How to account for company bonus

My company is paying us a "tech allowance" at the beginning of each month. I have an "account" labeled "Salary", in there I have 2 transactions. 1 for paycheck in, and 1 for paycheck out (which is where I record the deduction details - such as taxes, health insurance, etc. ). The tech allowance shows up on my paycheck under "Earnings" but it does not change my base pay. It is not counted toward taxes. Currently it shows up as a negative in the Paycheck Out transaction and does increase my "checking deposit" (take home) Any clues how I should actually record it?

Best Answer

  • UKR
    UKR SuperUser ✭✭✭✭✭
    Accepted Answer
    IMHO, your paycheck could and should be recorded directly in your checking account as one transaction, containing all the details, i.e., gross salary, deductions, retirement contributions, etc.
    To set up this transaction one would normally use the Paycheck Setup wizard available from the Tools  menu / Manage Bill & Income Reminders / Add Income Reminders.
    To create a single register transaction containing all the details please see https://help.quicken.com/pages/viewpage.action?pageId=3216722
    For other transactions where you need to split the amount into two or more categories, please read https://help.quicken.com/pages/viewpage.action?pageId=3217280&src=search

    Now, it may be possible that the paycheck setup wizard won't let you add the "tech allowance" as a non-taxable amount without impacting taxable gross / W2 amounts. (I'm not too experienced with the inner workings of the paycheck wizard). If that's the case, and given the fact that you only get one amount per month, I recommend you create a separate income transaction reminder, payee = "Company Name - Tech Allowance" and categorize it to something like "Misc. Income", a new category with no tax line item assigned.
    Execute your paycheck reminder as usual, without the allowance, twice a month.
    Execute the additional allowance reminder once a month.
    Record your internet / phone bills as you did before, to the regular Utilities:Phone category (or whatever you use).
    This may make reconciling your checking account a little more difficult because you now have 2 Quicken register transactions to be reconciled against 1 checking account deposit, but that's not too complicated to do.

Answers

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    Others will probably be better at answering a question that involves needed to take into tax consequences, but it seems to me that something needs to be made clear first.

    When people usually talk about a "Company bonus" that would be taxable just like any other income.  On the other hand you say this is a "tech allowance" if this is some kind of allowance to pay for "company expenses" then that would be handled completely differently.

    To properly answer what to do I think that needs to be cleared up.
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • hulakumu
    hulakumu Member ✭✭
    Apologies. I should have been more clear on tech allowance. It is what the company pays in the first paycheck of each month since COVID 19 to help offset internet expenses while we work from home full time.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    Do you have to provide your Internet bill to receive this?
    And does the amount paid correspond to your Internet bill?
    OR, it is just a fixed amount no matter what your internet bill is/
    Lastly, you probably need to contact your payroll dept to determine how this is going to be reported at year-end.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • hulakumu
    hulakumu Member ✭✭
    I finally was able to locate the 10/8/2020 email notification from the company leaders on this "tech allowance". We do not have to produce a bill or any proof. Per the email: "Those eligible will receive the tax-free monthly allowance ..."

    I hope this helps!!
  • UKR
    UKR SuperUser ✭✭✭✭✭
    Accepted Answer
    IMHO, your paycheck could and should be recorded directly in your checking account as one transaction, containing all the details, i.e., gross salary, deductions, retirement contributions, etc.
    To set up this transaction one would normally use the Paycheck Setup wizard available from the Tools  menu / Manage Bill & Income Reminders / Add Income Reminders.
    To create a single register transaction containing all the details please see https://help.quicken.com/pages/viewpage.action?pageId=3216722
    For other transactions where you need to split the amount into two or more categories, please read https://help.quicken.com/pages/viewpage.action?pageId=3217280&src=search

    Now, it may be possible that the paycheck setup wizard won't let you add the "tech allowance" as a non-taxable amount without impacting taxable gross / W2 amounts. (I'm not too experienced with the inner workings of the paycheck wizard). If that's the case, and given the fact that you only get one amount per month, I recommend you create a separate income transaction reminder, payee = "Company Name - Tech Allowance" and categorize it to something like "Misc. Income", a new category with no tax line item assigned.
    Execute your paycheck reminder as usual, without the allowance, twice a month.
    Execute the additional allowance reminder once a month.
    Record your internet / phone bills as you did before, to the regular Utilities:Phone category (or whatever you use).
    This may make reconciling your checking account a little more difficult because you now have 2 Quicken register transactions to be reconciled against 1 checking account deposit, but that's not too complicated to do.

  • hulakumu
    hulakumu Member ✭✭
    @UKR - thank you for your suggestions. I've been using Quicken since before dirt was born (;-0). Okay, since the mid-90's. I never knew there was a paycheck wizard!

    The additional checking account deposit is doable and not inconvenient.

    Thank you again!