[VanessaRose]

I accepted a job that offers $2000 a month, which is low, with a 12% commission paid after I reach a certain sales amount per month. Why is such a huge chunk of each commission check gone in greater proportion than my salary check? I was told commissions are taxed higher. How can I change this? Is this even true? I am the top sales person, yet my coworkers are bringing home more income than me and I am frustrated.
Thank you.

[ebaines]

Commissions are not taxed higher than salary, but if the amount of your commission is significant it can push you into a higher bracket for withholding. The IRS requires that tax be withheld at a rate that assumes the amount you make on any given check is the amount you will make on every check all year. In other words, when your company pays you $2000 for a monthly salary, taxes are withheld at a rate that assumes your total earnings for the year is 12 x 2,000 = $24,000/year. The taxes on that amount will be pretty low. But if you then get a separate commission check that's for, say, $5,000, the company is required to withhold taxes at a rate that assumes your annual salary is 12 x 5,000 = $60,000/year. The tax rate is higher for this higher level of income hence a greater percentage is withheld. Your co-workers may have declared more exemptions on their W-4 form than you did - you may want to review the level of tex withholding and change the number of exemptions if they're taking too much out. But be careful - while you don't want them to take out too much tax (which is like giving the government an interest-free loan), you also don't want to have too little taken out or you may end up owing the government a big tax payment come April, and possibly interest as well if your payments are insufficient.

[AtlantaTaxExpert]

Ebaines explanation is EXCELLENT. I have nothing to add.