How to Pay Employee Bonuses in QuickBooks Online Payroll

QuickBooks Online Payroll users looking to pay employee bonuses can do so through a dedicated bonus-only payroll run, but the method chosen — gross versus net — carries tax-reporting and deduction consequences that are easy to miss.

Running a Bonus-Only Paycheck

From the payroll workspace, the Bonus only option sits under the Run payroll dropdown rather than alongside the regular scheduled payroll workflow. Selecting it opens a streamlined screen where you choose how the bonus should be entered: as a gross amount or a net amount.

The distinction matters. Entering the bonus as a gross figure lets QuickBooks calculate the applicable taxes and arrive at the net amount on its own. Entering it as a net amount — sometimes called grossing up — tells QuickBooks the employee should receive a specific dollar figure after taxes, and the system works backward to figure out the gross. When you choose the net option, you are effectively covering the employee’s share of taxes on top of the bonus amount.

What Appears on the Pay Stub

When a bonus is processed as a net-pay amount, the resulting pay stub includes a line item reflecting employee taxes paid by the employer. This is a reporting detail worth noting for employees who scrutinize their stubs, as the line can cause confusion if it is not explained ahead of time.

Direct Deposit and Notification Behavior

QuickBooks Online Payroll handles bonus direct deposits differently than regular paychecks in a couple of respects. Employees will not receive an email notification about the bonus from QuickBooks Workforce, so communicating the payment separately is a good practice. Additionally, if an employee has split their direct deposit across two accounts, the bonus paycheck routes to the secondary account rather than the primary one — a detail that has caught users off guard.

Limitations of Net-Pay Bonuses

Choosing the net-pay method introduces a constraint: QuickBooks cannot deduct retirement contributions, health savings account contributions, or garnishments from a bonus entered this way. If those deductions need to come out of the bonus amount, the gross method is the practical choice.

Bonus Items in QuickBooks Desktop

For users on QuickBooks Desktop, the process involves creating a bonus payroll item through the Payroll Item List using Custom Setup, classifying it as a Wage type, and assigning it to an expense account. Once created, the item is added to each employee’s Earnings section in the Employee Center. When running the bonus check through Unscheduled Payroll, the bonus item appears in the paycheck detail and any unrelated earnings items should be removed so the check reflects only the bonus amount.

Desktop users should also note that if the bonus was set up as an Addition rather than a Wage, it lands in the Additions, Deductions, and Company Contributions section of the paycheck rather than the Earnings section — a placement that affects how the amount is taxed and reported.

Supplemental Tax Rates

For both platforms, the accepted guidance points toward using federal and state supplemental tax rates for bonus payments. These flat rates are designed specifically for supplemental wages and are generally the cleaner approach compared to taxing the bonus at the employee’s regular withholding rate.