I have one employee that I am trying to give a bonus to but it will not deduct any income tax.

Hi Sherri60,

Thank you for reaching out to us in the Community. QuickBooks Online Payroll is a dynamic program that allows you to pay your staff with peace of mind. It's great to hear that you'd like to give your employees a bonus. I'll be happy to provide more information on calculating income tax on the bonus for your employee.

You can deduct income tax from a bonus to an employee by following these steps:

1.     Set up a bonus item:
•      Go to the Gear icon at the top right corner and select “Products and Services.”
•      Click on “New” and choose the type of item. Select “Service” for a bonus.
•      Set up the bonus item with a name, description, and income account.

2.     Process the bonus payment:
•      Go to the “+ New” button.
•      Select “Pay Employees” or “Check” under Vendors, then choose “Bonus” as the pay type.
•      Enter the bonus amount for the employee.

3.     Tax setup for the bonus:
•      Ensure the employee’s tax information is accurate in their profile.
•      When creating the bonus pay, QuickBooks Online will automatically calculate the income tax deduction based on the employee’s tax details.

4.     Review and submit:
•      Review the details of the bonus payment, including the calculated tax deduction.
•      Click “Save and close” or “Save and send” to process the transaction.

QuickBooks Online should handle the tax deductions automatically based on the employee’s tax setup. However, if you’re uncertain about tax calculations or want to ensure accuracy, it’s advisable to consult with an accountant or a tax professional to ensure compliance with tax regulations and accurate deductions.

Feel free to use the article below for more information on pay types in QuickBooks Online:
Understand supported pay types and deductions in QuickBooks Online

I hope you find this to be helpful! If you have any other questions, please don't hesitate to reach out.