الإجمالي

What is the meaning of gross up?

Gross up is a process of raising a net amount to reach its gross equivalent. It includes adding the amount of taxes or other deductions to a net figure to calculate the total amount before those deductions were made. The primary purpose of grossing up is to ensure that a recipient receives a particular amount after taxes or deductions have been taken.

When an employer offers gross-up to employees?

Employers may offer a gross-up in various situations, such as:

1. Relocation expenses
2. Bonus and incentives
3. Equity awards
4. Severance package

1. Relocation expenses: When an employee is asked to relocate for work, they may provide financial assistance to cover the cost of moving, maybe traveling, housing and shipping goods expenses. Employees get reimbursed for the tax incurred; the employers may gross up the amount of relocation.
2. Bonus and incentives: Employers may also provide incentives or bonuses on their performances; rather than giving a gross bonus, they may gross up the bonus as a desired amount.
3. Equity awards: In some scenarios, employers grant equity-based compensation, like stock units or stock options, to employees. When equity awards vest or become exercisable, employees may face tax implications to help employees cover the taxes owed on the equity awards.‍
4. Severance package: When the employee is being terminated, they might be offered a severance package to assist the employee during this termination and cover taxes; the employer may gross up the amount.