How the Payroll Process Calculates Net-to-Gross Earnings for the US
When you create an earnings element, you can indicate that it must pay a specified net amount.
Use this feature if you need to pay a person:
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Guaranteed take-home pay (net) per payroll period
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Bonus of a specified net amount
To create an earnings element, use the Elements task.
You can create a net-to-gross (gross-up) element for any recurring or nonrecurring earnings element using these primary classifications.
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Standard Earnings
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Supplemental Earnings
What Settings Affect Net-to-Gross Processing
You define which deductions the payroll process uses to calculate the gross amount from the specified net amount.
You must create the earnings element as a net-to-gross element by answering Yes to the Use this element to calculate a gross amount from a specified net amount? prompt in the element template.
In each element entry, you specify the limits of the net-to-gross processing this way.
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In the Net value, enter the value you want the employee to receive.
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In the To Within value, enter the allowed difference between the amount you want and the actual amount.
If these values are the same across most entries, you can enter a default value on the element eligibility record.
How the Formulas Calculate the Gross Amount
Here's what happens when you run the formulas for net-to-gross processing.
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The predefined GLB_EARN_GROSSUP iterative formula takes these input values.
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Net amount you want (Net input value)
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Amount the net can differ from the goal amount (To Within input value)
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In the first run, the formula:
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Sets the lower gross limit to the goal net amount, and the higher gross limit to twice the goal amount.
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Runs a function to provide the first guess of the gross.
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Returns three values to the element's input values: low gross, high gross, and additional amount.
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The element's payroll formula runs. This formula:
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Adds the additional amount to the goal amount. This is create the gross amount.
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Returns the gross amount to the element's pay value for the payroll run to process.
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In the next iteration, the iterative formula compares the additional amount to the total value of the balances that are available for net-to-gross for this element entry.
The additional amount must not differ from this balance total by more than the amount you specified in To Within.
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If the additional amount equals the balance total, the iterative processing ends.
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If the additional amount is above or below the balance total by an acceptable margin:
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Processing ends.
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The formula returns the remainder (additional amount minus balance) to the element's Remainder input value.
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Otherwise, the formula runs the function to generate a better estimate for gross, using the remainder to determine by how much to change the guess. The formula checks the results in another iteration.
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By default, these tax balances are included in the gross up processing.
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City Withheld
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County Withheld
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FIT Withheld
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Family Leave Insurance Employee Withheld
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Head Tax Withheld
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Medicare Employee Withheld
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SDI Employee Withheld
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SIT Withheld
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SUI Employee Withheld
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School Withheld
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Social Security Employee Withheld