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Please explain: What does it mean to gross up?

11/21/2023

If you pay an employee’s taxes on, say, a $500 bonus or the value of a gift card, those taxes become income to the employee. That means more withholding. And if the employer keeps picking up the taxes, what results is a never-ending upward spiral of taxation. The only way to escape is to gross up the payment. But what does this really mean?

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