To reduce the amount of tax withheld, choose one of the following options:
Note: Consult a certified tax accountant, the IRS, or your state revenue office to determine how taxes should calculate on bonuses

 

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. How do I set up bonus pays or supplemental wages to be taxed at a specific rate in US Payroll?
• 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.
• 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.