Trying to determine how to calculate annual salary is a difficult task for many people. You may be paid weekly, monthly, bi-weekly or semi-monthly, and it can be confusing to try to calculate the true amount you earn in one year. Why do you need to know how much you make on an annual basis? This information is required on most credit applications, and you will need an exact figure when you prepare your tax return. Below are guidelines that will help you better understand how to calculate annual salary.
1. Use your paycheck stub.
A recent pay stub will usually show all of the details about your pay, including miscellaneous deductions, taxes, insurance, etc. On your pay stub, you will find an area that says “gross wages,” “gross pay” or something to that effect. This is the figure you want; be careful that you are not looking at your net pay, or the amount you bring home. If you aren’t certain which figure is the correct one to use, ask someone in payroll or management.
2. Determine how often you get paid.
Do you get paid every week? You may be paid once per month, every two weeks, or on the 1st and 15th of the month. Be sure that you understand the difference between bi-weekly and semi-monthly, as you get paid 26 times per year if you are paid bi-weekly and only 24 times per year if you are paid semi-monthly. Of course, if you get paid weekly then you are paid 52 times per year.
3. Use the “gross wages” or “gross earnings” portion from your check stub to determine your annual earnings.
Now that you know how many times per year you actually get paid, it’s easy to calculate annual salary. Simply take the gross pay from your check stub, then multiply it by the number of times you get paid. For example, if you are paid bi-weekly and your gross earnings are $400, multiply $400 by 26 in order to come to an annual income figure.
If you often work overtime or on holidays, you will need to factor these things in to figuring your annual salary. It may be a good idea to keep all of your check stubs if you often work more than a 40 hour work week, so that you can arrive at an exact figure as far as annual pay.
If you have direct deposit or for some reason do not receive a check stub, ask someone in your human resources department how to go about determining your annual salary. Someone who works in payroll should be able to give you your weekly pay amount or at least your hourly wage, so that you can figure out how much you make per year.
Hopefully the information above will help you clearly understand how to calculate annual salary.
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