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tpuckett
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Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

 
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5 Replies

Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

@tpuckett - comes April 15th, the tax is the same.  

 

your employer is required to use different withholding tables for base salary vs. commissions, but that will all settle up on April 15.

 

do not confuse 'withholdings' with 'tax liability'.   Tax liability is the tax you owe the IRS (and State) and is calculated on your tax return.  Withholdings 'pay down' the tax you owe owe against that tax liability and will result in either a refund or additional payment due.  

Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

By law, all compensation for services you perform is taxed the same way, it is reported on your W-2 as box 1 wages and is subject to income tax withholding as well as social security and medicare tax withholding.  Your employer also pays half the social security and medicare tax behind the scenes.  If your employer proposes to report salary on a W-2 and commission on a 1099-NEC, that is their way of trying to dodge/skip/avoid some of their tax responsibilities and place the entire burden of social security and medicare taxes on you.  Its also illegal.

 

Assuming your employer follows the law and puts everything on your W-2, you will pay the same tax at the end of the year.  The only difference might be the amount of withholding,  this could change your refund but won't change the net amount that the IRS keeps. 

Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

As an aside, some state Labor Depts. require that "wages" be paid on some type of schedule, such as biweekly or monthly. 

Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

@SweetieJean which ones? 

TomD8
Level 15

Is it better to increase draw biweekly with guarentte or is it better to leave a minimum and get more commision / not sure how all are taxed

@NCperson 

 

These:

https://www.dol.gov/agencies/whd/state/payday

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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