BANKING AFFAIRS

Detailed explanation-1: -Basic salary is a rate of pay agreed upon by an employer and employee and does not include overtime or any extra compensation. Gross salary, however, is the amount paid before tax or other deductions and includes overtime pay and bonuses.

Detailed explanation-2: -An employer generally must withhold social security and Medicare taxes from employees’ wages and pay the employer share of these taxes. Social security and Medicare taxes have different rates and only the social security tax has a wage base limit. The wage base limit is the maximum wage subject to the tax for the year.

Detailed explanation-3: -Taxable income or gross income or adjusted gross income includes salaries, wages, bonuses, etc. along with unearned income and investment income. It is the amount that will be used to determine your tax liability.

Detailed explanation-4: -For hourly employees, gross wages can be calculated by multiplying the number of hours worked by the employee’s hourly wage. For example, an employee that works part-time at 25 hours per week and receives a wage of $12 per hour would have a gross weekly pay of $300 (25x12=300).

Detailed explanation-5: -Earnings before tax (EBT) It is the amount of money left after all expenses are subtracted from revenues.