These procedures are designed for use with large bonus checks, typically issue at year end or the holidays.
These procedures are NOT recommended for bonus checks that are issued to Techs and other employees who are NOT receiving very large lump sum dollar amounts on a periodic basis. Regular bonus checks may be taxed using the annualized tables in your system and will tax the bonus checks at a slightly higher rate. Regular bonus checks can be combined with hourly and salary pay.
1. Establish a new PAYROLL PERIOD for bonus checks. Example: 2017-Sept-B.
Note: Unless overridden via registry, BONUS amounts (entered on the Labor Journal) will NOT Accrue/post to the GL, regardless of how the Accrue to GL field is checked in the Payroll Period.
Note: PTO Accrual and Bonus Pay Periods
Typically, PTO Hours would not be accrued on bonus payroll periods. Do NOT check the Accrue PTO or the Remote Technician Applet boxes on you Bonus Payroll Period.
2. Establish a new PAY TYPE if one doesn't already exist.
Pay Type Id: Bonus
Description: Bonus
Check Label: Bonus
Rate Factor: 1.000
Show Rate on CK: optional
Hours Type: Other
GL Acct Id: GL for Wages or Bonus Wages
Earnings Grp Id: n/a
3. In the LABOR JOURNAL, enter all bonus amounts using the new bonus Pay Period Id setup in step 1 above (example: 2017-Sept-B).
After inputting zero hours to an overhead Job and your Bonus Pay Type, double click on the MAGNIFY GLASS of the line. Confirm and edit as follows:
Hours: 000.00
Salary? N (not checked)
Extra? N (not checked)
Pay Type Id: Bonus
Bonus Amount: Enter Bonus Dollars to Pay this Employee
Federal Tax Rate:
State Tax Rate:
These fields provide a flat rate override to the Federal / State Income Tax rate brackets in the Employee's Federal (FED-M or FED-S) and State Tax Tables. These fields are intended to be used for Bonus pay only. If these field are blank, the Federal / State Tax Table will be used as before. Enter the appropriate rate for bonuses prescribed by the tax authority.
Important Notes On Usage:
1. The overriding federal and/or state tax rates are applied directly to the Bonus Amount with which they are associated. Taxable wage reductions (125, 401k, etc) are NOT applied to the Bonus Amount before computing FIT/SIT using the special tax rates. Tax is on Total Earnings when using this option. If this is not desired, the old methodology of changing the Employee record's Tax tab to specify a flat tax FED-bonus entry may be used instead.
2. Taxable wage reductions will eventually reduce the Taxable Wages so payroll reports, including W2s, will have the correct info.
Consider the example where an employee received a $10,000 bonus with 20% special FIT tax rate, 10% special SIT tax rate and 5% 401k deduction. In the event special tax rates have been specified, the following is the order in which the calculations occur:
Gross Wages = $10,000
FIT = $2,000 (10,000 x .2)
SIT = $1,000 (10,000 x .1)
401k = $500 (10,000 x .05)
Taxable Wage = $9,500 (10,000 - 500)
4. Run the COMPUTE PAYROLL function for the new bonus Pay Period Id and the print the PAYROLL WORKSHEET before printing your checks to confirm your bonus checks are correct for the new bonus Pay Period Id.
Tip: Use Pay/Deduct Cycle Code XXXX to skip all deductions!
1. Establish a new PAYROLL PERIOD for bonus checks. Example: 2017-Sept-B
Note: Unless overridden via registry, BONUS amounts (entered on the Labor Journal) will NOT Accrue/post to the GL, regardless of how the Accrue to GL field is checked in the Payroll Period.
Note: PTO Accrual and Bonus Pay Periods
Typically, PTO Hours would not be accrued on bonus payroll periods. Do NOT check the Accrue PTO or the Remote Technician Applet boxes on Bonus Payroll Periods.
2. Establish a new PAYROLL TAX TABLE if it doesn't already exist.
Tax Table Id: FED-Bonus
Tax Table Name: Bonus-Federal
Tax Authority Id: FED
Standard Deduction: 0
Tax Employee = Y, Employee Limit = 0
Child Tab:
Limit 999999999.99
Rate 25.0000 (as of 2017; always check your Circular E for the current value)
Addl Amt 0
3. Establish a new PAY TYPE for Bonuses if one doesn't already exist.
Pay Type Id: Bonus
Description: Bonus
Check Label: Bonus
Rate Factor: 1.000
Show Rate on CK: optional
Hours Type: Other
GL Acct Id: GL for Wages or Bonus Wages
Earnings Grp Id: n/a
4. Run the Report PR Employee Tax Table Report before changing any Employee Records.
5.For each Employee who will be receiving a bonus, go to the Employee Record Tax tab and
a. On the FED-S or FED-M line, uncheck the Always Withhold box and clear the Addt'l Amount
b. Add a FED Bonus line. Check the Always Withhold box. The A1 boxes and the Addt'l Amounts fields should be blank.
Tip: Rerun the Report PR Employee Tax Table Report to make sure your new setup is correct.
6. In the LABOR JOURNAL, enter all bonus amounts using the new bonus Pay Period Id setup in step 1 above (example: 2017-Sept-B). In the HOURS CHILD TAB enter zero (0) hours for each Employee to receive bonus checks using an internal Overhead/Admin Job. Change the PAY TYPE ID to Bonus.
After inputting zero hours, double click on the MAGNIFY GLASS of the line. Confirm and edit as follows:
Hours: 000.00
Salary? N (not checked)
Extra? N (not checked)
Pay Type Id: Bonus
Bonus Amount: Enter Bonus Dollars to Pay this Employee
6. Run the COMPUTE PAYROLL function for the new bonus Pay Period Id and the print the PAYROLL WORKSHEET before printing your checks to confirm your bonus checks are correct for the new bonus Pay Period Id (example: Bonus-Sept)
Tip: Use Pay/Deduct Cycle Code XXXX to skip all deductions!
7. After PRINTING CHECKS and before the next pay cycle, be sure to edit your Employees who had received bonus checks to re-establish the proper Federal Tax setup. Your original copy of the Report PR Employee Tax Table will be helpful in doing so.
a. On the FED-S or FED-M line, check the Always Withhold box and re-enter the original Addt'l Amount if applicable.
b. On the FED-Bonus line, uncheck the Always Withhold box. The A1 boxes and the Addt'l Amounts fields should be blank.