Cash bonus payments included for tax

I'd be glad to guide you in handling your taxable cash payments in QuickBooks Desktop Payroll, Deadwood.

Indeed, you are correct. To manage cash bonuses effectively, you'll need to set up two separate payroll item lists in QuickBooks: one for taxable bonus (Cash Bonus) and another for non-taxable bonus (Bonus Reverse).

Here's how:

1. Go to Lists, then select Payroll Item List.
   
   
2. Click Payroll Item, then New.
   
   
3. Choose Custom Setup and hit Next.
   
   
4. Select Wage, then Next.
5. Choose Bonus, then Next.
   
   
6. Enter the name of this item "Cash Bonus", then click Next.
   
   
7. Select the income account you want the item to track to, then select Finish.

Next, apply the same process to the non-taxable item (Bonus Reverse).

When processing your employee's payroll, include the taxable item (Cash Bonus), so QuickBooks will automatically calculate the taxes for the bonus payment. Then, enter the non-taxable amount for deductions to offset the cash bonus amount

For detailed information and steps, you can utilize this article for reference: Pay employee bonuses.

Moreover, I've added this article as your reference if you want to print paychecks and pay stubs: Print or reprint paychecks and pay stubs.

Keep us posted if you have further questions about handling cash payments in QuickBooks Desktop. We'll be here to lend a hand at any time.

You said "For deductions, enter the non-taxable amount as a negative figure to offset the cash bonus amount."

If the item "Bonus Reverse" is created as a Deduction type, I don't think you enter it as a negative amount ...?? A deduction is automatically subtracted from the amount to pay, just like other deduction items (insurance cost, garnishments, 401K contributions, etc.)  

Did I miss something, or did you not really mean to "enter" is as a negative amount?

You haven’t overlooked anything, and there’s no need to input a negative figure since deductions are deducted from pay automatically, Deadwood. Let me clarify the process for recording bonuses to ensure a correct calculation of the tax amount.

Itemizing deductions such as insurance expenses, garnishments, and 401K contributions within the Payroll Info will automatically lower your income. In this scenario, the Cash Bonus and Cash Reverse will be deducted from an employee’s earnings without needing to enter a negative amount.

Alternatively, creating a bonus item from the Payroll Item List enables you to add it to the Earnings section. Therefore, we can establish a custom entry for the Cash Bonus and a deduction-type entry for the Cash Reverse. I'll show you how:

1. Go to Lists, then select Payroll Item List.
2. Click Payroll Item then New.
3. Choose Custom Setup, then Next.
4. Select Wage, then Next.
5. Choose Bonus, then Next.
6. Input Cash Bonus as the name of this item, then Next.
7. Select the expense account you want this item to be associated with, then Finish.

Next, follow these instructions for the Reverse Bonus:  

1. Go to Employees, then Employee Center.
2. Select your employee. 
3. Select Payroll Info, then add the bonus item in the Additions, Deductions, and Company Contributions section.
4. Select OK.

I'm adding some screenshots below for reference:

Additionally, you can pay the bonuses on separate paychecks or include them with regular ones. To proceed, scan Step 2: Pay out the bonuses in this article for detailed instructions: Pay employee bonuses.

Moreover, you can print your paychecks or pay stubs in QuickBooks Desktop Payroll to provide them directly to your employees.

I’m just a message away if you have any additional questions or concerns regarding the documentation of bonuses for tax purposes in QuickBooks. Stay safe.

Is there a way to do this in Quickbooks Online, as well? If so, how?

Yes, there's a way to accomplish this in QuickBooks Online (QBO), @Taxdunce. I'd be happy to guide you through the step-by-step process, ensuring you can achieve accurate payroll reporting.

You have the option to record cash bonus amounts as either Cash Tips or Paycheck Tips. When you choose to record Cash Tips, you have to enter the exact amount during your regular payroll processing. For Paycheck Tips, we need to create a payroll item first that pertains specifically to Deductions and Contributions. This setup is essential to ensure that the cash bonuses are accurately reflected in your payroll system.

When utilizing Cash Tips, we can directly proceed to generate a standard payroll for that customer. During this process, manually input the cash bonus amount into the Cash Tips section. This approach ensures that the pay stubs provide a comprehensive breakdown of the employee's total earnings, clearly highlighting the cash bonuses along with their regular wages:

1. Click on Run Payroll.
2. Select the pay schedule, then click Continue.
3. Put a checkmark on the employee.
4. In the Cash Tips section, enter the specific amount for the cash bonus.
   
   
   
   
5. Click Preview Payroll.
6. The cash bonus will now be reflected in the Other Pay section.
   
   
   
   
7. Click Submit Payroll.

On the other hand, if you plan to use the Paycheck Tips, please follow these detailed steps to create a payroll item:

1. Go to the Payroll tab and select Employees.
2. Click on the Edit payroll items option.
3. Click on the New payroll item dropdown and select Deductions & Contributions.
   
   
   
   
4. Select Other deductions for the Deduction/contribution type.
5. You can also enter a description to track it easily, then click Create.
6. Click Assign Employee and assign it to a specific employee on the list, then click Next.
   
7. Select Flat amount for the Calculated as dropdown and enter the amount for the cash bonus.
   
   
   

Once you've completed the necessary steps for creating a payroll item, we can run a regular payroll for that employee. Make sure to enter the specific cash bonus amount in the Paycheck Tips section. This ensures that the cash bonus will appear in the Employee Taxes & Deductions and will be included in the calculations:

1. Click on Run Payroll.
2. Select the pay schedule, then click Continue.
3. Put a checkmark on the employee.
4. In the Paycheck Tips section, enter the specific cash bonus amount.
   
   
   
   
5. Click Preview Payroll, then Submit Payroll.
   
   
   

To ensure that all payroll information is accurately represented, it’s a good practice to generate a payroll summary report using your QuickBooks payroll system. This report will give you a comprehensive overview of your payroll expenses, detailing the amounts you've paid to employees including deductions for employee taxes and any contributions made.

If you're feeling uncertain about how to generate reports, interpret the data they contain, and gain a clear understanding of your financial situation, we provide QuickBooks Live Expert Assisted. Our experts are available to guide you through the entire process, providing personalized support to help you navigate the complexities of your financial reports and make informed decisions for your business.

Properly documenting employee cash bonuses is crucial for maintaining an efficient payroll system. Do you have any follow-up questions? Let me know below and I'll assist you right away.