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    Net to gross formula

    Article ID: 1002648

    Overview

    This article explains how to gross up a paycheck, or create a paycheck for zero net amount.

    Expected Outcome

    You will gross up a paycheck in order for the business to cover the employee and employer tax liability.

    Assumptions

    You need to pay an employee a certain net amount.

    Details

    "Grossing up" a paycheck means to calculate the gross wages required to obtain a specified net pay amount. To successfully calculate the gross from the net, you must know:
    • the net amount
    • the taxes to be withheld

    To get a quick, accurate calculation, use our Net-to-Gross Paycheck Calculator found here:

    Formula

    The basic formula to gross up an amount is:

    Net amount + flat tax amounts / (100% - total percent of taxes) = Gross

    Example

    Assume the desired net pay amount is $200, and you wish to withhold social security, Medicare and $100 for federal income tax (FIT):
    1. Total the tax percentages: Social security 6.2% + Medicare 1.45% = 7.65%
    2. Subtract the total from 100%: 100-7.65 = 92.35
    3. Convert that number to a percentage by moving the decimal two positions to the left: 0.9235
    4. Add $100 from FIT to the net: $100 + $200 = $300
    5. Divide the new net amount by the amount in step 3: 300 / .9235 = 324.85
    6. The gross amount to be used is $324.85. The net amount will be $200 after withholding social security, Medicare, and $100 for FIT.

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