My wife and I file jointly and one of our annual salaries is partially commission based. How should we declare that salary?
Now that we are into Q2 of the year, how can we calculate what amounts to withhold to best set us up this year to not owe any money back?
If you're paid by commission, how you report that income on your tax return using TurboTax depends on whether you're an employee or an independent contractor. If you are an employee it will be reported on a W2 and tax will be withheld. If you are an independent contractor, you will report it as self employment and pay estimated taxes.
You should pay at least 90% of the tax for the current year, or 100% of the tax shown on your return for the prior year (110% if your adjusted gross income is over $150,000), whichever is less in tax withheld or estimated payments.
TurboTax has a W4 withholding calculator which will estimate how much you should have withheld from your jobs to ensure you meet the above requirements and not have a balance due :W-4 Calculator
You can have extra withheld on the W4 to cover the tax you would owe on the commissions if you do not make estimated tax payments.
Mary, Tax expert