How to record a cash/gift card bonus paid to an employee outside of Quickbooks?

Recording all cash gifts in QuickBooks Online Payroll (QBOP) is essential for accurate payroll reporting, Caitie. I'm here to help track this in the program.

In QBOP, we can utilize the "in and out" method since the employee received the gift. To do so, add the amount as regular wages for proper taxation (in), then deduct it from the check since it's already paid (out). The approach ensures correct tax treatment without altering the net pay.

For the detailed process, I recommend following the step-by-step instructions below.

First, I suggest adding a Bonus pay item to your employee's profile (you can skip these steps if you've already done it). Here's how:

1. Go to the Payroll menu and then select Employees.
2. Choose the employee who received the cash gift.
3. In the Pay types section, click the pencil icon to edit.
4. On the Common pay types section, click Bonus.
5. Hit Done.

After that, let's create a zero net paycheck so that it'll offset the gift while making it taxable. I'll show you how:

1. Set up an after-tax deduction for the "out" part and an Other Earnings pay type for the "in" part. Set the after-tax deduction amount to 0.00. Leave the other earnings amount blank.
2. From Payroll, select Employees.
3. Choose Run payroll.
4. In the Other Earnings box, enter the amount the employee received.
5. Select Actions (⋮) and then Edit paycheck.
6. In the Employee deductions section, enter the same amount as the current net pay in the other after-tax box.
7. Hit Save.
8. Click Preview Payroll. Then, select Submit payroll.

Additionally, I've added these resources for your reference in filing and printing the W-2 form at the end of the year:

• File your W-2 forms
• Print your W-2 forms

Please know that I'm just a reply away if you need any further assistance running payroll, creating bonus paychecks, or filing taxes. Wishing you and your business continued success.