Are commissions and Bonus taxed the same federally? State?

Question

We have 3 payroll categories: Salaries/Wages, Bonuses, and Commissions. I am a salary + commission employee. Last quarter my commission was tracked under 'bonus'. It was my understanding that these were taxed differently. Does anyone know the answer to this on FICA and or State of CA?

Answer 1

Ask your employer or call the IRS

Answer 2

For an employee, any commission (for the same employer) is extra salary. Bonuses are also extra salary payments. Thus salary, commissions and bonuses are all same: wages; both for Federal and State tax purposes.

Employer's deduct taxes from paycheck based on the employee's allowances (on W4). The deduct tax on commissions and bounces at employee's highest tax rate.

However, for someone who is not an employee of a company and sell a company's product or services on commission basis, then it is business income.

Answer 3

Commissions and bonuses are taxed the same as wages, there is no difference. You will pay FICA up to the limit (for SS) plus state taxes the same as if the commission were regular wages.

Since commissions are in addition to your wages, you may be in a higher tax bracket.

The withholding for bonuses is different, but the taxes are the same.

Answer 4

Typically bonuses and commissions have income tax withholding at a much higher rate than salary. Supposedly this is because the dollar amounts are larger. When you file taxes at the end of the year, it's all taxed at the same rate.

I always hated when half my quarterly bonus check was withheld for income taxes. I had to increase my exemptions to counteract the excessive withholding. I don't like letting Uncle Sam use my money interest free.

Answer 5

When it comes to taxes, all are taxed the same at federal and state level- salaries/wages, bonus, and commissions.

Answer 6

Bonuses are almost always taxed at around 40 or 42%. Commissions I believe are taxed at whatever the base salary is taxed at.

Answer 7

They are taxed the same as income but some companies withold much more taxes for bonuses, I know mine does and it creates a big problem as they withold too much taxes.