How much income tax do they take from commission based jobs?

Question

As a Financial Advisor at Ameriprise, you receive commission paid salary, rather than base salary. How much taxes do they take away from you? Or is it even taxed differently? I live in Virginia, in the DC/Metro area.

Any info would help. Thanks!

Answer 1

It doesn't matter what it is called, it matters how the company reports your pay to the IRS.

Many commissioned based salespeople are regular employees in that they receive company benefits (health, dental, whatever) but they only get paid from what they sell. They are withheld on at the regular rates according to W-4 filed by employee, frequency of pay, then amount of gross.

But, many sales people are not considered employees at all and are independent contractors. These salespeople fill out a W-9 (vs W-4) and no taxes are withheld. They have to file taxes as a small businessman and pay self-employment tax (social security) themselves.

Without knowing all the specifics, can't tell which Ameriprise offers.

Answer 2

Are the commissions roughly equal every pay period?

I have a job that receives salary and commissions. Every 3rd month the commission tends to be substantially larger than the other 2, and the IRS takes a huge bit out of it. It's not linear either. It's like 10 times the bite for 4 times the commission.

Answer 3

The taxes that are deducted depend on how many dependants you have claimed. There is no difference between commission paid salary and base salary; they are both earned income.