Off-Cycle Payroll

Your payday is set, and some payments can't wait for it.

SurePayroll® By Paychex plans include unlimited payroll runs, so an extra run between payday can be part of your workday. It's still payroll: you withhold on the payment, and you deposit and report it based on the date you pay it.

Common reasons to run an off-cycle payroll

You run an off-cycle payroll when a payment needs to go out before your next scheduled payday. Common reasons include:

• A bonus or commission you want to pay now
• An underpayment, such as hours left off an employee's last paycheck. For other fixes, read how to correct a payroll error.
• A final paycheck for an employee who's leaving
• A new hire who missed the payroll cutoff
• A retroactive raise

Off-cycle payroll taxes, deposits and reporting

Running payroll off schedule doesn't make wages tax-free or take them out of payroll tax reporting. You generally withhold the same applicable federal taxes, and owe the same applicable employer taxes, as you would on a regular payroll. How you withhold federal income tax on supplemental wages, such as a bonus, can depend on whether you pay them separately or with your regular payroll. For how withholding works, see payroll withholding.

You report the wages on Form 941, Employer's Quarterly Federal Tax Return, for the quarter you pay them, and include them on each employee's IRS Form W-2, Wage and Tax Statement. The federal tax deposit for those wages is due based on that payday, the same as any other payday.

If the payment is a bonus, how to pay an employee bonus explains bonus withholding.

Off-cycle payroll vs. supplemental wages

The two terms overlap, but they aren't the same thing. Off-cycle payroll describes when you pay. Supplemental wages describe a type of pay.

Under 26 CFR 31.3402(g)-1, supplemental wages are "all wages paid by an employer that are not regular wages," such as bonuses, commissions and back pay. The same regulation says supplemental wages "include wage payments made without regard to an employee's payroll period, but also may include payments made for a payroll period."

So a bonus you add to your regular payroll run is still supplemental wages, even though you pay it on schedule. Whether wages are regular or supplemental matters for withholding.

‍Publication 15 (Circular E), Employer's Tax Guide, covers supplemental wages in section 7.

Off-cycle payroll vs. regular payroll

The primary difference between regular and off-cycle payroll is timing.

How to run an off-cycle payroll

Say you want to pay a $500 bonus to one employee. You run it in four steps:

1. Choose who you're paying. Include only the employee receiving the bonus, not your whole team.
2. Enter the pay type and amount. Record the payment as a $500 bonus.
3. Review the withholding and net pay. Check the tax withholding and the employee's take-home amount before you approve.
4. Approve the run and set the pay date. Allow for your direct deposit lead time so the bonus arrives on the date you choose.

Unlimited off-cycle payroll runs with SurePayroll

SurePayroll plans include unlimited payroll runs, so you can run an off-cycle payroll for a bonus, a correction or a final paycheck at no extra charge. Off-cycle runs use the same direct deposit lead time as your scheduled payroll.

Compare SurePayroll plans

Related terms

• Payroll processing: calculating, withholding and paying employee wages, and depositing and filing the related payroll taxes.
• Payroll withholding: the taxes and deductions taken out of an employee's pay.
• Payroll check: a paycheck issued through payroll.
• Pay period: the span of work one regular paycheck covers.
• Pay frequency: how often you run payroll and pay employees.