How To Create Bonus Paychecks In QuickBooks Desktop Payroll

Here we will discuss how to create bonus paychecks in QuickBooks Desktop Payroll. QuickBooks Desktop gives you the various methods to pay bonuses to employees. You have three options to create bonus paychecks in QuickBooks Desktop Payroll. 

  • Pay a bonus on a regular paycheck
  • Pay a bonus on a separate paycheck
  • Pay employees with a gift certificate or cash bonus

Steps To Create Bonus Paychecks In QuickBooks Desktop Payroll

Here are the different methods to create bonus paychecks in QuickBooks Desktop.

Pay a bonus on a regular paycheck

QuickBooks Desktop allows you to pay a bonus to your employee on a regular paycheck during the employee’s scheduled payroll.

Points to keep in mind while including the regular paycheck:

  • The bonus will be paid with regular pay and distributed at the same time and method and regular pay.
  • Regular reductions like retirement, health insurance, child support may apply to the bonus amount. Discuss with your tax/financial advisor or plan advisor concerning the knowledge about these deferrals on the bonus paycheck.

QuickBooks Desktop will calculate taxes according to filing status and allowances in the employee profile. You should examine the taxability of the bonus. The net salary on a bonus check can vary substantially depending on the selection and distribution of taxes.

Steps to add a bonus item to a regular paycheck:

  • Start creating payroll according to your regular process.
  • Now, go to the Earnings box of the Preview Paycheck window, and choose the Item Name column below the regular salary or hourly item to see the drop-down menu, now click on the bonus item.
  • Insert the gross amount of the bonus in the Rate column.
  • Adjust federal and/or state withholding taxes as needed.
  • Now, click on save and close or save and next to continue with creating the paychecks. 

Steps to pay a bonus on separate paychecks in QuickBooks Desktop Payroll

Here are the steps to pay a bonus on separate paychecks in QuickBooks Desktop Payroll

Points to keep in mind while including the separate paycheck:

  • The bonus should be mentioned as a separate paycheck without including the regular wages.
  • If you have a Direct Deposit or Assisted Payroll service then maybe you have to pay additional fees.
  • To aggregate the paycheck, you can use the Calculation Number Entry / Calculations gross facility.
  • Regular reductions like retirement, health insurance, child support may apply to the bonus amount. Discuss with your tax/financial advisor or plan advisor concerning the knowledge about these deferrals on the bonus paycheck.

QuickBooks Desktop will calculate taxes according to filing status and allowances in the employee profile. You should consider the taxability of the bonus. The net salary on a bonus check can vary substantially depending on the selection and distribution of taxes.

Steps to create a separate bonus paycheck

Check out the steps to create a separate bonus paycheck.

  • Go to the top menu bar and click on Employees. And later click on Pay Employees.
  • Later, on the list click on the Unscheduled Payroll.
  • Check the name of the employee you need to make a bonus check, and later click on the open paycheck detail button.
  • In the Income box of the Preview Paycheck window, go to the Item Name column to see the drop-down menu, and click on the bonus item. Reminder: All income items and information plus bonus items must be removed from the paycheck statement as required.
  • Add the gross amount of the bonus in the Rate column.
  • Now, adjust the federal and state withholding taxes as required.
  • Now, click on save and close or save and next to continue with creating the paychecks. 

Step to Pay Employees With A Gift Certificate Or Cash Bonus In QuickBooks Desktop Payroll

When an employee gets a cash or gift bonus certificate, these amounts should be entered via a paycheck that will be reflected on the tax filing in the QuickBooks desktop payroll.

Use the paycheck to record bonuses paid by cash or gift certificates:

  • It adds the bonus gross amount to the employees YTD earnings.
  • It reports the payments and taxes on tax forms by the QuickBooks Desktop.
  • To aggregate the paycheck, you can use the Calculation Number Entry / Calculations gross facility.
  • You can also create an offset item to reduce the paycheck.
  • Regular reductions like retirement, health insurance, child support may apply to the bonus amount. Discuss with your tax/financial advisor or plan advisor concerning the knowledge about these deferrals on the bonus paycheck.

QuickBooks Desktop will calculate taxes according to filing status and allowances in the employee profile. You should consider the taxability of the bonus. The net salary on a bonus check can vary substantially depending on the selection and distribution of taxes.

Check out these steps to create the cash or gift certificate bonus check with the taxes calculated automatically:​

  • Start making payroll according to your normal process. If you use a payroll schedule, design a bonus check as an unplanned payroll to avoid date inconsistencies in your next scheduled payroll.
  • In the Income box of the Preview Paycheck window, go to the Item Name column to see the drop-down menu, and click on the bonus item. Reminder: All income items and information plus bonus items must be removed from the paycheck statement as required.
  • Now go to the earnings box of the Preview Paycheck window, select the Item Name drop-down arrow, and click on Bonus Items, and leave Rate Rate blank.
  • Go to the right bottom corner of the window and give a checkmark in the Enter net/Calculate gross box.
  • Note: This choice is only accessible for Assisted or Enhanced customers. If you are using the Standard or Basic Payroll, you have to manually gross up the check.
  • Under the Employee Summary section, enter the amount of the bonus in the Check Amount field and click on the Tab key. Note that a gross amount will be added to the bonus item and the check will have a net bonus amount.

Steps to zero out the paycheck, but still record the wages and taxes, you can create an offset item:

  • Go to the Other Payroll Items column, and look for the drop-down arrow and click on it and choose to Add New.
  • Click on Deduction, and later select Next.
  • Type Net pay offset in the Enter name for deduction window and later select to Next.
  • Now go to the Agency for Employee-Payment Liability window, and change the liability account to the affected account when the gift certificate payment is entered into the QuickBooks desktop.
  • Choose Next.
  • From the Tax tracking type drop-down list, click on None, and later choose to Next.
  • Make sure no tax is selected in the Tax section, and click Next.
  • Choose neither in the calculation based on the Quantity window, and later choose to Next.
  • Click on net pay in the Gross vs. Net window, and later select Next twice.
  • Now, choose to Finish. You are good to go to create the offset payroll item.
  • Insert the amount in the Net Pay field in the Rate column field.
  • Hit the tab key to close the other payroll item fields. The amount should be changed to $ 0 on the net salary area in the Employee Summary section.
  • Verify that the Direct Deposit checkbox is not used.
  • Choose to Save and Close.

Bonus Taxation options:

Once the method of paying the bonus is chosen, you must consider the taxability of bonuses. The net pay on a bonus check can drastically change based upon the selection and disbursal of taxes and whether the bonus is on the same or separate check than the regular payroll wages.

Intuit recommends you follow the guidelines outlined in Source – Section 7 – Supplemental Wages of Circular E, Employer’s Tax Guide.

Bonus checks are subject to normal tax deductions, including state and federal taxes. However, they may be subject to supplement tax rates for federal and state withholding. QuickBooks does not automatically calculate the state or federal withholding supplemental rate on bonus wages. To calculate the supplemental rate for state or federal withholding, you must manually change the amounts calculated on the paycheck.

  • There is a federal supplemental wage rate of 22% for supplemental wages identified separately from regular wages: “withhold a flat 22% (no other percentage allowed).”  If the supplemental wages are more $1 million, withhold using the 37% rate.   Source – Section 7 – Supplemental Wages of Circular E, Employer’s Tax Guide.
  • Some states also have supplemental wage rates, if you are unsure of the state s individual requirements for the use of supplemental rates, please contact your tax/financial advisor or your state.

Additional options:

  • Calculate withholding taxes from a different pay schedule when creating the check (i.e., annually instead of weekly to reduce the amount of taxes withheld. To do this, the employee record would need to be edited to change the pay frequency prior to creating the paycheck).
  • Calculate withholding taxes from the supplemental tax rate and override the withholding amount on the paycheck (22% federal supplemental rate).
  • Allow QuickBooks to calculate withholding taxes at the standard tax rate within the paycheck.
  • Allow QuickBooks to calculate withholding taxes at the standard tax rate within the paycheck with and without the bonus amount then override the withholding amount on the paycheck

Note: QuickBooks Desktop Payroll Assisted customers: Please contact Payroll Support at +1-855-441-4417 if a bonus check needs to be reported in a prior quarter or year. After you create bonus checks, you need to send them to QuickBooks Desktop Payroll Assisted for processing. You can also create both the regular paychecks and the bonus paychecks in a single payroll, as long as both the bonus checks and paychecks have the same date; or you can create and send them separately. The usual deadline for sending payroll applies.

Hope this article will be helpful to you on how to create bonus paychecks in QuickBooks Desktop Payroll manage clients with wholesale and direct billing. If you still need any technical assistance then feel free to contact us by dialing our toll-free+1-855-441-4417 and get instant help for your queries from our Intuit Certified ProAdvisors. We are 24*7 available in the assistance of our customers.

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