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bluebird24
January 22, 2024
Question

How to Record Employee Gift Cards in Payroll at a Gross Up Amount

  • January 22, 2024
  • 1 reply
  • 0 views

Our employees receive gift cards on their work anniversary dates. I need to record these through payroll so that they are taxed as compensation but we also want to gross up the amount to eliminate the tax burden on the employee. 

I've researched the "in out" method which allows for the recording of the gift amount but then takes it back out through deduction resulting in a net zero paycheck. In QB Online, this method doesn't seem to allow a gross up option however.

I've also read that I could issue a separate bonus check, which would allow me to choose the gross up amount automatically, but as I understand it, I would be issuing an actual payment with this method. Since these gifts are already purchased and given outside of payroll, I don't want to disburse any more funds.

So is there a way in QBO to record for tax purposes only, not issue any more wages, and gross up the amount to alleviate the taxes to the employee?

1 reply

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AileneA
January 23, 2024

I'll help you learn how to record employee gift cards received, bluebird24.

 

In QuickBooks, you can only create a gross-up as a separate bonus check. Deductions or other earnings won't be included. When creating a gross-up, it's important to remember that it can only be issued as a separate bonus check. It cannot be combined with regular paychecks or other earnings. Additionally, deductions such as taxes or benefits will not be included in the gross-up amount. It's important to factor in these details when creating a compensation plan that provides for gross-up payments.

 

Here's how: 

 

  1. Go to Payroll, then Employees.
  2. Select the Run Payroll dropdown, then select Bonus Only.
  3. Choose  As net pay. Tap Continue.
  4. Enter the pay date.
  5. Pick your employee(s), then enter their net bonus amounts.
  6. If you want to use the supplemental tax rates or add a pay period, click on the payroll options.
  7. Click Preview payroll, then Submit payroll.

 

 

 

Check out this article for more detailed steps: Gross up a paycheck.

 

Don't hesitate to reply anytime if you still have questions or concerns with gift cards. I'm more than willing to assist you. Take care and have a good one. 

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bluebird24Author
January 24, 2024

Thank you for the details on the bonus check. This process will result in additional funds being paid to the employee, though. In our situation, we have already given them a gift card and I am simply trying to record it through payroll as required for cash/cash equivalent gifts but we want to do so at a gross up amount. 

AldritchM
AldritchM
January 25, 2024

Hi there, @bluebird24.

 

Allow me to help you to record the gift card at the gross up amount.

 

I'd suggest creating a bonus check for an amount equivalent to the given gift. gross it up to QB can calculate the gross amount for tax calculations. then add another deduction item for the same net amount to zero out the net amount.

 

You can refer to this article as your guidance: Gross up a paycheck.

 

Additionally, you can check this article to learn how to enter paycheck for @-2 employees: Enter paycheck totals for your W-2 employees.

 

If you need have more questions managing your payroll or banking, don't hesitate to click the reply button. I'm always around to help!

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