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Pay commission separate from regular pay

SOLVEDby QuickBooksIntuit Online Payroll56Updated April 22, 2021

Learn why you should pay commission separate from regular pay.

Do you want to create a separate commission check for an employee? While you can pay commission in regular paycheck, you might consider doing it separately. We explain why

There are a number of reasons to pay commission separate from a regular paycheck.

  • You want to control the tax treatment of a commission or the withholding of retirement account deductions. For example, an employee might want a commission to be withheld at the flat 22% supplemental rate for federal income tax. It isn't possible to control the tax rate when you include the commission on a payroll check.
  • You want to turn off direct deposit for the commission check.
  • You're paying the commission off-cycle. Not on a regularly scheduled payday.
  • The commission was earned over a different period than the current pay period.
  • The employee has accumulated $1,000,000 or more in supplemental wages. This means you're required to withhold federal taxes at 37%.

Things to know

  • If your state also has a supplemental tax rate, we apply the state rate when you choose to use supplemental rates. Some states don't have a supplemental tax rate. So in these states, we apply only the federal supplemental tax rate if you check that box.
  • If the employee has accumulated $1,000,000 or more in supplemental wages in the current tax year, you must withhold federal income tax at 37%.

See Set up and pay a commission-only employee for details on how to set up a separate check. 

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