Deductions from Gross Pay of an employee

Deductions from Gross Pay of an employee refers to the amount withheld from employee's pay.

Deductions from Gross Pay are the following:

1. Withholding Income Tax
2. SSS or GSIS Premium
3. Phil-Health Premium
4. Additional Deductions
• Advances or Vales
• Union Dues
• Pension Fund
• Charitable Contributions
• Cooperatives / Credit Unions

Various Employee Pay: Bonus

Bonus is generally given as an incentive in order to stimulate the employees to work more efficiently and effectively. 

Various Employee Pay: Commission

Commission definition:

This is usually the wage given to sales people based on the amount of sales he/she made. 

Normally, this amount is added to the basic pay or basic salary of an employee. Or, on a separate payment basis depending on the commission scheme of the company.

Sometimes sales people earns solely on a commission basis.  

Various Employee Pay: Wage

Wage definition:

It is a fixed amount of compensation for service rendered covering a fixed period of time, usually hours or a fixed amount of work.

This usually is the compensation given to skilled and unskilled laborer. 

Various Employee Pay: Salary

Salary definition:

It is a fixed amount of compensation for service rendered covering a fixed period of time, typically a month.

Usually, this refers to the pay of those in the managerial level and administrative employees.  These employees do not earn any overtime pay. 

Payroll Accounting: The Employee's Pay

Employee's pay depend on the employment contract whether the work to be rendered would be paid on a salary, wage, commission or bonus basis. 

Payroll Accounting

Payroll Accounting Definition:

It refers to the processes of determining who among the employees, workers and staff had rendered their services during the period.

Factors to be considered in payroll computation:
1.  how many days they rendered services
2.  how many hours in a day they rendered services
3.  items deductible from the gross pay to arrive at the net pay

Exemptions on Taxable Income of Individual Tax Payer

The following exemptions are allowed by law (R.A. 9504 effective July 6, 2008) to be deducted from net income:

Basic Personal Exemption - per taxpayer :  P50,000.00

Additional Exemption for each qualified dependent child (maximum of 4) :  P25,000.00