A supplemental check entry is an additional payment made to an employee outside their regular payroll check. These payments are typically one-time or irregular in nature and are often used to compensate employees for things like bonuses, commissions, overtime, or corrections to previous payroll errors. 

Examples of supplemental checks: 

• Bonus payments. If an employee is receiving a bonus or incentive pay separate from their regular payroll check, a supplemental check ensures these payments are processed correctly, often with a different tax withholding rate. 

• Expense reimbursements. If an employee is getting reimbursed for business expenses, a separate check may be needed to avoid mixing taxable and non-taxable payments. 

• Correction of payroll errors. If a mistake occurred in a previous payroll check (for example, mixing overtime or underpayment), a supplemental check allows for quick correction without waiting for the next payroll cycle. 

• Severance or special payments. Payments like severance, retroactive pay increases, or settlement payments are sometimes processed separately for tracking and tax purposes. 

• Different tax treatment. The IRS allows flat-rate withholding (22% for federal taxes in the U.S.) on supplemental wages, which may differ from  the employee's regular withholding method. This is useful when processes bonuses or lump-sum payments. 

• Manual payroll adjustments. If an automated payroll settings don't support a specific payment scenario, an override allows manual adjustments to ensure accurate pay. 

Step 1. Enter supplemental check

First, use Calculate Payroll to calculate a supplemental check. Supplemental checks will be included in the next normal payroll. Enter a check for each employee who will be receiving a supplemental check. 

Do this...

1. Open Connect Payroll > Employees > Calculate Payroll. 

2. Click Options  (F12). 

Supplemental checks - Override payroll settings

Click to select the Override payroll settings checkbox. 

Deactivate direct deposit

If you are entering a supplemental check for an employee using direct deposit and you want to print a paper check, select this checkbox. 

Monthly period number

 Select 5. 

Why am I selecting monthly period number 5? Selecting Monthly Period Number 5 will ensure that regular deductions will be skipped. If you need to deduct retirement from the paycheck and compute benefits, then an "A" needs to be set in the fifth pay period frequency on the pay code. To learn more, see How do I set up a pay code to deduct retirement and compute benefits? 

Tax rate (Federal and State withholding rate)

To calculate federal and state withholding tax, select the checkbox, and then enter the federal withholding rate or state withholding rate. 

Where do I learn how to compute tax on a supplemental check? Search the section on Supplemental Wages in the IRS Circular E to review two ways of computing taxes on a check that is compensation paid in addition to the employee's regular wages.

3. Click OK. 

4. Set up the Calculate Payroll options. 

Check issue date

Verify the check issue date. This is the date on which you plan on releasing or distributing the check to the employee. This is the date printed on the check and is considered the day the funds are made available to the employee. 

Journal

Select the journal for recording supplemental checks. Example: PC/PB

Calculate checks for payroll exception entries

Do not select this checkbox. 

Calculate checks for supplemental exception entries

Select this checkbox. 

Selection criteria

In Employee.Employee number, double-click ALL, and enter the employee number(s) who will receive a supplemental check. 

5. Click GO  (CTRL+G). 

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