What can i do to keep more of my sales comission from tax?

  • Thread starter rody084
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In summary, if you are an independent contractor, you may want to consider transferring the commission to a 401(k) or IRA to minimize your tax liability. If you are an employee, you may want to consult with a financial planner to see what options are available to you.
  • #1
rody084
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hi,

i am going to be getting sales commission on our projects at my company and I want to know what kind of tax strategy will be best for me. My employer is willing to pay that commission in whatever way I prefer...so I am wondering if anyone has any advice for me as to how I can avoid having a huge chunk of my commissions taken by taxes.

near $30k every year is getting taken out of my paychecks...im fine contributing for worthy causes and helping the underpriviledged...but come on! most of this money is going to the "war" on iraq anyway. :(

i would greatly appreciate any help!

thank you!

Rody
 
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  • #2
Are you being paid as an independent contractor (1099) or as a regular employee? What type of contributions (pre-tax/post-tax) are you making to an IRA or 401K?
 
  • #3
This is probably better suited for a financial forum.
 
  • #4
What you could do is to transfer the money through some off-shore cayman accounts, re-route it through the coruptive parts of northern siberia. The more transfers you make, the harder it is to follow the money trail, especially if it is via unofficial channels. Your best bet is to do it via a computer.
 
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  • #5
If the commission isn't money you're going to miss (judging from what you say is taken out of your paycheck, I'd guess this is the case), I'd turn the commission into a 401(k) contribution or stick it into an IRA. Otherwise I think you'll probably get better answers consulting with a financial planner.
 
  • #6
If you are on sallary you will be taxed at source (AFAIK), so u can't do anything. If you are Independent or have your own Company then you can minimise the amount of tax you pay legally... So what are you?
 
  • #7
Buy rental property and deduct the mortgage interest.
 
  • #8
loseyourname said:
Buy rental property and deduct the mortgage interest.

And use all your personal expenses as "rental expenses" :rofl: :rofl: :rofl: Within reason of course...

I mean... don't cheat on your taxes
 

1. How much of my sales commission is subject to taxation?

The amount of your sales commission that is subject to taxation depends on various factors, such as your total income, deductions, and tax filing status. Generally, your sales commission is considered as earned income and is subject to both federal and state income tax.

2. Are there any strategies to reduce the amount of tax I pay on my sales commission?

Yes, there are a few strategies that you can use to reduce the amount of tax you pay on your sales commission. You can contribute to a retirement account, such as a 401(k) or IRA, which can reduce your taxable income. You can also take advantage of deductions and credits, such as business expenses or charitable donations, to lower your overall tax liability.

3. How can I keep track of my sales commission for tax purposes?

It is important to keep detailed records of your sales commission for tax purposes. This includes keeping track of all sales and commission payments received, as well as any business expenses related to your sales activities. You can use a spreadsheet or accounting software to organize and track this information.

4. I receive commission checks throughout the year. How often should I make estimated tax payments?

If you receive commission checks throughout the year, it is recommended to make quarterly estimated tax payments to avoid penalties for underpayment. These payments are due on April 15, June 15, September 15, and January 15 of the following year. However, if you have other sources of income (such as a salary), you may be able to adjust your withholding to cover your tax liability from your commission earnings.

5. Can I deduct any business expenses related to earning my sales commission?

Yes, you may be able to deduct certain business expenses related to earning your sales commission. This includes expenses such as advertising, travel, meals and entertainment, and office supplies. However, these expenses must be necessary and directly related to your sales activities, and you must keep detailed records and receipts to support these deductions.

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