Taxes on commissions?

Question

Should there a different tax on commissions than that of a regular hourly paycheck?

So if I make 1154.00 before chargebacks and other charges equalling about -$75 and before bonus of about +125 and only bring home $630.00 while claiming either 1 or 2 is that about wrong, right, or what? Thank you everyone for your help!

Answer 1

In the end, no. Commissions are considered to be part of your gross income. While some companies choose not to withhold federal taxes from commission checks, so as to give you a better bonus and a better incentive, in the end the tax is the same. They are required to withhold social security and medicare taxes (7.65%) from your commission check regardless.

At the end of the year, your commissions will be included in your W-2 gross income amount. You will pay federal taxes on it. Either way, whether the money is withheld up front, or whether you pay it at the end of the year, the result is the same. Whether or not the company withholds federal taxes on the commissions at the time you receive it, is up to the company itself.

Hope this helps!


Regarding your additional details: Yeah, the net pay from that sized check, regardless of what's going on, should be more than the $600 you got back. Check with the payroll department to see if they've made a mistake in your withholding. Good luck in getting your situation resolved!!

Answer 2

Tax On Commissions

Answer 3

The tax rate on commissions is the same as on your regular hourly paycheck. Withholding can be skewed, especially if you get a check with a larger-than-average amount of commission so the gross is higher. But when you file your return and actually calculate your tax for the year, the tax will be figured on your total income - if too much was withheld, you'll get it back as a refund.

Answer 4

The tax rate for the tax payer will be the same but the withholding from the pay check shouldn't be. If you got one commission check a month and it was added to your paychecks it may be withheld as if you made that amount per week so withheld at a high rate. You regular checks might be very small so under withheld.
As long as your withholding for the year turns out the same as your total tax liability you should be fine.
The year is half over have you had half your tax liability withheld?

Answer 5

No. Commissions are taxed as ordinary income. There's no rationale for treating them any differently.

Answer 6

yes, your employer should withhold according to the w4 information you filled out. if you are an independent contractor you should get a 1099 at the end of the year. my employer also withdraws 401k from commissions.