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About Carole Dunton
Expertise
Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions. General knowledge of schedule C for small sole proprietorships. No experience in corporate, estate, partnership or large business returns.

Experience
8 years as tax preparer for major national firm.

You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Income Taxes

Topic: Tax Law (Questions About Taxes)

Expert: Carole Dunton
Date: 8/29/2008
Subject: Income Taxes

Question
QUESTION: I am a sales rep who receives a bi-monthly paycheck and a monthly commission check. Why are my commission checks taxed at a mucher higher rate (10%) than my paychecks? The commissions are considered part of my overall compensation, not a bonus.

Thank you for taking the time to answer this question.

Best regards,

Cheryle

ANSWER: Hi,

You would have to ask your employer about how they determine how much to deduct for Federal income tax. There is more than one option that they can use. Ten percent doesn't seem too high to me since 10% is the lowest tax bracket.

Regards,
Carole

---------- FOLLOW-UP ----------

QUESTION: Carole, Thank you for your quick respose. My company is taking about 45% of my income out in taxes for a commission check and only about 35% for my regular pay. Is this correct?

Thank you.

Answer
Hi,

So the difference is 10%. If the taxes taken include social security, medicare, Federal income tax and state income tax, that would seem about right. But again, ask them what method they are using to determine Federal and state withholding.

Regards,
Carole

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