Earnings: Salary, Hourly, Commission, Bonus

Video: Salary vs Hourly, Additional Earnings

Salary VS Hourly

Salaried employees are usually paid the same amount each pay period, based on their total salary. An hourly worker, on the other hand, earns a set payment for each hour they work. For example, if they earn $20 per hour and work eight hours in a day, they would earn $160 for that day (before taxes).

Types of Taxes Deducted for Salary and Hourly Employees.

There is no difference between salary and hourly workers when it comes to withholding federal taxes because the requirements are identical. Employers must withhold the following taxes: Medicare, Social Security, State Income Tax, Federal Income Tax.

How are Commissions paid and taxed?

Contrary to popular belief, commissions are subject to all of the same withholding taxes as regular wages including Social Security, Medicare, State (if applicable) and Federal income taxes. In most cases the taxation for commission payments is based on whatever withholdings are claimed on an employee's W-4.

Bonuses

Paid inside a payroll vs Bonus Run (Supplemental Taxes)

Additional Resources

isolved Resources:
University (Course): https://learning.myisolved.com/courses/97

Government Articles:
https://apps.irs.gov/app/understandingTaxes/teacher/hows_mod02.jsp

Other Resources:
https://blog.cmp.cpa/tax-differences-salary-and-hourly-employees#:~:text=Types%20of%20Taxes%20Deducted%20for,State%20income%20tax

https://www.investopedia.com/ask/answers/06/commissiontaxes.asp