Grossing Up an Earning
What is a Tax Gross up ?
There might be a time you want to pay an employee a specific amount. But, once you factor in taxes, that amount gets smaller. So how can you give an employee a certain net pay? Gross up for taxes.
What is a gross up?
A gross up is when you increase the gross amount of a payment to account for the taxes you must withhold from the payment. Let’s say you promise an employee a specific pay amount or are giving an employee a gift card. You will issue gross wages for more than the promised amount. After you withhold taxes from the payment, the net amount should equal the amount you promised.
The gross up basically reimburses the worker for the withheld taxes.
How to gross up?
Note: Regular payroll check should not be grossed up. Gross up pay should always be processed on an additional pay or instant check.
In order to gross up an Earning the gross up Earning code must have a calc rule of “Flat Amount” assigned to it.
However, if you have an Earning code with a calc rule of Flat in your Regular payroll and you gross up, the system will gross up all other earnings in that Regular pay.
Earnings with automatic deduction offsets cannot be grossed up, however an earning code without an offset in conjunction with a separate deduction code can be used.
1.Go to the Payroll Processing tab > Payroll Gateway > select the paygroup (blue hyperlink) > View or edit payroll results/ instant check
2.Search the employee in question and check the box next to their name
3.Under actions select Create Instant Check
4.Hit OK
5. Go to the check by clicking on the blue hyperlinked name
Note: If there is already a regular check, you will need to select next to go to pay 2 of 2
6. When on the check, under the earnings tab, click add and select the earning that you would like to gross up.
Note: When grossing up, the earning that you are grossing up can be the ONLY earning on the check or all other Earnings on the check will gross up as well.
If a deduction is present before the gross up box is checked, the deduction amounts will be included in the gross up calculation.
If a deduction needs to be on the grossed up check, you gross up the earning and then add the deduction to the check
7. Leave the earning amount at 0.00 and select the gross up check box
8. Once you click the gross up check box, Input your amount and press OK.
9. When it takes you back to the check, you will still see a 0.00 amount for the earning. HIT SAVE- This will save your entry, as well as calculate the check.
10. Once the check has finished calculating, you should see the net amount desired.
There is also the option of importing gross up earnings. Please reach out to the HCM Service team to get set up with this option.
