Gross income essentially refers to your total compensation before taxes or other deductions. This can be useful to know for a variety of reasons -- for example, when applying for a loan you'll have to pay monthly, approval is usually contingent on your gross income exceeding a certain amount. Here's how to calculate yours:
Calculating gross monthly income if you receive an annual salary
If you are paid an annual salary, the calculation is fairly easy. Since gross income refers to the total amount you earn before tax, and so does your annual salary, simply take the total amount of money (salary) you're paid for the year, and then divide this amount by 12.
For example, if you are paid an annual salary of $50,000 per year, the formula shows that your gross income per month is $4,166.67.
Calculating gross monthly income if you're paid hourly
For hourly employees, the calculation is a little more complicated. First, to find your yearly pay, multiply your hourly wage by the number of hours you work each week, and then multiply the total by 52. Now that you know your annual gross income, divide it by 12 to find the monthly amount.
Note: If your hours vary week to week, use your best estimate of the average number of hours you work.
For example, if you are paid $12 per hour and work 40 hours per week, your weekly gross pay is $480. Multiplying this by 52 shows an annual gross income of $24,960. Finally, dividing by 12 reveals a gross income of $2,080 per month.
If you have special circumstances, such as a certain amount of overtime hours per month or a recurring bonus/commission, it can generally be added in to gross monthly income. The common way to do this is to determine the amount of overtime pay (or bonus/commission) you've received throughout the last year, and then divide it by 12. This amount would then be added to the gross monthly income you calculated from your base pay.
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