We are paying out a bonus to our employees on the 13th so I am running an off cycle payroll for that purpose. The CEO wants hard checks for the 16th for manager and Director bonuses at a leadership dinner, so I was going to cut those and add them to the 13th off-cycle but that means that managers and Directors will already see the amount before they are handed the check, which would defeat the experience. Not a logistical problem because I was just going to add the amounts of those (from an accounting perspective) to the payroll which pays out on the 20th (normal cycle.)

This issue is this. The finance director is convinced that if we don't run the manager checks on an off-cycle payroll the manager checks will be taxed at a higher rate than if we did. I've talked about this with the payroll company because that didn't make sense to me and it doesn't make sense to them either. With either way, off cycle payroll or on regular schedule, I have to code the bonuses as Misc Supplemental income that will be taxed at a Misc Supplemental tax frequency. Since bonuses and commissions are taxed at a higher rate that will happen no matter what I do. I explained this to her and she says she prefers to pay the tax later on her bonus. Not sure how I would accommodate that when the payroll system requires me to use a particular code for the bonus and that taxes at a higher rate.

Is this something that companies manipulate so that employees don't have to think about their taxes until later. I'm honestly confused about where this is even coming from. Maybe other payroll software is more agile and allows the flexibility of deferring those taxes until April 15? From my perspective its either that or other employers are not being honest about what a bonus really is.

Where is this gal coming from? Help me out. I won't even pretend to be super savvy at this.