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Accounting, Payroll & Pension Issues/payroll separation of base pay & commissions

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Expert: - 3/10/2008


Question
just this month, my company rolled out a new payroll procedure, sending out 2 checks - 1 for base pay & the other check is my commssion check (eg sales incentive is what they are calling it).  they stated that since they are taxed at a different tax rate they can.  so, before my checks combined were to have been & the commission amount was taxed higher.  (appx 48%)  now, i feel i have lost more money.  are they legally allowed to do this?  are commissions taxed the same as bonuses?

Answer
If it is a "Sales Incentive" than it is a bonus check and if it is paid separately taxed at the supplemental tax rates.  

You will get the taxes back if you do not owe tham when you file your tax returns. You are not losing money, but they are holding out more taxes. If you do not owe the taxes than you will get them back in a tax refund.

Shirley

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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