Gross earnings definition
/What is Gross Earnings?
Gross earnings refers to the total earnings of an individual, prior to deductions for income taxes and other taxes, as well as any deductions imposed by the employer. Gross earnings are listed on the remittance advice (pay stub) that is attached to a paycheck, along with an itemization of all deductions, resulting in a net pay figure.
Examples of Gross Earnings
Here are several examples of gross earnings:
Gross earnings for a salaried employee. An employee has $100,000 of gross earnings, after which $35,000 is deducted for income taxes, social security, garnishments, medical insurance, and charitable deductions, leaving net income of $65,000. The person’s $100,000 gross earnings figure is the salary that he is being paid, while the $65,000 figure is the amount stated on his paycheck.
Gross earnings for a salesperson. A salesperson has $30,000 of fixed base salary, and earns another $70,000 of commissions. From this $100,000 is deducted $32,000 for income taxes, social security, and medical insurance, leaving net income of $68,000. The salesperson’s $100,000 gross earnings figure is comprised of both a salary and commissions, while the $68,000 figure is the amount stated on his paycheck.
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Gross Earnings FAQs
Is vacation pay included in gross earnings?
Vacation pay is included in gross earnings because it represents compensation earned by the employee. Even though the employee is not actively working during vacation, they are still receiving pay based on their employment agreement. As a result, vacation pay is treated the same as regular wages for tax and reporting purposes.
Are gross earnings your salary?
Gross earnings are not necessarily the same as salary. Gross earnings represent the total compensation earned before deductions, including salary or wages, overtime, bonuses, and commissions. Salary is a specific component of gross earnings that refers to a fixed amount of compensation paid regularly to an employee.