How do I set up the income tax deduction on severance pay? The tax should be 10% of the first $5,000.00 and $20% of the next $936.00 for a total of $687.20

Hi there david-inwoodworx,

Thanks for reaching out about your payroll. QuickBooks Online Payroll is a great tool able to help you pay your employees for the hours they've worked. I can point you in the right direction to edit the deductions when running payroll.

When running payroll, you can edit the amount of certain deductions, such as income tax, can be manually edited. This can be accomplished by following these steps: 
 

Go to the Payroll.
Choose Run payroll.
Select the Edit pencil next to the employee you want to edit. Note: You can also make changes on the Preview payroll screen.
Select the disclosure triangle to show Employee and Employee deductions.
Enter the amount of income tax you'd like deducted and select OK.
Repeat for each employee that requires an edit.
When done, choose Preview payroll.
Verify the information is correct and choose Submit payroll.

If you have any other questions, feel free to reach out here.