Taxes on commissions?

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Dec 6, 2009 4:16 am

How many out there are being taxed at the Federal supplamenta tax rate of 25% on commissions?

 
My friend says his company is changing to that method of witholding and the advisors have no option to change their Federal witholding elections.
Dec 6, 2009 11:03 am

WFA is changing to that method starting in January.  In addition to the fixed 25% Federal Tax Withholding on Commissions, there will be a fixed % withheld for State Taxes.  This change will reduce the cashflow for most FA's, and they will have to wait until  2011 to get their Tax Refund.  There is no way to decrease this fixed witholding at this point.  I am not aware of any other Co. doing this to their FA's.

Dec 6, 2009 4:27 pm

It sounds like it sucks to work for AG WAchovia Fargo Advisors... I feel bad..

 
What are the positives of the new firm(not sarcasm, honestly wondering why some of you are staying)?
Dec 6, 2009 5:09 pm

If they do this, won't a big producing advisor run the risk of under withholding?

Dec 6, 2009 8:20 pm

As likely as them passing the legislation that advisors at brokerage firms will not be able to consult on company retirement plans and will have to have RIAs second guess their work. H.R. 1988.



Gotta love being an employee, huh?



For the record, this is why I think our profession is set up to be independent.

Dec 6, 2009 9:18 pm
AGEMAN:
Fen Ban:

WFA is changing to that method starting in January.  In addition to the fixed 25% Federal Tax Withholding on Commissions, there will be a fixed % withheld for State Taxes.  This change will reduce the cashflow for most FA's, and they will have to wait until  2011 to get their Tax Refund.  There is no way to decrease this fixed witholding at this point.  I am not aware of any other Co. doing this to their FA's.

How can they justify that our commissions are supplemental pay.  This is our pay!!!!!!!!!
 
They are saying that it has to do with converting us to the bi-weekly payroll system.   They say it will be at least 9 months for the software guys to figure it out and it will be fixed in 2011. Somehow, one of the largest banks in the world can't quite figure out all of that complicated math. 
 
Here's how I see that boardroom conversation going:
"Boss, the bi-weekly payroll system conversion is going to screw up the commission paid employees."
"Do we have anyone on commission?"
"yup.  Those brokers we had to buy when we bought Wachovia."
"Oh yeah.  Haven't we cut thier pay yet?"
"Working on that sir.  Sir, we could either put a few of the summer students to work for a few days to fix the programming, or we could force all of those overpaid panzies to withhold 25% for a year until the President raises taxes high enough where it won't matter.  If we force them to withhold 25%, it will really hurt the smaller producers."
"Don't we want to hurt them?"
"Yes sir, that is what you always say."
"Screw em.  Can't we make the witholding higher?"
"We could include mandatory state as well."
"Let it be written, Let it be done.  Make sure to tell Warren about our good idea, he'll get a kick out of it."
Dec 6, 2009 11:11 pm
CommonSense:
AGEMAN:
Fen Ban:

WFA is changing to that method starting in January.  In addition to the fixed 25% Federal Tax Withholding on Commissions, there will be a fixed % withheld for State Taxes.  This change will reduce the cashflow for most FA's, and they will have to wait until  2011 to get their Tax Refund.  There is no way to decrease this fixed witholding at this point.  I am not aware of any other Co. doing this to their FA's.

How can they justify that our commissions are supplemental pay.  This is our pay!!!!!!!!!
 
They are saying that it has to do with converting us to the bi-weekly payroll system.   They say it will be at least 9 months for the software guys to figure it out and it will be fixed in 2011. Somehow, one of the largest banks in the world can't quite figure out all of that complicated math. 
 
Here's how I see that boardroom conversation going:
"Boss, the bi-weekly payroll system conversion is going to screw up the commission paid employees."
"Do we have anyone on commission?"
"yup.  Those brokers we had to buy when we bought Wachovia."
"Oh yeah.  Haven't we cut thier pay yet?"
"Working on that sir.  Sir, we could either put a few of the summer students to work for a few days to fix the programming, or we could force all of those overpaid panzies to withhold 25% for a year until the President raises taxes high enough where it won't matter.  If we force them to withhold 25%, it will really hurt the smaller producers."
"Don't we want to hurt them?"
"Yes sir, that is what you always say."
"Screw em.  Can't we make the witholding higher?"
"We could include mandatory state as well."
"Let it be written, Let it be done.  Make sure to tell Warren about our good idea, he'll get a kick out of it."

one more you forgot..
"are these the same guys that we played with for 9 months on retention, then for fun added the forefront for a few more giggles" yes sir.
Dec 7, 2009 7:49 pm

One word. "PEOPLESOFT".
Same reason a new employee can only start on twice a month, 15th and 30th.

Dec 7, 2009 8:14 pm

I would have to make around 350k for my effective tax rate to be 25%. 

Dec 8, 2009 7:53 pm

The idea of being able to choose your marital status and dependents is so that you can have the right amount of tax witheld.  It makes no sense to force a flat tax on employees.   

 
Ideally you dont want to get a big refund (less cash flow and no interest on the money)or underpay and owe bigtime.
 
I can see how some could under report and now need to do quartely tax paments.. and what about those that really don't need 25% witholding.    Add to the 25% the state tax and 15% for the 401k and that could add up to nearly 50% in taxes.   For some that may bust the monthly budget.
 
Memo to Business... take care of your best resource - your employees !
Dec 8, 2009 10:18 pm

Man this stuff gets better by the day...why are you guys still there!

Dec 8, 2009 11:18 pm

You are a jackass!!  Anyone that takes the time to read the thread will understand that.


Do you actually mangae peoples money?  No way?
Dec 9, 2009 12:16 am

If you are going to be taxed at 25% and you are currently having 35% withheld figure out approximately what that extra 10% equates out to and tell payroll to also withhold that amount in addition to the 25%. Pretty easy I think. If you are having a lesser percentage withheld now well then welcome to a tax refund. Not the end of the world.