Learn how to pay an employee bonus using QuickBooks Payroll.
Bonuses are fun to pay out for a job well done. Compliment your employees by giving them bonuses. We’ll show you how to pay bonuses in your payroll product.
|Note: Not sure which payroll service you have? Here's how to find your payroll service.|
Step 1: Determine how you want to pay out the bonus
You can pay your employees with bonuses along with their regular pay or through a separate paycheck.
Pay bonus along with the regular pay
- If you pay bonuses along with the employee’s regular pay, the bonus amount is taxed the same way as the employee’s salary.
- Any deductions set as percentages will come out of the bonus.
Pay a separate bonus check
If you pay bonuses separate from the employee’s salary:
- You can apply the federal supplemental tax rate of 22%, or 37% for bonuses of $1,000,000 or more.
- You have the option to pay the bonus as a gross pay or as a net pay. For the net pay example, if you want your employee to take home $1,000, the payroll product will gross this up and you’ll pay the employee part of taxes.
- If you use QuickBooks Online Payroll, your employees won't receive an email notification about their bonus from QuickBooks Workforce.
- Online Payroll Only: Your employees can only have the bonus go to one direct deposit account. If you have an employee you pay with direct deposit to two accounts, bonus-only paychecks will be deposited 100% into the secondary account.
Step 2: Add the Bonus pay type
Follow the steps below for your payroll product.
Step 3: Pay out the bonus
When supplemental wages, such as bonuses, are paid with regular wages on a single paycheck, federal income tax may calculate at a higher tax rate. Direct your customer to review Section 7 of Publication 15 for more information. We recommend that customers create bonuses separate from regular paychecks for appropriate federal tax withholding.
Pay bonus along with the employee's salary
Pay a bonus-only paycheck