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Charles Markham, EA
Charles Markham, EA, Former TurboTax Employee
Category: Financial Software
Satisfied Customers: 734
Experience:  Intuit Ask a Tax Expert and Turbotax expert
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Wanda, my question is how is the spiff taxed is it at a

Customer Question

Customer: Wanda Young, my question is how is the spiff taxed is it at a supplemental rate or regular w-4.
JA: Thanks. Can you give me any more details about your issue?
Customer: I have a sales group that want to issue a weekly spiff payment on a debt card. I'm trying to decide what is the best way to process this earnings. If I treat it like a supplemental income then the tax rate is going to much higher than just the basic tax rate.
JA: OK got it. Last thing — JustAnswer charges a fee (generally around $32) to post your type of question to Tax Experts (you only pay if satisfied). There are a couple customers ahead of you. Are you willing to wait a bit?
Customer: okay do you need my email address.
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Submitted: 1 year ago.
Category: Financial Software
Expert:  Charles Markham, EA replied 1 year ago.

Hello, Wanda are you available for a chat?

Customer: replied 1 year ago.
Expert:  Charles Markham, EA replied 1 year ago.

Hi, there.

Customer: replied 1 year ago.
Hi, do you have a response to the taxing question?
Expert:  Charles Markham, EA replied 1 year ago.

I see your question. I want to make sure you understand something.

Expert:  Charles Markham, EA replied 1 year ago.

You are speaking about the "tax rate" on supplemental vs. regular but this really isn't a tax rate it is just the withholding rate.

It is just the amount of taxes they take out. How much taxes you decide to have taken out, has nothing to do with how much

you actually wind up owing when you file your taxes. Do you follow me?

Expert:  Charles Markham, EA replied 1 year ago.

Spiffs and regular wages are both ultimately taxed the same on your tax return.

Expert:  Charles Markham, EA replied 1 year ago.

If you don't follow me, just say so, and I can explain it more.

Customer: replied 1 year ago.
okay thanks that makes sense.
Expert:  Charles Markham, EA replied 1 year ago.

Many times the withholding on bonuses and spiffs tends to be too high, so they have an alternative way of computing the taxes to withhold.

Expert:  Charles Markham, EA replied 1 year ago.

Here's the way I would think of this: if the spiffs are not a large part of your total compensation then I would not be overly concerned with the withholding and would opt

for the lower withholding schedule. On the other hand if they are large component then I would take another look. Her's an example: Base pay is $70,000 and the spiffs might total $10K. I would not call this a big proportion and would go with the lower schedule. On the other hand if the numbers were reversed, I would stop and take another look.

Expert:  Charles Markham, EA replied 1 year ago.

Does this give you something to go on? It's hard without the numbers.

Customer: replied 1 year ago.
Your answer is clear. Thanks
Expert:  Charles Markham, EA replied 1 year ago.

Then if you're all set. I think there's a button you push on your end, but feel free to keep asking. Not going anywhere here!

Charles