What is a Gross-Up?

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Gross-up definition and meaning

A gross-up is money added to a payment to cover income taxes the recipient will owe. It is most often seen in executive compensation plans.

 

More about gross-up

Companies sometimes pay employees and don’t realize that the check needs to be grossed up to cover taxes when running through payroll. A gross-up can also change a dollar amount for if an individual receives. For example, if an employee expects a payment of $10,000 after taxes – the payment can be grossed up once tax is withheld – the employee will net $10,000.

 
Most of the time, a gross-up is can be used for one-time payments, such as reimbursements for employee relocation expenses or bonuses.

Using gross-up in a sentence

“More and more small businesses are switching to a payroll service that lets their employees see their pay stubs online, including information like gross earnings, deductions, and time off balances.”

Terms related to Gross-Up

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