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February 23, 2024
Question

Bonus pay

  • February 23, 2024
  • 1 reply
  • 0 views

Enhanced Payroll

If a payment is added to an employee on a regular paycheck but identified as a "Bonus", will it be taxed at the bonus rate automatically or be paid at the normal tax rate the employee normally would pay based on the total payroll paid? I've seen comments going both ways, and I'm curious what QuickBooks does. Thanks.

1 reply

February 23, 2024

I appreciate you bringing up this concern here in the Community, @DeadWood. I'd be glad to share information about supplementary wages in  QuickBooks Desktop (QBDT).

 

Bonus items in QuickBooks Desktop are created the same way as other wage items. If you pay supplemental wages using the same withholding method as for regular wages, federal income tax will be withheld as a single payment for the standard period

Meanwhile, if you pay supplemental wages separately or combine them in a single payment, the method for federal income tax withholding depends on whether you withhold income tax from your employee's regular wages.

Let me show you below how to set up your bonus by utilizing the payroll item list :

 

  1. From the Lists menu, choose Payroll Item List.
  2. Right-click anywhere in the list, then select New.
  3. For the Select setup method, choose Custom Setup, then press Next.
  4. Choose Addition, then Next.
  5. Add the name of the payroll item, then press Next again.
  6. Pick a Tax tracking type corresponding to how the grant is reported on the tax forms.
  7. Click Next three times, then add the default rate.
  8. Once done, click on Finish.

As for tax subjects, it's subject to the same standards as other taxes. In addition to federal withholding, a supplemental tax rate of 22% is included in calculating the withholding tax. You can check this article for more details: Pay employee bonuses.

 

You can also refer to this article for more guides on managing your bonus rate in QuickBooks Desktop: Internal Revenue Service(IRS).

 

I've also attached this article for further reference in setting up a payroll schedule in QuickBooks Desktop: Create and run payroll.

 

Community space is open 24/7 if you need further assistance regarding Payroll concerns. I'll be around for you. Have a good one.