Bonus checks, cash and/or gift card values are required to be added to an employee’s gross pay;
– for taxes, per IRS guidelines for all locations
– for 401k voluntary contributions per SEC guidelines
– for 401k employer match & discretionary percentages
– for the Lay Pension Frozen contribution, for Archdiocese retirement locations
NOTE: Please do not record a separate physical check in Dayforce under the Checks tab as “Manual”. See the instructions below for Quick Entries.
We recommend including the bonus in a regular pay run and keeping the processing simple (ex: December 15 pay) as a Quick Entry for “Bonus” or “Bonus – Christmas.” This will assure that the correct taxes and deductions are processed and give you an extra payroll before the year end in case a correction is needed. At the Chancery, we create bonus letters with a Christmas greeting indicating the specific bonus/gift amount that will be listed on the employee’s earning statement.
Bonus pay needs to be added into Employee Gross Pay in your payroll for the month the bonus is paid via Quick Entry. This will assure the bonus is taxed correctly and that the 401k contribution will be calculated correctly based on total gross pay. The employee’s earning statement should accurately list taxes and the 401k deductions that apply to their total gross pay, (with the bonus amount included in the gross).
- Bonus included with regular pay direct deposit: (recommended)
Payroll>>Quick Entry>>Code – “Bonus” or “Bonus – Christmas” (The Bonus code will tax at the employee’s regular pay rate and include the bonus pay with 401k & Lay Pension Frozen contributions).
Create bonus letter or certificate that states the bonus amount.
- Separate Physical Check (from Accounts Payable):
On the next Regular Payroll>>
1st Quick Entry>> Code – “Bonus” or “Bonus – Christmas” (The Bonus code will tax at the employee’s regular pay rate and include the bonus pay with 401k & Lay Pension Frozen contributions).
2nd Quick Entry>> Code – “Advance” – positive amount will result in a negative. Add a comment with the physical check number.
Result: The bonus will be added to gross pay and the taxes and deductions that need to be deducted from the bonus will be deducted from the employees regular pay.
- See link below for import instructions: Do not use this option unless you have comprehensive knowledge of both Excel and Dayforce. We suggest you test your import first with a single record, before entering all your data. Please do not call the Chancery for assistance on this option.
Import instructions to create a CSV file and load data for import into Dayforce.
We recommend including the bonus in a regular pay run to be included with regular pay as a direct deposit. The amount will be listed on the earnings statement as Bonus. A simple Bonus letter or certificate can be created for the employee that reflects the amount of the bonus, (you can get creative). It can be noted that the bonus will be added to your gross pay for the payroll date.
Eligible employee bonus pay is subject to set voluntary contributions and both the 2% 401k match contribution, (if a Voluntary contribution is made) and the 2% 401k discretionary contribution, (regardless if a voluntary contribution is made or not). The Archdiocese 401k Plan policy requires that employee and employer 401k contributions be based on total W2 gross wages, which includes bonus or gift pay.
DONATIONS or GIFTS:
IRS RULES ON MONETARY DONATIONS/GIFTS If parents or parishioners write a check to the school or parish as a donation and the school or parish then presents a bonus to an employee of all or a portion of that money, the full amount of the bonus is taxable and should be included in the employee’s gross wages. The donation from the parent or parishioner is considered a charitable contribution and is tax deductible to the person making the donation.
Holiday gifts, such as a turkey, gift basket, etc. with nominal value are considered “de minimis” for fringe benefit taxation. For a complete overview of fringe benefit taxation please visit www.irs.gov.