Correction, we would not print a "paper check" because the extra amount from grossing up the amount will go into the employee's net pay to pay for the taxes. This "other pay" will be added to the employees weekly check. Anything else I am missing?

I forgot that I would also need to create a deduction to cancel out the gift certificate amount on the check.

If this amount should be included in their payroll totals, then you would want to set it up as either a fringe benefit or a bonus. See resolutions ID:20995 How to set up and process fringe benefits; ID 18656 How to process a bonus check; 18032 How to gross up a net value check
If this amount does not be included in the payroll totals, then do not process a check out of payroll. Just use the Cash Management Instant Check option to purchase the gift certificate and expense to the appropriate expense account.
Otherwise, if you have other questions regarding this process, I would suggest calling support at 800-447-5700 to speak with a support analyst.

Thank you but unfortunately checks have been printed and signed and will go out today. I grossed up the total of the gift card as an "other pay" and then deducted the total of the gift card with a deduction. This got me the correct taxes but removed the gift card from the payroll totals which isn't what I wanted to do. I will have to fix this on the next payroll with a tax free company paid deduction .

I compared the W2 with check stubs and found that it did include the grossed up total of the card on the W2 so although it probably wasn't the best way to do it, the way I did it did work.

I am glad you were able to get the results you needed!