The information posted on PayrollTalk is for informational purposes only and is not intended to substitute for obtaining accounting, payroll, tax, or financial advice from a professional accountant.

Commissions and Bonuses

dlsisco
edited November 2010 in General Payroll Topics
I'm a salaried employee, I also get commissions for other things I do and sell. In past jobs, my commissions were taxed differently than my salary. After 9 years with this company having salary, commissions and bonuses paid separetly, now they say they have have been advised to tax everything together, even my Christmas bonus, Is this correct? I hope I'm in the right place. Really need advice. :?:

Comments

  • All pay paid during a pay period is supposed to be combined (even if paid separately) for purposes of computing withholding of income tax. This is because, if it is not combined, your withholding allowances and the zero bracket and other wage bracket amounts will be applied twice during the period and you will be WAY underwithhled. As an alternative, if your salary is enough that tax is withheld from that using the regular withholding computation method and the employer so chooses - the employer can withhold from the "supplemental wages" (i.e. commissions and bonuses) at a flat 25% of the gross without taking into account the claims you made on the W-4. If your employer was doing that already, you may not see much of a change or you could see a reduction in withholding or an increase depending on how much you make. If your employer was not doing that and your withholding was about right, you can adjust your W-4 so that the withholding is about right.
    We need more details to know what your situation is.