Gross Earnings

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Definition of 'Gross Earnings'

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Gross earnings is the total amount of money earned before any deductions are taken out. This includes wages, salaries, tips, bonuses, and commissions. Gross earnings are also known as before-tax income.

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Deductions are subtracted from gross earnings to arrive at net earnings, which is the amount of money that is actually paid to an employee. Deductions can include federal income tax, state income tax, social security taxes, Medicare taxes, and health insurance premiums.

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Gross earnings are important for a number of reasons. They are used to calculate how much income tax an employee owes. They are also used to determine how much an employee is eligible to contribute to retirement savings plans, such as a 401(k) plan or an IRA.

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It is important to keep track of your gross earnings so that you can accurately calculate your income tax liability and make sure that you are contributing the maximum amount to your retirement savings plans. You can find your gross earnings on your paystub.

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