Gas stipend...

[Amethyst]

Per my employment arrangement, I receive $15 per day for a gas stipend. Employer has been classifying this stipend as a "commission" on my paycheck stubs. I believe that this is improper since the tax rate for wages is different from commissions, as well as from stipends.

What recourse, if any, is available to me?

Thanks in advance!

[Pattymd]

None. It is the employer's choice as to how to characterize additional compensation. Since this is a fringe benefit, it could, according to IRS guidelines, be taxed as supplemental wages, although I've been in payroll for 27 years and I wouldn't do it that way.

If the withholding is too high, you can always file a revised W-4 with fewer exemptions.

[Amethyst]

My employer only allows one free W-4 revision yearly and it can only be done for the following reasons:

1. Change in marital status
2. Change in my dependents' status (birth/adoption or child turns 18)
3. Change in employment (ie: whether I work another job or not)
4. Change in filing status (ie: head of household vs. married/jointly vs. married/separately)

If an employee wants to revise their W-4 for a reason other than the 4 listed above, there's a $20 processing fee per revision. I've never heard of such a thing! In fact, I've read articles in financial magazines that RECOMMEND revising your W-4 as needed during the year to prevent a large tax refund.

[Beth3]

I've never heard of such a thing either. Patty would certainly know better than I but I seriously question whether it's legal to (a) limit the number of times and employee may adjust their withholding and (b) charge the employee a fee for doing so.

[Pattymd]

No, they legally cannot do any of that. It's none of their business. Unless of course, they want to pay you interest if you are overwithheld and pay the tax and penalties and interest if you are underwithheld. OK, so that was sarcastic.

In any case, contact the IRS immediately and report this. This is asinine.