Work out Gross Pay

Your gross pay is your total monetary compensation for a given time period, prior to any deductions for taxes, insurance, retirement plans, and so on. While knowing your net pay (the amount you actually take home) is usually more relevant to your day-to-day life, there are reasons you may want to know your gross pay as well. Perhaps you want to see just how much the government takes out of your paycheck, or maybe you want to figure out a target gross pay that will give you the take-home amount you desire. Regardless of your reasoning, it only requires some simple calculations to work out your gross pay for a given time frame.

Steps

Determining Hourly Gross Pay

  1. Add up your hours for the desired time period. You can figure out gross pay for the year, month, two weeks, week, even day if you desire, if you know how many hours you worked during that same period of time.
    • As an example, let’s say you worked 25 hours last week for a part time job — in fact, you’ve worked the same 25 hours per week for the past year.
  2. Factor in any overtime or double-time hours. If you work beyond your standard number of hours for a week, or work on a weekend, holiday, or other non-standard time period, you may receive additional gross pay per hour.
    • Overtime is often calculated at a factor of 1.5 times, meaning 1 hour of overtime is paid the same as 1.5 hours of normal time. Double-time is, not surprisingly, multiplied by two. Talk to your employer about the rates for your job.
    • While part-time workers don’t usually get much overtime, let’s assume that five of your hours last week (and each week for the last year) have been “double-time.” Because you were paid double for five of your 25 hours last week, it was the same as working 30 hours at regular pay ([20 x 1] + [5 x 2] = 30).
  3. Multiply your hours by your hourly pay rate. Consult your pay stub or your employer if you do not know your hourly pay rate.
    • In our example, let’s make your pay rate $13.50 per hour. Therefore, 30 x $13.50 = $405. Over the past year (52 weeks), the total would be 52 x $405 = $21,060.
    • If math is not your strong suit, or you have a lot of overtime, etc,. to factor in, there are easy-to-use gross pay calculators available online.[1]
  4. Add on any tips, commissions, or bonuses during the chosen time period. Gross pay includes everything you earn for your work and subtracts nothing. If commission is a regular part of your earnings (if you are in sales, for instance), you may want to try tracking your commissions for a month or a few weeks, then look to see if there are any trends. This can help you if you are trying to plan for the future or earn a specific amount of gross pay.
    • Let’s say that you earned a $45 productivity bonus last week, and have been consistently productive and earned that same $45 each week for the past year.
    • Your new totals, then, are $405 + $45 = $450 weekly, and $405 x 52 = $23,400 yearly.
    • In our example, therefore, your weekly gross pay is $450; yearly, it’s $23,400. This is what you earn during those time periods before any taxes or other deductions are taken out.
  5. Compare your calculations to your pay documents. If you are a legal hourly employee in the U.S., you must receive a pay stub (paper or electronic) with your payments, be it weekly, bi-weekly, or other. This will show your gross pay for the period.
    • Each year at tax time, you will also receive a W2 form from your employer to use when filing your federal, state, and local taxes. This shows your total gross pay at that job for the past calendar year.

Determining Salaried Gross Pay

  1. Establish your base salary. Salaried employees work under a contract for a set amount of pay over a set period of time, without factoring in the number of hours worked (unless, possibly, overtime is involved). Typically, your salary refers to your base pay amount for a year.
    • As an example, let’s say you earn a $30,000 base annual salary.
  2. Divide your base annual salary by 12 (monthly), 26 (bi-weekly), 52 (weekly), or 365 (daily). Do this only if calculating your gross pay for a time period shorter than a year, though.
    • For instance, your $30,000 base annual salary is $577 per week ($30,000 / 52 = $577).
  3. Add on any tips, commissions, or bonuses during the chosen time period. Remember, gross pay includes everything you earn for your work and subtracts nothing.
    • For simplicity’s sake, let’s say you’re an amazingly consistent salesperson and have earned a $120 commission each week for the past year. Added to your weekly base salary plus overtime of $577, your weekly total is now $697. This is your weekly gross pay.
    • For the year, $697 x 52 = $36,244. This is your annual gross pay.
  4. Compare your calculations to your pay documents. As a salaried employee, you will receive a pay stub (paper or electronic), typically at intervals of one or two weeks, or monthly. This will list your gross pay, along with your net pay and the taxes and other deductions.
    • In the U.S., your federal W-2 form will arrive for tax season, and will list your gross pay for the past calendar year.

Determining a Target Gross Pay

  1. Set your net income target. Simply put, how much money do you want or need to take home each week, month, or year to support your lifestyle? The goal of this exercise is to figure out how much gross pay you need to earn in order to take home your target amount of net pay.
    • Let’s say, for example, that you have determined that you need to take home $2,100 per month in order to pay your monthly expenses and have a little bit left over to save (or spend). Let’s also assume that your current monthly net pay is $1,800.
  2. Use a recent pay stub to establish a rough net-to-gross pay percentage. For example, if your weekly paycheck lists your gross pay as $600 (or $2,400 per month), and you take home $450 per week ($1,800 monthly), Your net pay is 75% (.75) of your gross pay.
    • The calculation: 450 / 600 = .75 (weekly), or 1800 / 2400 = .75 (monthly).
  3. Divide your target net pay by that percentage. If you need to bring home $2,100 monthly, and you know you currently bring home 75% of your gross pay (because of taxes and other deductions), you can determine your gross pay target.
    • The calculation: $2,100 / .75 = $2,800. So, if you want to have $2,100 in take-home pay each month, your target is to earn $2,800 per month ($700 weekly) in gross pay.
    • Please note that this method only provides an approximation, and works best when your current pay and desired pay amounts are close. Varying tax withholding rates, for instance, will throw off the figures if your current net pay is $1,500 monthly and your desired one is $15,000.
  4. Use a reverse tax calculator. If you have your target net pay in mind already, there are also numerous online options for determining just how much gross pay you need to reach that target amount.
    • One benefit of these so-called “reverse tax calculators” is that they are calibrated to the taxation and deduction structures of specific countries, and allow you to tailor your withholding criteria, thus providing a more accurate representation of your target gross income.[2][3]
    • Note that it is not advisable to change your withholding amounts for the sole purpose of achieving a target net pay. You are obligated to pay a certain amount in federal, state, and city tax (where applicable) based on your taxable income. The fact that you have withheld less will not change the amount of the tax due, and you may end up owing money at tax time.

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Sources and Citations

  1. ↑ http://www.calculatorsoup.com/calculators/financial/gross-pay-calculator.php
  2. ↑ http://www.bankrate.com/calculators/tax-planning/net-to-gross-paycheck-tax-calculator.aspx
  3. ↑ http://www.uktaxcalculators.co.uk/reverse-tax-calculator.php

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