How to Create Bonus Checks with QuickBooks Payroll?

QuickBooks Payroll allows you several options to pay bonuses to your employees like paying a bonus on a regular paycheck, on a separate paycheck, or pay your employees with a gift certificate. You can have this article handy for reference if you need additional information when creating bonus checks in QuickBooks Payroll.

Creating / Setup Bonus Checks In QuickBooks Payroll

With the end of financial year approaching, many organizations around the globe would be thinking of awarding their hard-working employees with better remuneration.

For many of these organizations, taking in parameters of employee performance and experience and calculating the amount of bonus to be circulated can be mind boggling. Creating each separate check and putting signature onto is will cost a lot of time and effort. With QuickBooks this problem can easily be solved.

With QuickBooks Payroll, you can either create a complete paycheck that contains the salary as well as bonus or create separate checks for bonuses. Bonuses are also subject to taxes.

This is why we must consider the various tax imposed on paying employees to be applicable on bonuses as well. These taxes are applicable on bonus payment despite the payment mode. You may choose to pay through bank account, credit card or paychecks.

With QuickBooks Payroll, the stored data can be used to calculate taxes. Though most of these taxes are normal and QB cannot calculate supplemental rate applicable on Federal taxes and state taxes that are also to be paid on bonuses.

What are supplemental wages?

Any wage that is given in addition to the normal wage of the employee is deemed as supplemental wage. These can include the tips, commissions, overtime payments, bonuses, etc.

These wages are not subjected to the same tax laws that regular wages are subjected to. Further, there is no necessity to pay taxes on supplemental wages and regular wages at the same time. A seven day period is given for tax payment on regular wages but the same isn’t true for taxes on supplemental wages.

How much is the Tax on Supplemental Wages?

There are a number of factors this percentage depends upon.

1. Condition One: Supplemental Wages less than 1 million USD

A flat rate on 25 % can be held on both the wages combined. You can also choose to pay the tax separately. This way you can pay later but the percentage of tax cut may differ from the fixed rate.

These rates are implemented by IRS. Also, many complicated calculations are involved in separately calculating the tax on these individual wages.

2. Condition Two: Supplemental Wages more than 1 million USD

On combined wages there can be a combined rate of 25 % but on supplemental wages more than 1 million USD tax has to be calculated separately.

This tax is to be paid at 35% on the amount exceeding 1 million USD. This way, a huge amount is saved from being taxed at a high rate, only the amount that supersedes 1 million USD is taxed.

Fixing Bonus Checks Related Issue in QuickBooks Payroll

There are taxes on the other forms of payments of supplemental wages. Tips are taxed along with trips commissioned by organizations and overpay is also subject to these taxes.

To stay on top of these taxes is an arduous task. Most people hate gutting out their pockets at tax time but it is important to pay taxes and not only to avoid hefty penalties. With QuickBooks Payroll support this process simplifies substantially. To know more, contact us at 📞+1844 827 3817 (Toll Free.)

FAQs

  1. Why do I need to create a separate bonus paycheck instead of adding to a regular paycheck?

    There can be several reasons to create a separate bonus check instead of adding to a regular paycheck:

    💠 Turn off the direct deposit to search for the bonus.
    💠 Your employee has accumulated $1,000,000 or more in extra salaries, and you are allowed to withhold federal taxes at 37%.
    💠 Govern the tax treatment of incentives. Or withdrawing deductions from the savings plan.
    💠 You’re paying off-cycle incentives. Not on a planned payday.
    💠 Deliver a bonus check to the employee as a special occasion. Produce a separate bonus paycheck.

  2. How to add the bonus pay type to the employee profile in QuickBooks Online Payroll?

    Initially, select Workers and then choose Employees. Choose the Name of the employee. In the section of Employee details, select the pencil icon which is next to Pay. Choose the Add additional pay types and then choose Bonus. At last, hit done.

  3. How to add the Bonus to a paycheck in QuickBooks Online Payroll?

    In the beginning, select Workers and then choose Employees. Select the Run Payroll. Next, choose the employee and then enter the amount within the Bonus field. In the end, hit Preview and then Submit payroll.