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.

How do I record this using QuickBooks Desktop? We don't have QB online payroll. Thank you.

How do I book this using QuickBooks Desktop Pro Plus? We don't have QB online payroll. Thank you.

Hello SuzGregz.

Thank you for reaching out to the QuickBooks Community! To assist further, could you share which Desktop payroll service you use? You can check out the link below if you are unsure which payroll service you have.

• Find Payroll Service 

Looking forward to your response. See you soon. 

We don't use a payroll service - we do payroll in house.

It says enhanced payroll but we input payroll manually.

There can be several ways to record your cash/gift card bonus in QuickBooks Desktop (QBDT), Suzgregz. Let's dive into this topic.

It was noted that you're utilizing QBDT Enhanced payroll at the moment and have set up your account to manually record payroll. We can track your cash/gift card bonus as Compensation or Fringe Benefit.

However, before doing so, we must create an additional Payroll Item list and add it to your employee/s. Let's first establish the item, kindly follow the steps below:

1. Go to Lists, then Payroll Item List, and click New in the dropdown.
2. Select Custom Setup, then Next.
3. Choose Addition, then Next.
4. Type the name of the Addition item such as Gift Bonus Pay. Click Next.
5. Pick the Expense Account where you want to track the item, then Next. 
6. In the Tax tracking type prompt, pick:
   • Compensation if you prefer it to show on Boxes 1, 3, and 5 of the W-2.
   • Fringe Benefit if you want to show it on Boxes 1, 3, and 5, reported in Box 14 of the W-2.
7. Click on Next three times, then Finish.

Following that, we need to establish a deduction item to counterbalance the cash or gift card bonus amount on your employee's paycheck.

Here's how:

1. Go to Lists, then Payroll Item List, and click New in the dropdown.
2. Choose Custom Setup, then Next.
3. Select Deduction, then Next.
4. Type the name of the deduction item such as Gift Bonus Offset. Tap Next twice.
5. Pick None from the Tax tracking type ▼ dropdown, then choose Next three times.
6. Choose net pay in the Gross vs. Net prompt, then Next.
7. Once done, click Finish.

Once we've set up the gift card bonus as an item on your payroll, you create a gift card paycheck. You can refer to Step 3 in this article: Create a zero net paycheck.

However, you can enter it as a check or Journal Entry and seek your accountant's guidance upon selecting a category if you're not using any QBDT payroll feature. If you don't have an accountant, you can find one on this webpage: Find QuickBooks ProAdvisor.

I'll be leaving you with this article that discusses various payroll reports to have an overview of your business and employees with their payrolls:

• Run payroll reports
• Create a payroll summary report in QuickBooks
• Customize payroll and employee reports

Don't hesitate to return to this thread if you need further assistance with your cash/gift card bonus in QBDT, Suzgregz. The Community will be at your aid 24/7.

Do you have a video of this transaction? We use Intuit QBO Stand-alone payroll system and this instruction isn't helping me at all.

Let me guide you on how to record a cash/gift card bonus paid to an employee outside of QuickBooks stand-alone Payroll in no time, @LCPQDA71.

While we currently don't have video tutorials on this specific process with QuickBooks Standalone Payroll, there's no need to worry—I can provide you with the necessary steps to get it recorded.

In QuickBooks Online (QBO), the most effective way to record gifts already given to employees is by creating a bonus paycheck. This ensures the gift's value is taxable and will appear on their W-2 form.
 

To start, you need to add the Bonus pay type to the employee's profile. Here's how to do it:

1. Click Payroll from the left menu, then select Employees.
2. Select the employee you want to add the bonus.
3. In the Profile section, choose Pay types and click Edit.
4. Under the Common pay types and tick Bonus.
5. Then select Done.

Once complete, you can proceed to create a bonus paycheck by following these steps:

1. Click on Payroll from the left menu and choose Employees.
2. From the Run payroll drop-down menu, click Bonus only.
3. Choose the relevant settings for the bonus paycheck and click Continue.
4. Select the employee and enter the bonus (gift) amount.
5. Click the pencil icon next to "Payroll options" to make edits.
6. Select your desired payroll options and click Apply.
7. Click on Preview Payroll, then Submit Payroll.
8. If you selected the option As net pay, the pay stub will display Employee Taxes Paid by Employer in the pay section.

Moreover, I'm adding this article to help you learn how to give your employees a bonus check using QuickBooks Payroll. Pay an employee bonus.

Feel free to visit or save these articles for reference when processing payroll in QBO:

• Edit or change employee info in payroll.
• Run payroll reports
• Create a payroll summary report in QuickBooks

Feel free to get back to us if you have more questions about managing your employees cash/gift card bonus in QBO. We are committed to supporting your business endeavors and hope you have a productive day, LCPQDA71!