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    Creating bonus paychecks for QuickBooks Payroll

    Article ID: 1000699


    This article provides information about bonus paychecks.


    There are several options when paying bonuses to employees; including the bonus amount on the employee's regular paycheck, creating a separate paycheck for the bonus amount only, or reporting a cash or gift bonus through a paycheck.

    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.

    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 25% for supplemental wages identified separately from regular wages: "withhold a flat 25% (no other percentage allowed)."  If the supplemental wages are more $1 million, withhold using the 39.6% 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.

    Bonus Taxation options:

    Intuit reccomends you follow the guidelines outlined in Source - Section 7 - Supplemental Wages of Circular E, Employer's Tax Guide.

    Additional options:
    • You can 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).
    • You can calculate withholding taxes from the supplemental tax rate and override the withholding amount on the paycheck (25% federal supplemental rate).
    • You can allow QuickBooks to calculate withholding taxes at the standard tax rate within the paycheck.
    • You can 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.
    Assisted Payroll customers: Please contact Payroll Support at 888.712.9702 if bonus check needs to be reported in a prior quarter or year. After you create bonus checks, you need to send them to QuickBooks Assisted Payroll for processing. You can create both regular paychecks and 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.

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