Everybody is mostly concerned with how much pay one gets each month after deducting taxes. However, we must also know how much salary we get on an annual basis. This is because we need this information for many things. For example, if we apply for a credit card or home loan then we need to provide the whole information about our annual salary. How to calculate a yearly salary mostly depends on whether the earnings are based on a fixed amount each pay period or on an hourly wage and on whether you are paid other compensation such as tips or commissions or not.
Calculating annual salary is very easy. You can calculate it by following these simple steps given in this article.
Steps for calculation of yearly salary
- Find out the bottom of the present pay stub. You have to look for the line which says “salary” or “wages.” The amount written next to it is the amount of money which is earned per pay period. Make sure to find out the amount of your present salary opposed to your year-to-date salary. You will need to use this number to compute your salary but you cannot compute your net pay figure from this because net pay is not the total amount of your salary but the amount of your paycheck after overtime, taxes and adjustments.
- Find out how many times you get paid each year. Determine if you are getting paid monthly, semi-monthly, weekly or bi-weekly. You can ask to someone in the human resources department of your office for this. If you are getting paid monthly then you are getting paid 12 times each year. If you are getting paid semi-monthly then you will be paid 24 times per year. If you are getting paid weekly then you are paid 52 times a year and if you are paid bi-weekly, you are paid 26 times per year.
- Multiply your base salary with the number of times you are getting paid in a year. This amount which you will obtain now will be your yearly base salary.
- Determine your average hourly income before taxes for one pay period. For this, you have to divide the year-to-date (YTD) wages written on your present pay stub by the number of pay periods till date. Let us suppose, if you have got 12 paychecks so far in this year and your YTD wages are $ 9600 then your average hourly wages per pay period will be $ 800.
- The average hourly wages per pay period should be multiplied by the number of pay periods in one year.
- Find out the average amount of other compensation which you receive with each pay period. If there is a YTD on your present pay stub then you should divide that by the number of pay periods to date. If it’s not there, add up the amounts for other compensation from each pay stub and then divide it by the number of pay periods till date.
- The average of other compensations should be multiplied by the number of pay periods in one year. Add this amount to your base yearly salary or yearly base hourly wages to find your yearly salary.
- The final result you will get is your yearly salary.
Tips and warnings
- When you are listing your yearly income include non wage income like interest on savings or investment earnings also.
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