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Pay employee bonuses

SOLVED•by QuickBooks•4749•Updated February 12, 2024

Learn how to give your employees a bonus check using QuickBooks Payroll.

Bonuses are a great way to recognize your employees for a job well done.  But there’s also some things to consider when it comes to paying them.  We’ll show you how to pay bonuses in QuickBooks.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Add the bonus pay item to your employees (if you haven’t already)

Follow the steps below for your payroll product.

If you choose to pay a bonus along with the employee’s regular pay, add the Bonus pay type before you run payroll. If you choose to give the bonus through a separate check, skip to Step 3: Payout the bonus.

  1. Go to Payroll, then Employees (Take me there).
  2. Select your employee.
  3. From Pay types, select Start or Edit.
  4. In the Common pay types section, select Bonus.
  5. Select Save.

Step 1: Set up the bonus item

  1. Go to Lists, then select Payroll Item List.
  2. Select Payroll Item then New.
  3. Select Custom Setup, then Next.
  4. Select Wage, then Next.
  5. Select Bonus, then Next.
  6. Enter the name of this item, then select Next.
  7. Select the expense account you want the item to track to, then select Finish.

Step 2: Add the item to your employees

  1. Go to Employees, then Employee Center.
  2. Select your employee. 
  3. Select Payroll Info, then add the bonus item in the Additions, Deductions, and Company Contributions section.
  4. Select OK.

Step 2: Pay out the bonuses

You can pay the bonuses on separate paychecks (or a bonus-only payroll), or add the bonuses to your employees’ regular paychecks.

Option 1: Run a bonus-only payroll

  • You can use the federal and state bonus supplemental tax rates (recommended). 
  • You can gross-up the bonus if needed. For example: if you want your employee to receive $1000 after taxes, you can enter this as a net pay amount. You’ll pay the employee portion of taxes.
  • If you use QuickBooks Online Payroll:
    • Your employees won’t get an email notification about their bonus from QuickBooks Workforce.
    • The bonus will only go to one direct deposit bank account. If your employee has 2 accounts, the bonus paycheck will go into their secondary account.
    • If you enter the bonus amount as net pay you can't deduct retirement, HSA, or garnishments.
  1. Go to Payroll, then Employees (Take me there).
  2. From the Run payroll ▼ dropdown, select Bonus only.
  3. Choose how you’d like to enter the bonus:
    1. As a net: The employee gets the exact bonus amount. Taxes are still calculated but you'll pay the taxes.
    2. As a gross: We’ll figure out the net amount for you.
  4. Select the employee, then enter the Bonus amount.
  5. Below the list of employees, select Edit ✎ next to Payroll options.
  6. Select the payroll options you want. Then select Apply.
  7. Select preview and submit payroll.
  8. If you’ve selected As net pay, the pay stub includes Employee Taxes Paid by Employer in the pay section.

These steps are for gross pay bonus amount.  If you want to enter a net pay bonus, you’ll need to gross up your paycheck.

  1. Go to Employees, then select Pay Employees.
  2. Select Unscheduled Payroll.
  3. Verify the pay period end date, and the check date, then select the employee you want to pay.
  4. Select Open Paycheck Detail.
  5. Remove the Earnings and Other Payroll Items if needed.
  6. In Earnings, enter the Bonus item you created in Step 1.
  7. In the Rate column, enter the gross amount of the bonus.
  8. Adjust federal and/or state withholding taxes as needed.
  9. Select Save and Close or Save and Next to continue creating additional bonus paychecks.

Option 2: Add the bonuses to regular paychecks

  • The bonus is taxed the same as the employee’s regular pay.
  • Federal income tax may calculate at a higher tax rate. See Section 7 of Publication 15 for more info.
  • Deductions set as percentages will come out of the bonus.
  1. Go to Payroll, then Employees (Take me there).
  2. Select Run payroll.
  3. Select your employee, then enter the amount in the Bonus field.
  4. Select Preview payroll, then Submit payroll.
  1. Create your payroll as normal.
  2. Open the Preview Paycheck window.
  3. In Earnings, enter the Bonus item you created in Step 2.
  4. In the Rate column, enter the gross amount of the bonus.
  5. Adjust federal and/or state withholding taxes as needed.
  6. Select Save and Close or Save and Next to continue creating paychecks.

Note: 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.

 

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