Boss paid EOY bonuses via check and did not withhold taxes

You've come to the right place for assistance, fbyrc11. I can help you record the employee bonuses paid via the check and ensure they are reflected correctly on the W-2 forms.

In QuickBooks Online (QBO) Payroll, the most effective way to record bonus checks given to employees is by creating a bonus paycheck. This process ensures the transaction will appear on their W-2 form.

First, I suggest adding a bonus pay item to your employee profile (you can skip these steps if you've already done it). Here's how:

1. Go to the Payroll menu and then Employees.
2. Choose the employee who received the cash bonus.
3. In the Pay types section, click the pencil icon to edit.
4. On the Common pay types section, tick Bonus.
5. Hit Save.

Next, run a bonus-only payroll. Please follow the steps below:

1. Go to the Payroll menu and then Employees.
2. From the Run payroll drop-down, select Bonus only.
3. Choose between: As a net pay - the employee gets the exact bonus amount. Taxes are still calculated but will be a company-paid tax or As a gross - the program will figure out the net amount for you.
4. Click Continue and choose the employee.
5. Enter the Bonus amount and pick Paper check under the Pay method option.
6. You can Preview payroll details before submitting.
7. Submit payroll once you're ready.

I'm also including this article to learn more about this process of issuing bonus checks to your employees using QBO Payroll: Pay an employee bonus in QBO 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

Maintaining accuracy and efficiency in your payroll operations is essential, fbyrc11. The Community is just a reply away if you need any further assistance creating bonus paychecks. We're committed to supporting your business endeavors and hope you have a productive day!

Thank you so much!

Unfortunately this does not quite solve my problem. My boss does not want the company to pay the taxes on the bonuses - he still wants the employees to pay, just as part of their taxes when they file individually next year. So he just directly paid them the gross amount.

I'm starting to feel like this was a bit of a screw up on everyone's part. I tried to talk him out of doing it this way but then was sick and out of the office the day he gave everyone their checks. Sigh.

Any solution here beyond get an accountant involved to properly do the W-2s?

Hi @fbyrc11! I hope you're doing well. I wanted to take a moment to discuss the ongoing issue concerning taxes and bonuses related to your employees.

I appreciate the effort in following the steps provided by my colleague. Since the issue is unresolved, I recommend contacting our support team for assistance from our payroll corrections team. Additionally, I suggest consulting a tax accountant before making payments and filing taxes.

Here's how to contact support:

1. In your QuickBooks (QBO) Online account, click the Help icon at the top right corner.
2. Click the Search tab.
3. Type "Talk to support" then hit enter.
4. At the lower right side, click Contact Us.
    

Moving forward, managing deductions allows for better tracking and reporting of employee benefits, which can be useful for decision-making and budgeting.

Moreover, a year-end checklist for QuickBooks Online Payroll enhances organization, compliance, and overall payroll efficiency, paving the way for a smoother transition into the new year.

Thank you for your attention to this matter, @fbyrc11. By addressing these tax concerns and your payroll processes, you can focus on driving your business forward without distractions. Our support team is here to assist you, so feel free to reach out with any questions.

@fbyrc11 

"My boss does not want the company to pay the taxes on the bonuses - he still wants the employees to pay, just as part of their taxes when they file individually next year. So he just directly paid them the gross amount."

With all due respect, your boss doesn't get to decide what payroll tax laws they want to follow and which ones they don't.  When employees get a bonus, they should not have to worry about how the taxes are going to be paid but in this case they will because your boss has made it so the employees need to budget for federal and state income tax.  Bonuses are subject to 22% federal withholding (and state income tax if applicable) and the employer and employee portions of FICA (15.3%) when paid.  That generally covers the income tax due for the employee.  

"I'm starting to feel like this was a bit of a screw up on everyone's part."

This is on your boss, not you.  Having owned several businesses myself and giving year-end bonuses to key employees, I understand wanting to maximize the bonus given to employees.  However, doing it the right way is always best.  At this point, IMO, the best way to handle this is to run the gross-up bonuses through payroll (so the net pay equals what your boss gave to each employee), just don't issue the payments to the employees since they were already made.