Bonus payrolls

Admins with the required permissions can run a bonus payroll if you want to pay a bonus outside of your regular payroll—there's no extra fee to do this.

Important reminders

• Bonus payrolls default to the supplemental 22% withholding rate per the IRS, but this can be changed, whereas a regular payroll will tax the bonus as regular wages.
• If you have more than one employee, use our search, sort, filter, and bulk edit tools to make administering payroll(s) easier.
• If you pay out bonuses on every payroll, set up a recurring payment for your hourly or salaried employees.
• If you enter a timeframe in which an employee has requested time off, the bonus payroll will include and pay out the time off.
• Time tracking hours do not sync to off-cycle payrolls, only regular payrolls.
• Gusto will include the bonus in overtime calculations. If the bonus is discretionary, then it can be excluded from overtime calculations.
  • “Discretionary” means it’s optional for the employer to give or not give the bonus, and you have not promised the employee the bonus, or you are not contractually obligated to pay the bonus.
  • If your bonus is discretionary, then set up a custom earning for discretionary bonuses. Gusto will not include discretionary bonuses in overtime calculations, which is compliant with Department of Labor guidelines.

Run a bonus payroll

If at any point you need to exit to payroll flow, click Save changes for later at the bottom of the page to save this payroll as a draft. The steps to access this draft are the same below.

1. Click the Pay section and select Run payroll.
2. Click Bonus payroll from the list on the right-hand side.
3. On the next page, select the employee(s) this Bonus payroll should apply to.
   • Employees can be selected through the search bar, filtered by department/job titles, or directly via the check-box.
4. Click Continue to enter Step 1 of the Bonus payroll.
   • If at any point you need to edit the employee list during Step 1, select Edit Employees.
5. Once in Step 1, enter a work period.
   • The timeframe in which the employee worked to earn this payment. 
   • If you enter a timeframe in which an employee has requested time off, the bonus payroll will include and pay out the time off.
6. Select the check date.
7. If you have multiple bank accounts set up, select which bank account you would like to process payroll from.
   • If you don't see this option, head to this article to learn more.
8. Select if you want deductions and contributions to be included. 
   • Block all deductions and contributions:
     • We will not make any benefit deductions or contributions. 
       • Important: We're unable to turn off 401(k) deductions and contributions due to the requirements of most plans.
         • For integrated 401(k) with Guideline, Betterment, Human Interest, Vestwell, or other partners, Gusto cannot turn off integrated deductions due to 401(k) requirements.
         • For 401(k) plans managed outside of Gusto, we recommend updating your employees’ 401(k) elections.
   • Make all the regular payroll deductions and contributions:
     • We'll make all your normal benefit deductions and contributions.
     • If your benefits are managed by Gusto, your standard benefit will not automatically be applied unless you choose them to be included.
9. Review the tax withholding rates.
   • If you want to make a change, click Edit rates under the Tax withholding rates section.
10. For each employee, enter the bonus amount in either the +Gross Earnings or +Net Earnings fields.
    • Gross Earnings: The amount of money your employees receive before any taxes and deductions are taken out. 
    • Net Earnings: The amount of money your employees take home after all deductions have been taken out. This is the money they have in their pocket on payday.
11. Adjust the payment method to check or direct deposit if needed.
12. Click Save & Continue.
13. Review the wages and taxes Gusto will be debiting. 
    • If you need to make adjustments, click Go Back.
    • If everything looks good, click Submit Payroll.
14. If you're paying your employee via check, print the check and give it to your employee.
15. You'll receive a confirmation email letting you know that your bonus payroll has been processed.
    • You can view this payroll and other past payrolls by clicking Pay and selecting Pay History. 

Note: If your employee has an active garnishment, you may need to check with the garnishment authority to see if there are specific requirements for garnishing the bonus payment.