Question

The purpose for using grossed-up pay is to: (all that apply)

A) Satisfy tax liabilites

B) Achieve a predetermined net pay

C) Evade mandated deductions

D) Avoid voluntary deductions

Answer 1

The purposes for using grossed-up pay are to satisfy tax liabilities and to achieve a predetermined net pay amount for the employee.

Step-by-step explanation:

The purpose for using grossed-up pay is to satisfy tax liabilities and achieve a predetermined net pay. Grossed-up pay involves increasing an employee's gross pay to account for taxes and other deductions, ensuring that after all withholdings are considered, the employee receives a specific net amount. This process is legitimate and commonly used to ensure that employees meet their tax obligations while receiving the net income they expect. It should not be confused with evading mandated deductions or avoiding voluntary deductions, as these actions are often illegal and can result in penalties.