Checks_Gross_up_checks_Entering_a_check

Checks: Gross-up checks - Entering a check

Learn how to enter a gross-up check. A gross up check is a type of paycheck where the employer increases (or "grosses up") the employee's pay so that, after taxes are withheld, the employee receives a specific net amount. 

Why gross-up a check?

Employers use gross-up checks when they want the employee to receive a set net amount, for example, in cases like: 

  • Bonuses

  • Relocation reimbursement

  • Prizes or awards

 

Because the employee still owes taxes on the payment, the employer calculates and adds the estimated taxes to the gross amount so that the employee's take-home pay matches the intended net amount. 

 

Example

Suppose the employer wants the employee to receive $1,000 net, and the total tax rate is estimated at 25%. Instead of giving $1,000 gross (which would be reduced by taxes), the employer gross-ups the amount: 
Taxes (25%): $333.33
Net pay: $1,000
Gross pay: $1,333.333 


Webinar: Entering a gross-up check

 

 

202405m 2024Dec04 

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