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re: Explain federal tax brackets to me...

Posted on 7/18/22 at 7:51 am to
Posted by meansonny
ATL
Member since Sep 2012
25806 posts
Posted on 7/18/22 at 7:51 am to
quote:

For example - If you’re paid twice a month and one check is a commission check ($10,000) while the other is a draw ($1,000), they may withhold nothing from the draw check (annual income of $24,000 would have no tax liability for a married couple) and way too much from the commission check (annual income of $240,000 would require $39,000 in withholding, so $1625/chk on those 12 checks). You’d end up withholding nearly $5k more than your actually liability on your $132,000 of income as a result.


The withholding rate for bonus/commission is 22%. Any bonus or commission payout will always be 22% taxed for a w2 employee through their payroll.
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37164 posts
Posted on 7/18/22 at 9:22 am to
quote:

The withholding rate for bonus/commission is 22%. Any bonus or commission payout will always be 22% taxed for a w2 employee through their payroll.


That's your withholding rates. That has exactly nothing to do with what your ultimate tax will end up being.

In fact... at 22 percent... those bonuses are often under-withheld.
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