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Ace Payroll Blog


Dec 01 2014

Year End and Holiday Bonuses

By: Clare Sorg

Posted in: Payroll Education


As the holiday season is upon us, employers may begin to think about year-end and holiday bonuses for their employees.  Below are some items to consider and discuss with your payroll representative.


  1.  Supply the check date in which you want the employees to receive the bonuses.
  2. Provide the check period start and end date that you will want reflected on the employee’s check stub, i.e.  12/1/14 through 12/31/14.


Please consult with your accountant on the preferred method in which to tax the bonus checks.  Using the standard payroll tax tables may not be applicable.  The following are some options that may be recommended.

  1. Supplemental Rate:  Accountants may ask you to advise your representative to use the federal, state and/or city supplemental rates.  If that is the case, please let us know.
  2. Frequency:   If your employees receive a bonus once per year, the accountant may ask that your payroll service use the annual tax table, (or possibly the weekly, monthly, semi-monthly, etc.)  If that is the case, please let us know.
  3. Net Amount:  Your representative will assist in determining how much you will need to gross-up the employee’s pay check in order for them to get paid the specific amount supplied by you.



Decide if voluntary deductions should come out of the bonus pay check, i.e. 401k, SIMPLE, Medical plan, etc.


4.Direct Deposit

Do you want the employees to receive the bonus as a live pay check or paid directly into their bank account on record.   Many of our clients prefer to hand out the live checks to their employees.

Your payroll representative will be more than happy to assist you with any questions and look forward to hearing from you.

Happy Holidays,

Customer Service

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