Learn how you can create a termination paycheck for terminated employees in Desktop Payroll.

Termination checks are governed by a separate set of state rules indicating when employees must be paid when they separate from employment because of discharge, layoff, or resignation. These requirements guarantee employees receive all wages they have earned on, or soon after, their last day of employment. We'll show you how to create termination checks.

Termination checks are subject to normal tax deductions

Termination checks are subject to normal tax deductions, including state/provincial and federal taxes.

  • If you have QuickBooks Desktop Payroll Assisted, you will need to send termination checks to Intuit for tax processing prior to your tax deposit schedule .
  • If you are paying the Termination check to your employee using Direct Deposit, you must send payroll to Intuit by 5:00 p.m. PST  two banking days prior to the check date. Intuit needs this time for processing in order for the Direct Deposit funds to post to your employee's account on the check date.

Note QuickBooks Desktop will not warn or charge a late payroll processing fee of $100 as long as:
  • The employee has a release date in the employee record that matches the send date of the payroll (or an earlier date).
  • The paycheck date is today or later.

To create a termination check

  1. From the QuickBooks Desktop menu, select Employees > Pay Employees > Termination Check.
  2. In the Enter Payroll Information window, enter the correct Pay Period Ends and Check Date.  In order to avoid a late fee, the Check Date must be dated today or a future date .
  3. Next to Bank Account confirm the correct bank is chosen.
  4. Place a checkmark next to the employee(s) to be paid a termination paycheck.
  5. Under the Release Date column, select the box next to the employee. A Calendar icon will appear.
  6. Select the Calendar icon, then select the employee's release date.
  7. Enter the hours worked for each terminated employee. Or verify the Total Hours or Salary amount. To preview or modify paycheck details, follow steps below:
    • Select the employee's name.
    • From the Preview Paycheck window, enter or modify paycheck information.
      • If the employee uses direct deposit, verify that the Use Direct Deposit box is marked appropriately. If you do not want the paycheck to be direct deposit, select to clear Use Direct Deposit. Most termination paychecks are live checks rather than direct deposit paychecks.
      • If you do not want vacation and sick to accrue on this specific paycheck, check the box Do Not Accrue Sick/Vac.
    • Select Save and Next to proceed to the next employee. Or Save and Close to go back to the Enter Payroll Info window.
    • Select OK to return to the Enter Hours screen.
  8. Select Continue.
  9. The Make Employees Inactive window will open. Select Make Inactive to make the employee inactive. Or Keep as Active to keep the employee on the active employee list.
  10. In the Review and Create Paychecks window, review the taxes, deductions, net pay, employer taxes and contributions. If the you wish to review or change these amounts, you can select the employee's name.
  11. Select Create Paychecks.
  12. The Confirmation and Next Steps window will open. Based on your payroll service, QuickBooks Desktop will provide you the next steps. If you have QuickBooks Desktop Assisted Payroll or use Direct Deposit, you will also be prompted to send your payroll to Intuit for processing.
    • If you are paying the Termination check to your employee using direct deposit, you must send payroll to Intuit by 5:00 p.m.  PST two banking days prior to the check date. Intuit needs this time for processing in order for the direct deposit funds to post to your employee's account on the check date.