Retail Resource Center for HR: Payroll

This item is part of Retail Resource Center for HR

Retail employers should be aware of the taxability of commissions paid and gifts given to sales employees. Commissions are generally included in the definition of taxable wages for purposes of federal income tax (FIT) and Social Security and Medicare (FICA) tax withholding and FUTA (federal unemployment insurance) tax. In addition, commissions are generally subject to all of these taxes when paid and they are treated as supplemental wages for purposes of FIT withholding. Retail employers may provide gifts to sales employees without having to tax the value of the gifts for purposes of FIT, FICA and FUTA taxes.

XpertHR provides the following information to assist retail employers with these common payroll tax issues: