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  • commission pay Oregon

    my company pays me an hourly wage plus commission. I was told that about 46% in taxes will be taken out of my commission pay, last year it was not that way. Last year I paid my federal taxes at the end of the year while they took out my other state taxes and income tax. This year it has changed and for fear of an audit they will not budge even after I said I would sign a piece of paper releasing them from that responisibility. I need the money now and am willing to pay at the end of the year. Please help me..As it stands now I will loose almost 1/2 of my commission sales to taxes

  • #2
    The IRS regulates the tax rate on supplemental wages. The current federal tax rate is 25%. This is not discretionary on the employer's behalf. This is a requirement of the federal tax code. These regulations are posted in the Ciruclar E on an annual basis. The 46% you mention is most likely a combination of all tax types (i.e. federal, FICA, state, etc.). I'm sorry, but the employer shouldn't allow for an option to not tax a commission.

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    • #3
      The supplemental rate for FIT is 25%. Add to that 9% SIT and 7.65% FICA/Medicare, there's 41.65% right there. And if the local transit taxes apply, it very well could come to around 46%.

      The other commonly used withholding method is to add the supplemental wages to the regular pay and tax the total per your W-4. However, if the commissions are at all substantial, this could result in an even higher marginal tax rate for withholding.

      There are also alternative less commonly used methods that you can request of your employer, such as the cumulative method. Check the IRS website for alternate methods of withholding. You would have to request such alternate method be used, in writing, and the employer does not have to agree.

      Generally speaking, when it comes to supplemental wages, the employer has the right to elect the method of withholding they will use.
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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