Payroll How-To
How to run an off-cycle bonus payroll
Create the off-cycle run
A bonus is paid in an off-cycle run so it doesn’t disturb the regular schedule. The run goes through the same lifecycle, YTD application, and approval controls as a scheduled run: it’s a first-class part of the year, not a side calculation.
Set it up
- Create a new run dated outside the regular schedule
- Add a BONUS earning line per employee (flat amount)
- Apply any 401(k) deferral election against the bonus if desired
- Confirm each employee clears the SSN gate
Correct taxation
From a bonus pool
If the bonus comes from a performance pool, allocate the pool first (weighted by rating), then bring each allocation into the run as a BONUS line: one thread from performance to paycheck.
Approve and post
- Submit and approve under segregation of duties
- Anomaly flags still apply (e.g. large net vs the trailing median)
- Liabilities and the payroll journal are built like any run
- Bonus wages roll into year-end W-2 boxes automatically
Questions people ask
Should bonuses run separately from regular payroll?
Typically yes: a bonus is paid in an off-cycle run using the BONUS earning code, with the same approval and traceability as a scheduled run.
Will an off-cycle bonus over-withhold Social Security?
No. It applies against the same year-to-date ledger, so once an employee hits the Social Security wage base, further wages aren’t taxed again.
Can employees defer 401(k) from a bonus?
Yes. The deferral reduces Box 1 federal-taxable wages but remains subject to Social Security and Medicare.
Where do bonus amounts come from?
Entered directly, or allocated from a performance bonus pool (weighted by rating) and brought into the run as BONUS lines.
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Bonuses paid right, taxed right
Run an off-cycle bonus on the same cap-exact engine as payroll.