

The federal Income Withholding for Support form also calls for the paying parent’s full legal name, Social Security number, and the recipient’s full legal name.² The recipient’s Social Security number does not appear on that form, but both parents typically have to verify identity when they set up an online SDU account or enroll in direct deposit, so keep yours accessible.

Accuracy on the Case ID matters more than people expect. A wrong number can leave a payment stuck in the automated system without matching to any file, so the paying parent’s account shows a missed obligation even though the money went out. That alone can trigger enforcement.

How Income Withholding Works

For most paying parents, the SDU never sees a personal check. The employer withholds support from each paycheck and sends it to the SDU directly, in the same way taxes come out before wages hit your account. Federal law requires income withholding on all child support orders issued since January 1, 1994, unless both parents agree in writing to something else or a court finds good cause to waive it.³

Once the employer has an Income Withholding for Support order in hand, federal rules give it seven business days after each payday to remit the withheld amount to the SDU. Some states shorten that window.⁴ Employers who ignore a withholding order, or fire a worker because of one, face state-imposed penalties.³

How Much Can Be Withheld

Federal law caps the share of disposable earnings that can go to support. The ceiling depends on two things: whether you’re also supporting another spouse or child at home, and whether you owe back support older than 12 weeks.⁵

50% if you support another spouse or dependent child at home
55% if you support another spouse or dependent child and owe arrears older than 12 weeks
60% if you do not support another spouse or dependent child
65% if you do not support another spouse or dependent child and owe arrears older than 12 weeks

These are federal maximums. Your actual withholding is whatever the court order says, and that figure is often well below the cap. The limits exist so a parent isn’t left without enough to live on.

Paying the SDU Directly

If you’re self-employed, between jobs, or your order predates mandatory withholding, you send payments to the SDU yourself. A few routes are available.

Check or Money Order by Mail

Make it payable to your state’s SDU and put your Case ID on the memo line or the remittance voucher that came with your order. Send it at least five to seven days before the due date to cover postal delivery and manual processing. A mailed payment that arrives late is late in the SDU’s records regardless of when you sent it.

Online and Phone Payments

Most states run an online portal where you log in with your Case ID and pay by bank transfer, debit card, or credit card. Save the confirmation number from each transaction; it’s your proof of compliance if the payment history is ever questioned. Automated phone systems let you enter bank or card information by keypad at any hour. Electronic payments generally post within two to three business days.

Cash at Retail Locations

Some states accept cash at retail locations through services like MoneyGram. You give your Case ID or depository number along with the SDU’s billing name, pay in cash, and the money reaches your account within a couple of business days. A small per-transaction fee applies, typically around $2 to $3.

Fees to Watch

Bank transfers and mailed checks usually cost nothing beyond what your own bank charges. Credit and debit card payments carry a convenience fee from the payment processor, generally in the 1.5% to 3.5% range, though some states charge a flat fee instead.⁶ On a $500 monthly payment, a 2.95% fee sends about $15 a month to the processor instead of toward your obligation, and weekly or biweekly payers lose more. Bank transfers avoid that entirely.

How Receiving Parents Get Paid

If you’re the parent owed support, the SDU can send money to you two ways, and the choice affects how fast it lands.

Direct Deposit

Direct deposit sends funds straight into a checking or savings account. You enroll through the state’s SDU portal or by paper form, providing routing and account numbers. Once active, payments arrive in your account within two business days after the SDU receives them. This is the fastest and most reliable option.

Electronic Payment Card

Parents without a bank account can receive support on a state-issued electronic payment card that works like a debit card. You apply through the SDU’s site or on paper. Payments load automatically as the SDU processes them, and the card can be used for purchases or ATM withdrawals. Out-of-network ATM fees typically run $1.25 to $3.00 per transaction, so staying in-network or spending directly with the card is cheaper.

Distribution Deadlines

Federal law gives the SDU two business days to distribute payments after receiving them from an employer or other source, as long as the payment carries enough identifying information to match it to a case. Weekends and holidays don’t count. The SDU can hold distributions back toward past-due balances if there’s a pending appeal on the arrears amount.¹

Add it all up and the real-world lag from an employer’s payday to money in the recipient’s bank account can run about two weeks: up to seven business days for the employer to remit, up to two business days for the SDU to distribute, plus whatever your bank adds. Consistent delays beyond that are worth tracking down. The holdup could sit with the employer, the SDU, or the bank, and each one has a different fix.

Tracking Payments and Updating Your Information

Most states give both parents an online portal to view payment history, see what has been credited, and check any outstanding balance. Access usually requires the Case ID and a PIN from the SDU; call the SDU’s service line if you haven’t been issued one. Keep your own records alongside the portal: save confirmation numbers from electronic payments, use delivery confirmation when mailing checks, and periodically download the payment history so you have independent documentation if the SDU’s records ever need correction.

Both parents also have an ongoing duty to keep contact and employment information current. A new address needs to be reported promptly so legal notices, payment cards, and other correspondence reach you. Employment changes are more urgent. When the paying parent starts a new job, the child support agency needs to know so a withholding order can go to the new employer; without it, nothing is withheld and arrears start building. States are required to maintain procedures for issuing new withholding orders when employment changes.³ Report the new job through the state’s child support website or by phone. The sooner the order reaches the new employer, the smaller the gap.

When Payments Fall Behind

Missed payments trigger a federally mandated set of enforcement tools, and they escalate quickly.

License Suspension

Every state must have procedures for suspending driver’s licenses, professional licenses, and recreational licenses when a parent owes overdue support.³ Losing a professional license can wipe out the earning capacity needed to pay the support in the first place, which makes it a blunt tool. Contacting the child support agency about a modification or payment plan before a suspension lands is easier than reversing one after.

Passport Denial

When past-due support hits $2,500, the federal Passport Denial Program can block the issuance, renewal, or revocation of a U.S. passport. Paying the balance back under $2,500 doesn’t automatically clear you. The federal Office of Child Support Enforcement removes a parent only when the balance reaches zero or when the state specifically asks for removal.⁷ Parents who travel internationally for work can be blindsided at the worst moment.

Federal Tax Refund Offset

The government can intercept a federal tax refund to cover past-due support. When the state is providing collection services (the common scenario), the arrears threshold is $500. When the support obligation has been assigned to a state, usually because the custodial parent receives public assistance, the threshold drops to $25.⁸

Interest on Arrears

Many states charge interest on unpaid support, treating the balance like any other civil judgment. Rates vary by state, running roughly 6% to 10% annually. Interest compounds on top of missed payments, so a balance that looks manageable now can grow substantially over a few years of nonpayment.

Tax Treatment of Child Support

Child support is tax-neutral for both parents. The paying parent cannot deduct it on a federal return, and the receiving parent does not report it as income. Child support received is excluded from gross income entirely.⁹ Which parent claims the child as a dependent is a separate question. Generally the custodial parent claims the child, and the noncustodial parent can claim the child only if the custodial parent signs a release using IRS Form 8332; that release covers the child tax credit and additional child tax credit but does not transfer the earned income credit, the dependent care credit, or head of household filing status.¹⁰

1
Office of the Law Revision Counsel. 42 U.S.C. 654b – Collection and Disbursement of Support Payments
2
Office of Child Support Services. Income Withholding for Support Instructions
3
Office of the Law Revision Counsel. 42 U.S.C. 666 – Requirement of Statutorily Prescribed Procedures to Improve Effectiveness of Child Support Enforcement
4
Administration for Children and Families. Remitting Payments – Answers to Employers’ Questions
5
Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment
6
Office of Child Support Services. Payment, SDU and EFT Contact and Program Requirements
7
Administration for Children and Families. Passport Denial Program 101
8
eCFR. 31 CFR 285.3 – Offset of Tax Refund Payments to Collect Past-Due Support
9
Internal Revenue Service. Alimony, Child Support, Court Awards, Damages
10
Internal Revenue Service. Claiming a Child as a Dependent When Parents Are Divorced, Separated or Live Apart