Gross Earnings: Definition and Explanation
Gross earnings represent the total income an employee earns over a given pay period before any deductions, such as taxes or benefit contributions, are applied. It reflects the full amount of compensation earned by an individual, household, or business within a specified timeframe, typically monthly, quarterly, or annually.
A Closer Look at Gross Earnings
In payroll and accounting terms, gross earnings include not only standard wages but also any overtime pay, bonuses, commissions, and certain employer-paid benefits. It’s the comprehensive total of what an employee is entitled to earn prior to any mandatory or voluntary deductions.
Although the term is often used interchangeably with gross pay, it’s important to understand the distinction in tax reporting. The IRS differentiates gross earnings from adjusted gross income (AGI), which is calculated by subtracting specific deductions (also known as “above-the-line” deductions) from total income.
Payroll providers like Beyond simplify the calculation of gross earnings by automating time tracking, earnings calculations, and deductions, ensuring accuracy and compliance every pay period.