Commission Taxes ... Ask TaxMama ... July 9, 2004

Ask TaxMama.Com
Tax Information With A Mother's Touch

Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 266 July 9, 2004


	TaxMama's Resources & Specials
	TaxMama Didn't Answer
	Commission Taxes
	Are You Doing Payroll?
	Will It Ever End?
	Bank Garnishment


	IRS Summer Tax Tip — Tax Advice for the Working Student


	Job Hunting

E-Mail
This Page To A Friend

Your email:

Your name:

TO email:

Commission Taxes

» From: Lakewood, CO

Dear TaxMama:

After being in sales for many years, I just got my first commission check at a new job and it was taxed at 40%!!!!

It's going to be extremely difficult to live on commission when I lose almost half to taxes.

What procedure or forms are required to get this rate adjusted?

Thanks so much.

Allison

Hi Alison,

Congratulations!

That means you're selling. So keep up the good work.

But, you need some money - so fill out a new W-4.

And ask your company's payroll department to apply to all your checks, including the commission checks.

If the commission checks don't get issued every month, if they get issued quarterly, your payroll department uses a different withholding table than normal. They use a table for periodic checks, not weekly or monthly. That withholding table has them take out a much bigger chunk of withholding. Ask them if they're doing that. And if they are, can you give them a separate W-4 for the commission checks, with a larger number of exemptions.

If not, and you are SURE they are over-withholding from your commission checks, just raise your regular exemptions by 1 or 2 to adjust, throughout the year. Ask your tax professional or your payroll department to help you.

Good luck on the new job!

Best wishes,

Eva Rosenberg
Your TaxMama

TaxMama's
Other Sites
TaxMama's Secrets
The Help Desk
PhotoMasterpieces
I-Laugh

Site design by Serenata Design.