What does 'gross wages' include?

Gross wages refer to the total amount of money earned by an employee before any deductions for taxes, retirement contributions, health insurance, or other withholdings. This figure encompasses all forms of compensation, including hourly wages, salaries, bonuses, overtime pay, and commissions. Understanding gross wages is essential for payroll professionals, as it serves as the baseline for calculating take-home pay and determining withholding amounts.

The other options do not accurately reflect the definition of gross wages. For instance, stating that gross wages only include hourly wages before deductions neglects other types of income an employee may earn. Additionally, net pay refers to the amount an employee receives after all deductions have been applied, which is not related to gross wages. Finally, total earnings after tax deductions represent what employees actually take home, rather than the sum of their earnings before any such deductions are considered.