Gross to Net Glossary · Workforce

8 and 80 system: the FLSA section 7(j) option for hospitals and residential care establishments to pay overtime after 8 hours in a day and 80 in a fixed 14-day period instead of 40 in a workweek (Payroll by Industry).
Aggregate procedure: withholding on supplemental wages by adding them to a regular period's wages, figuring tax on the total and subtracting what was withheld from the regular wages (Supplemental Wages & Imputed Income).
Allocated tips: tips a large food or beverage establishment assigns to employees when reported tips fall short of 8% of qualifying sales, reported in W-2 box 8 and never withheld on (Tips & the 2025 Tax Law).
Arrears (deduction): the part of a deduction a short paycheck couldn't take, kept as a balance and recovered on later statements by the election's rule (Gross-to-Net, Step by Step).
Back pay: wages paid late for past work, including retroactive increases, taxed as ordinary wages in the year paid (Retro Pay, Voids & Corrections).
Cafeteria plan (Section 125): a written plan letting employees choose between cash and qualified benefits paid with pre-tax salary reductions, exempt from income tax, Social Security, Medicare and FUTA for the benefits chosen (Pre-Tax & Post-Tax Deductions).
Cash tips (payroll): tips the employee already holds, taxed through payroll but excluded from net pay; for the section 224 deduction, "cash tips" also includes charged tips (Tips & the 2025 Tax Law).
Certified payroll: the weekly payroll report, with a signed Statement of Compliance, that a Davis-Bacon contractor submits for each covered project, optionally on Form WH-347 (Payroll by Industry).
Charged tips: tips paid by card or through an employer-run arrangement and paid to the employee on the paycheck (Tips & the 2025 Tax Law).
Computational bridge: Pub 15-T's optional conversion of a 2019-or-earlier W-4 into 2020-or-later fields, so one withholding path handles both (Federal Withholding & the W-4).
Flat rate (supplemental): 22% federal income tax withholding on separately paid supplemental wages, allowed when income tax was withheld from regular wages in the current or prior year (Supplemental Wages & Imputed Income).
Gross-up: solving for the gross payment that leaves a stated net after taxes and deductions, run on an off-cycle statement (Gross-to-Net, Step by Step).
Group-term life imputed income: the Table 2-2 cost of employer group-term life coverage over $50,000, less after-tax employee payments, added to wages and reported with W-2 code C (Supplemental Wages & Imputed Income).
Housing allowance (clergy): an amount designated in advance as a minister's housing allowance, excluded from income tax wages but included for self-employment tax (Payroll by Industry).
Imputed income: the taxable value of a noncash benefit, added to tax bases on the statement without adding to net pay (Supplemental Wages & Imputed Income).
Lock-in letter: an IRS notice to an employer setting an employee's permitted filing status and withholding, which W-4s that lower withholding can't override (Federal Withholding & the W-4).
Manual check: a payment made outside the pay run and recorded afterward as a statement with its taxes and deductions (Retro Pay, Voids & Corrections).
Nonresident alien wage addition: the Pub 15-T amount added to a nonresident alien's wages only to figure income tax withholding, never reported on the W-2 (Federal Withholding & the W-4).
Off-cycle run: a pay run outside the regular schedule, such as a bonus, final pay or correction, with its own withholding and deduction choices (Retro Pay, Voids & Corrections).
Overpayment: wages paid that the worker wasn't owed, recovered net in the same year and gross in a later one, under federal and state limits on deductions (Retro Pay, Voids & Corrections).
Percentage method: Pub 15-T's annualize, look up and de-annualize withholding computation (Worksheet 1A for automated systems) (Federal Withholding & the W-4).
Qualified overtime compensation: the premium portion of overtime required by FLSA section 7, deductible under section 225 for 2025 to 2028 and reported in W-2 box 12 with code TT from 2026 (Tips & the 2025 Tax Law).
Qualified tips: voluntary cash or charged tips in an occupation that customarily received tips by December 31, 2024, deductible under section 224 up to $25,000 for 2025 to 2028 (Tips & the 2025 Tax Law).
Retro pay: the difference owed when a rate change takes effect for periods already paid, recomputed by work period and including overtime on the new regular rate (Retro Pay, Voids & Corrections).
Section 45B credit: the employer's business credit for Social Security and Medicare paid on tips above the amount needed to reach the minimum wage, for food or beverage and, from 2025, beauty services (Tips & the 2025 Tax Law).
Service charge: a mandatory charge on a bill, such as an automatic gratuity, which is regular wages when distributed to staff and never a tip (Tips & the 2025 Tax Law).
Special accounting rule: the option to treat noncash fringe benefits provided in November and December as paid in the next year (Supplemental Wages & Imputed Income).
Subject wages and taxable wages: the wages a tax applies to in a period, and the part of them under what is left of the tax's wage base for the year (Gross-to-Net, Step by Step).
Supplemental wages: pay outside regular wages, such as bonuses, commissions, severance, back pay and retroactive increases, with their own withholding methods and the 37% rate over $1 million (Supplemental Wages & Imputed Income).
Taxability matrix: the table of each pay item type's treatment (subject, exempt or reported only) for each tax and jurisdiction, effective-dated (Gross-to-Net, Step by Step).
Treasury Tipped Occupation Code (TTOC): the three-digit code for a tipped occupation reported in W-2 box 14b from 2026, up to two per W-2, with 000 for tips from a nonqualifying occupation (Tips & the 2025 Tax Law).
Void: a statement that negates a paid statement line for line, usually because the payment never reached the worker (Retro Pay, Voids & Corrections).
Wage bracket method: Pub 15-T's lookup tables for manual payroll, generally for wages under $100,000 a year (Federal Withholding & the W-4).