Yes, I will ask my accountant...

With that said, how do you handle cash bonuses?

One of my clients that's no longer reachable was/is doing something I've always wanted to do; he's giving his employees cash bonuses few weeks before Christmas time.
His belief is that giving someone $1,000 bonus as a processed payroll check with taxes, 401k contributions, loan repayments and other deductions taken out may result in $300-500 take home.

From what he told me, he would take out 30-50k in cash and give valued employees envelopes with cash. Nothing to sign, nothing to report, Merry Christmas.

In this scenario, how do you think this was handled? Would this be an owner's draw which would then show up as his taxable income?