How to correct BONUS paid in QBO?

GIGI83 · ‎December 06, 2020

I have a client who hand wrote a bonus check to his employee for $1000, no taxes were taken out of course. The check has already cleared the bank and ready to add from the bank feed. What is the correct way to fix this?

I see the option for BONUS on payroll. Would I just gross up until the net amount equals $1,000 and then "match" the transaction to the bank feed?

Thanks in advance!

KlentB · ‎December 07, 2020

You've got it right, GIGI83.

You can create a separate bonus paycheck and then increase its net amount until it reaches $1,000.00. This way, you'll be able to match it to the downloaded transaction on the Banking page. I'll show you how to do it:

Select Payroll or Workers from the sidebar menu.
Go to the Employees.
Click Run payroll, then choose Bonus only.
Select the applicable settings for the bonus paycheck, then hit Continue.
Choose an employee, then enter the bonus amount. Make sure that the net amount is equal to $1000.00.
Select the Edit icon beside Payroll options.
Choose the appropriate payroll options, then click Apply.
Select preview and submit payroll.
If you selected As net pay, the pay stub includes Employee Taxes Paid by Employer in the pay section.

Once you're all set up and ready, it's time to categorize and match the bonus paycheck to the downloaded bank transaction.

I've also included an article that will help you track your company's payroll and employee expenses: Run payroll reports.

I'll be right here to continue helping if you need more help in managing your payrolls and bank transactions. Have a great rest of the day.

View solution in original post

KlentB · ‎December 07, 2020

You've got it right, GIGI83.

You can create a separate bonus paycheck and then increase its net amount until it reaches $1,000.00. This way, you'll be able to match it to the downloaded transaction on the Banking page. I'll show you how to do it:

Select Payroll or Workers from the sidebar menu.
Go to the Employees.
Click Run payroll, then choose Bonus only.
Select the applicable settings for the bonus paycheck, then hit Continue.
Choose an employee, then enter the bonus amount. Make sure that the net amount is equal to $1000.00.
Select the Edit icon beside Payroll options.
Choose the appropriate payroll options, then click Apply.
Select preview and submit payroll.
If you selected As net pay, the pay stub includes Employee Taxes Paid by Employer in the pay section.

Once you're all set up and ready, it's time to categorize and match the bonus paycheck to the downloaded bank transaction.

I've also included an article that will help you track your company's payroll and employee expenses: Run payroll reports.

I'll be right here to continue helping if you need more help in managing your payrolls and bank transactions. Have a great rest of the day.

GIGI83 · ‎December 07, 2020

Thank you so much for your help. Would you recommend having fed and state zero?

Charies_M · ‎December 07, 2020

Welcome back, GIGI83.

Let me share additional information with your follow-up question about correcting bonus checks in QuickBooks Online (QBO).

Bonus is considered as a supplemental wage. Thus, it is subject to a tax. The Federal Withholding tax used for bonuses is 22% while the State tax varies on which state you belong to. That said, having the federal and state tax zero is not advisable.

I'm just a post away if you have other questions or concerns. We're always here to lend a hand. Thanks for posting and I wish you have a lovely day ahead.

NumbersByNelson · ‎December 28, 2020

Hi KlentB. I have a similar question. I have a client who issued a handwritten bonus check for $500. Now she wants to have taxes deducted in this week's payroll run. She has full-service payroll in QBO. Can you offer guidance on this? Thanks!

JoesemM · ‎December 28, 2020

Hello there, @NumbersByNelson.

I'd like to redirect you to the right support group available so this gets addressed right away.

Since your client is using QuickBooks Online Full Service Payroll, I'd suggest contacting our Customer Support Team. They can guide you on how to deduct the 500$ from this week's payroll and properly recorded it in QuickBooks.

Here’s how to get in touch with our support team:

Choose the Help menu in the upper right to open the Search window.
From there, scroll down to click the Contact us link.
This will route you to another window where you can type the issue/topic.
Once done, hit the Let’s talk button.
Under the Choose a way to connect with us section, select how you want to reach out to our support team: Start messaging or Get a callback.

Keep in touch if you need any more assistance with this, or there's something else I can do for you. I've got your back. Have a good day!

john-pero · ‎December 28, 2020

@NumbersByNelson Although you can add a gross amount to payroll such that the net pay increases by $500 (and then treat the separate $500 check as an advance payment and deuct in payroll as a repayment of said employee advance) the taxes will not be correct. If you were to hand out a gross $500 bonus the IRS wants, in addition to FICA, FUTA and your state and local taxes a flat 22% FWT!!! When you "gross up" from the net $500 there will be at a minimum over $110 income tax due. But Quickbooks will not calculate it as such and you would have to manually enter it.

I ran a test in Desktop Payroll and for one employee the FWT on a $500 bonus was 12.77% and on another there was zero tax. No consistency

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How to correct BONUS paid in QBO?