<prompt> Human: I work for an IT managed services provider. Basically, we sell time. I get an hourly wage and for every hour I bill just like an attorney I get a commission. e.g. 15hour and 20 for every hour I bill to a client. On my paycheck, this commission time is marked as Bonus pay. Is this correct? My understanding is that this is taxed higher than a commissioned pay would be. My concern is that my employer is taking a shortcut in the payroll or just doing things incorrectly and causing me to be overtaxed on my paycheck. Can anyone clarify?  <response>: Nope, bonus and commission pay is withheld the same way generally higher than ordinary income but it is actually taxed just like any ordinary wage income.Edit: A commission is pay based on performance, such as a percentage of sales revenue or the number of units a salesman moves. A bonus is extra pay given for exceptional performance. As far as the Internal Revenue Service is concerned, theres not much tax difference between them.Supplemental WagesThe IRS classes both bonuses and commissions as supplemental wages. This category covers any payments to employees that are not regular weekly or hourly salary or wages. Bonuses, commissions, overtime, severance pay and retroactive back pay all fall into this category.Supplemental pay is subject to withholding, just like regular income. The IRS breaks down the ways to do this in Publication 15:If the employer lumps bonuses, commissions and regular pay into one lump sum for a given pay period, the company takes out withholding just like it does with regular wages.If the company makes two separate payments or identifies separate amounts on the paycheck, it has two options. One is to withhold a flat 25 percent from the bonus or commission pay. The other is to figure out the total withholding for the pay period, subtract the withholding on regular wages and take the rest out of supplemental pay.If an employees bonus or commission pay tops 1 million in a year, the withholding is at the highest current income tax rate.When the company issues employees a W-2, it includes bonuses and commissions with regular pay in Box 1. An employee includes both with his income on Form 1040 and pays tax as usual. 