Create a Bonus Check

Bonus pay should be set up as one of the six miscellaneous pays on the Payroll > Properties > Misc Pays / Ded tab. Make sure that the W2 box is checks so that it will be included in gross wages. Typically, the bonus pay is not marked as exempt from any taxes nor as exempt from workers comp but check with your CPA. The g/l account on this line does not need to be filled in because the system will use the associated department code in the time card entry for the g/l account.

2.	Set up a department code specifically for the bonus pay. Most companies accumulate bonuses into one expense account. Be sure to choose this department code on the time card entry otherwise it will use the department code found in the employee's file.

3.	There are a couple of options to override the calculation of the Federal Withholding and State Withholding taxes on the bonus check:

•For all employees receiving a bonus, we suggest enabling the Override Auto Tax Calc option on the Payroll > Employee > Federal tab. When taxes are calculated you will be able to manually type in the specific tax amounts that you want deducted from the check. This option can replace or be used in conjunction with changing the default Payroll Period as described below.

•Temporarily change the default Payroll Period settings to allow A|B to reduce the normal withholding tax calculation. For example, by changing the default Payroll Period from Weekly to Monthly, the withholding tax will be calculated at a lower amount. You may use this option in conjunction with the Override Auto Tax Calc option in order to edit the withholding tax.

oFor non-salaried employees, temporarily change the default pay period from weekly to monthly or annual on the Payroll > Properties screen. This will reduce the amount of tax calculated on all non-salaried employees in the batch. Refer to the IRS and State publications for withholding table calculations. Be sure to reset your Payroll Periods after the bonus checks have been posted, otherwise all future checks will be calculated incorrectly.

oFor salaried employees, temporarily change the pay period on the employee's record (Payroll > Employee > Pays Tab) to monthly or annual. Be sure to reset your Pay Periods after the bonus checks have been posted, otherwise all future checks will be calculated incorrectly.

4.	You will process the bonus checks through the Enter / Update Time Cards menu option. (Miscellaneous pays cannot be entered through the Time Card Worksheet screen.)

When you enter your time card entries, use the transaction code associated with the bonus pay. This will be code 51 - 56 (misc pay NOT withheld). The term 'not withheld' on this screen has nothing to do with the taxable status of the item; the taxable status is defined in the payroll properties as described in step 1. Instead, 'not withheld' on this screen simply means that the employee will be receiving the amount on his check. (Do not use transaction codes 81-86 for the bonus pay. The term 'withheld' on this screen is used to pay an amount on the check, tax it, then deduct the amount from the check in order to give it to a 3rd party such a union or approved benefit plan.)

When you save your bonus pay entry, the system will automatically bring in the miscellaneous deductions that are set up in the employee's file. Be sure to delete these deductions from the time card screen.

5.	Calculate the taxes as usual. If you chose the override auto tax calculations in the employee file then you will need to manually fill in the FWH and SWH fields with the proper amounts. If you chose to change the payroll periods, then review the tax calculations using the Pre-Check Tax Register.