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Can I pay commissions to a consultant without any tax deductions.

Asked on Nov. 18, 2015

Hi, We have a consultant with who we have a Sales commissions agreement. He does not get paid any retainer / consulting fees. Should the commissions paid to him be subject to payroll tax deductions ? If yes, should he fill out the Form W4 and would I need to issue a Form W2 to him ? If no, would I need to issue a Form 1099 to him at the year - end ?

Answers

Esther Efraimovich's headshot
Esther Efraimovich CEO/President • November 20, 2015

If he truly meets the definition of a contractor, then it's more advantageous to both you and the consultant to issue a 1099: Less work for you and the consultant can deduct his expenses against commissions at tax time.

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