When an employee receives a cash or gift certificate bonus, those amounts must be recorded through a paycheck to be reflected on tax filings in QuickBooks Desktop Payroll.
Using a paycheck to record a bonus paid through cash or a gift certificate:
- Adds the gross amount of the bonus to the employees YTD earnings.
- Reports the wages and taxes on tax forms through QuickBooks Desktop.
- You can use the Enter net/Calculate gross feature of the paycheck to gross-up the paycheck. See Gross up a paycheck for more information on grossing up.
- You can create an offset item to zero out the paycheck.
- Regular deductions (retirement, health insurance, child support) may apply to the bonus amount. Consult your tax/financial advisor or the plan advisor for information about these deferrals on bonus paychecks.
QuickBooks Desktop will calculate withholding taxes according to the Filing Status and Allowances in the Employee Profile. 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. For options on changing the tax disbursal on the bonus, see Create a bonus paycheck.
If you do not have a bonus payroll item created, see How do I set up a payroll item for a bonus?
To create the cash or gift certificate bonus check with the taxes calculated automatically:
- Begin creating payroll according to your regular process.If you use payroll schedules, create the bonus check as an unscheduled payroll to avoid date discrepancies in your next scheduled payroll.
- In the Earnings box of the Preview Paycheck window, click the Item Name drop-down arrow, select a bonus item and leave the Rate column blank.
- In the bottom right corner of the window, place a checkmark in the Enter net/Calculate gross box.
Note: This option is only available for Assisted or Enhanced customers. If you have Standard or Basic Payroll, you must gross up the check manually.
- Enter the amount of the bonus in the Check Amount field under the Employee Summary section and hit the Tab key. Notice the Bonus item will have a gross amount added and the net of the check will be the bonus amount.
To zero out the paycheck, but still record the wages and taxes, you can create an offset item:
- In the Other Payroll Items column, click the drop-down arrow and select Add New.
- Select Deduction, and click Next.
- In the Enter name for deduction window, type Net pay offset, and click Next.
- In the Agency for employee-paid liability window, change the Liability Account to the account affected when the gift certificate payment was entered into QuickBooks Desktop.
- Click Next.
- Select None from the Tax tracking type drop-down list, and click Next.
- Make certain that no taxes are selected in the Taxes section, and click Next.
- Select Neither in the Calculate based on quantity window, and then click Next.
- Select net pay in the Gross vs. Net window, and then click Next twice.
- Click Finish. You have now created the offset payroll item.
- In the Rate column, enter the amount in the Net Pay field.
- Hit the Tab key to step off the Other Payroll Items field. The amount on the Net Pay field in the Employee Summary section should be changed to $0.
- Ensure that the Use Direct Deposit checkbox is not selected.
- Click Save and Close.