I STARTED A PARTNERSHIP WITH A FRIEND WHO HAS A BUSINESS AND INVITED ME INTO IT ...... I HAVE BEEN TOLD THAT OUT OF MY TOTAL COMMISSION SHOULD BE TAX FREE. IS THAT RIGHT ? At the end I pay taxes on a weekly basis
2006-09-05 16:44:53 · 7 answers · asked by mj23 4 in Business & Finance ➔ Small Business
come on people i wrote : 'I pay taxes on a weekly basis'
2006-09-05 17:15:17 · update #1
Earned and passive income is taxable. Depending on the state wherein you reside there may also be local and state income taxes as well.
Commissioned sales people and others are usually are paid as independent contractors, meaning they are responsible for their own taxes, including all the soc. sec. taxes. If not self-employed the employer pays half the 15.2% soc sec. tax. and you pay half. Self employed pay the total 15.2% tax.
I believe there is a reward if you turn in to the IRS a tax evading person, that being those who owe taxes and fail to pay them. I'd be very afraid if I were in a partnership and my partner took that position. Be careful that this business genius does not place you in a position with the IRS for an audit that you would fail and possibly loose the business, home and more, perhaps jail time for tax evasion. Perhaps your "friend" may qualify you for the reward if they are not reporting and paying their fair share of taxes and you turn them in.
2006-09-05 17:06:55 · answer #1 · answered by hithere2ya 5 · 0⤊ 0⤋
commissions are absolutely taxable.... You think the IRS would leave a loophole that big?
Many small companies believe they can pass out copy profits to owners/parterns and not worry about taxes. If the IRS believes you are actively involved in the operation of the business, they will reclassify you as an employee, and the dividends/distributions as salary . Then they will stick the company AND you with a 7.5% tax bill, penalties, and interest. Don't do it.
Best way to handle it: Hire a payroll company like ADP or Paychex, they know all the rules about what constitutes an employee. If you are truly simply an investor, they can add you to the payroll as an independent contractor. At the end of the year, you'll get a 1099 tax form in lieu of a W-2 and you will be all legal for tax season.
2006-09-05 16:53:23 · answer #2 · answered by Michael W 3 · 0⤊ 0⤋
Commisions are income and income is taxable.
2006-09-05 16:48:32 · answer #3 · answered by sirade1 4 · 0⤊ 0⤋
it would be unlawful for them to grant you the linked fee lower back. You, them and the two agents in touch might lose your license.. in case you opt for for the linked fee you need to be the itemizing or the advertising agent and particular, you pay income tax.
2016-12-14 18:59:33 · answer #4 · answered by ouelette 4 · 0⤊ 0⤋
simple, if you do not give your share, to my uncle SAM,, they will be paying you a visit,a just not any Visit,, they will send you on a VACATION paid, and i will just sit back drinking my JAMAICAN RUM, AND MY CUBAN CIGARS, and sending FIDEL CASTRO SMOKE SIGNALS FOR HELP.. from my BARS,, some day he will answer me,,darn it,, i wish he would answer me! GOOD LUCK, MY FRIEND,,
2006-09-05 16:55:49 · answer #5 · answered by litehmusicdj 3 · 0⤊ 0⤋
all income is taxable.
2006-09-05 16:47:28 · answer #6 · answered by Piggiepants 7 · 0⤊ 0⤋
First, please don't shout.
Sales commissions are ordinary income, and therefore taxable.
2006-09-05 17:08:05 · answer #7 · answered by AngiesHusband 5 · 0⤊ 0⤋