Question

Gift to an employee

3 replies
82 views

Hello - How do I reflect a gift to an employee that is taxable but has already been given to the employee? In other words, I need to add the value of the gift to their W-2, but I don’t want a new check to be created for the employee. Thanks so much!

Workforce Payroll

M

Mark_R

Moderator

I've got your bank on recording gift to an employee that is taxable, @YKKim.

In QuickBooks Online (QBO), the best way to record gifts that are already given to your employees is to create a bonus paycheck. This way, the value of the gift will be taxable and will reflect in their W-2 form.

First off, let's add the Bonus pay type to your employee's profile. Here's how:

Click Payroll from the left menu, then select Employees.
Select the employee you want to add the bonus.
In the Pay section, click the pencil icon to edit.
Go to the Add additional pay types, then put a checkmark in the Bonus checkbox.
Select Done.

Once done, you can now create a bonus paycheck. Please follow the steps below:

Click Payroll from the left menu, then select Employees.
From the Run payroll drop-down select Bonus only.
Select the applicable settings for the bonus paycheck and click Continue.
Choose the employee, then enter the bonus (gift) amount.
Click the pencil icon beside "Payroll options" to edit.
Pick the payroll options you want and click Apply.
Select Preview Payroll, then Submit Payroll.
If you selected As net pay, the pay stub includes Employee Taxes Paid by Employer in the pay section.

I'm adding this article for more guidance: Pay an employee bonus.

Just in case you want to change your employees' information, feel free to read this article for the detailed steps: Edit or change employee info in payroll.

Please know that I'm just a reply away if you need any further assistance running the bonus paycheck. Wishing you and your business continued success.

Y

YKKimAuthor

Thanks for your response.

Doesn't this essentially create another paycheck? I'm trying to have items flow into payroll that the employee has already been paid. I found the article below after typing my question:

https://quickbooks.intuit.com/learn-support/en-us/receive-payments/create-a-zero-net-paycheck/00/370784

AlexV

Level 10

Let me join this thread, YKKim.

Aside from the bonus check, the zero net paycheck can also work. Though you still need to run payroll for this, the difference is that it'll offset the "gift" while making it taxable.

You'll need to set up an after-tax deduction which we'll use to decrease the net pay. You also need an Other Earning pay type which will be used to add the gift as regular wages.

You can follow the steps on the Record a gift made to an employee section from the article you've found. I've some links for your reference in filing the W-2.

Keep on posting here if you need anything else. I'll be right here!

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