Typically a gross up is when your employer gives you a benefit that is taxable, but rather than stick you with the extra taxes on that benefit, your employer increases your taxable income enough to compensate for the taxes you'll have to pay on that benefit. The idea is that you won't owe any more taxes than if you hadn't received the benefit.
Gross up's aren't perfect though. You may not be made perfectly whole by a gross up depending on your tax situation.
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