Bonus Payroll Run Type

Bonus payroll runs automate the process of paying your employees bonuses. They differ from regular or adjustment runs because you manually enter the gross pay amount — no timesheet hours are needed. State and local withholdings are calculated according to an effective date.

Bonus Payroll and Withholding Calculations

Some withholdings, such as health insurance premiums, are not taken on a bonus payroll. In addition, tax withholdings are not based on the tax tables since they presume a timeframe for the calculations; a bonus payroll takes place outside of any payroll period. Because of this, Vision calculates federal, state, and local tax withholdings differently for bonus payroll than for regular or adjustment payrolls.

For bonus payroll runs, Vision does the following:

• Calculates Federal tax withholding as the current percentage recommended for supplemental wage payments. (Refer to Circular E: Employer’s Tax Guide, Government Publication 15.)

• Calculates State and local tax withholdings using an effective rate, which is equal to the Year-to-date Amount of State or Local Withholding divided by the Year-to-date Amount of Gross Pay Subject to the State or Local Tax Withholding.

• Calculates all other withholdings as usual.

Be sure to review withholdings after running a bonus payroll to make sure that the information is correct.

Tracking the Cost of Bonus Runs in the General Ledger

When you run a bonus payroll, no labor distribution takes place because no timesheet hours are posted, and certain withholding accounts receive larger or smaller amounts than during a regular payroll run.

To track the cost of bonuses, you specify an account in the Bonus Cost field on the General tab of the Payroll Setup form. You can specify the Job Cost Variance account, or another account dedicated to bonus payroll.

Alternatively, you can record and track bonus cost as other pay. To do this, create an other pay field called Bonus on the Other Pay Setup tab of Payroll Setup. Specify the desired account in the corresponding other pay cost Account field and then enter the bonus amount in the Bonus field on the Employee Review tab of the Payroll Processing form for each employee.