Summary
Taxes calculate differently on bonus checks, can I change them manually?
Cause
When you process a check the taxes are annualized depending on the Pay Frequency. The Pay Frequency is determined by the Pay Group.
Resolution
Options in regards to bonus pays.
- Recommended: Setup the Bonus pay as an other Pay type, and check the Supplemental check box. Enter a supplemental rate or formula on the withholding tax rate setup. See How do I set up bonus pays or supplemental wages to be taxed at a specific rate in US Payroll? for more detailed information.
- Use Enter Checks and enter a Second Sequence check for the Bonus check. Paying this as a separate check for the employee. See How do I enter a bonus pay or second sequence check and have only taxes calculate? for more detailed information.
- Manually adjust the withholding tax amount using Enter Checks. You would do this after processing the check with the bonus pay on it. See How do I adjust my taxes manually on a Payroll check that has not been printed? for information on how to adjust tax amounts in Enter Checks.
- Change the Pay Frequency associated with the Bonus Pay check using Enter Checks. Note: Do this only when the Bonus Pay is the only pay on the check. See How do I change the annualization pay periods for taxes on one check? for further information.