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This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
There are 12 references cited in this article that you can view at the bottom of the page.
This article has been viewed 4,226 times.
If you are an hourly waged employee or independent contractor, it is beneficial to calculate your annual wages by hourly earnings. You are usually required to provide information about your annual salary in your application form; or you may want to compare salaries among new career opportunities. Either way, you can calculate your annual salary using simple formulas and basic math.
Steps
Where the number of working hours per week is the same
- Hourly wages will be on your payslip, if the employer provides one. [1] X Research Source
- If you are not sure, you can also ask your manager, or an employee of the human resources / human resources department.
- For example, if you work 40 hours per week, your math would look like this: 40 hours x 52 weeks = 2080 hours in a year.
- Following the above example, VND 90,000 x 2080 = VND 187.2 million. This is your annual salary.
Where the number of working hours per week is different
- You can use electronic applications, online software or just write down in a notebook. [4] X Research Sources
- If your work hours vary from week to week, you’ll want to track your hours over a longer period of time. You can then average the hours worked.
- For example, if you worked 10 hours the first week, 25 hours the next week, 15 hours the following week, and 30 hours the last week, you worked 80 hours that month. Divide this number by 4 weeks and you get an average of 20 hours of work per week. [5] X Research Sources
- If your working hours vary significantly between different periods of the year, you need to track an even longer period. For example, imagine that you work 50 hours per week for a few weeks near the holidays, but only 20 hours per week in the summer. This change will greatly affect your calculations. In the case of large variations, you may have to track the number of hours worked for an entire year for accurate figures.
- The formula for this calculation is: Total hours worked for pay in the week = Actual hours worked + [0.5 x (actual hours worked – 40)]
- For example, you work 45 hours in a week. You worked 5 hours overtime. Let’s multiply 5 by 0.5. The result you get is 2.5 hours extra. Add this number to 45 hours of normal work. With this calculation, your working hours are 47.5 instead of 45.
- If you track hours worked for an entire year, you simply add them up, instead of multiplying the average number of hours worked per week by the number of weeks worked.
- For example, if you get VND 90,000/hour, multiply 2,470 by VND 90,000. Your annual salary will be 222,300,000 VND.
Extra remuneration
- Some employers offer annual holiday bonuses to all employees. With the example in Part 1, imagine that you receive a bonus of VND 4,000,000 per year. Your math will be as follows: 187.2 million VND + 4,000,000 = 191,200,000 VND.
- If you receive commissions or variable bonuses, you need to track these for a year to include them in your paycheck. For example, imagine that you are rewarded with VND 1,000,000 every time you reach a certain level of sales. If you get the bonus 12 times in a year, you will multiply VND 1,000,000 by 12, resulting in VND 12,000,000. With the above example, you would add 191,200,000 VND + 12,000,000 VND to get the final result of 203,200,000 VND.
- These are basically still part of your income. But they represent an amount that does not increase your purchasing power.
- Check your pay stubs to find out how much to deduct for these expenses each month. To get the year number, multiply the month’s expenses by 12. Subtract the result from your annual income. [9] X Research Source
- For example, if medical expenses cost 3,000,000 VND a month, it will cost you 3,000,000 VND x 12 = 36,000,000 VND a year. Subtract this from your annual salary.
- In the United States, you need to check which federal tax bracket your income falls under to determine how much federal income tax to pay. Your annual income will determine the amount of tax you are subject to. An online tax bracket calculator can help you figure this out if you don’t know what tax bracket you’re in. [10] X Research Source
- In the United States, the state tax rate depends on where you live. Many states do not collect income taxes. For states that collect taxes, the tax rate will be around 5-6%. You can find state income tax rates online. [11] X Research Source
- To calculate your U.S. after-tax income, subtract 100% from your income tax rate. For example, if you are in the 20% tax bracket, you will have 80% of your income left.
- Change the tax rate as a percentage to a decimal by moving the comma two rows to the left. For example, if you keep 80% of your earnings, the corresponding decimal would be 0.80 (or 0.8).
- Multiply your monthly income by that decimal to get your US after-tax income. You can calculate your monthly or annual salary this way. [12] X Research Source
- If your salary in the United States is $2,800 and you are in the 30% tax bracket, your corresponding decimal is 0.7. Multiply $2,800 by 0.7 to get $1,960 a month. This is your after-tax income in the United States. [13] X Research Source
Advice
- Under the United States Fair Standard Labor Act, an hourly worker must be paid severance pay. This is the time when the employer requires the employee to be present, even if there is nothing to do. You’ll also be paid for the time you work on an as-needed basis, and you’ll have to be at work at all times ready for action. You also get paid for working during breaks or mealtimes. Breaks are usually less than 20 minutes; you will be paid for mealtimes if forced to work at that time. [14] X Trusted Source US Department of Labor Go to Source
- You can reverse the math, using the annual earnings to calculate the corresponding hourly rate. Divide the total amount you receive annually by the number of hours worked. If you work full time, the hours will be 2080 (52 weeks, 40 hours per week). For example, a person with an annual salary of VND 200,000,000 will have an hourly rate of VND 96,000 when dividing the annual salary by 2080.
- If you’re paid for travel or sick leave and don’t work for several weeks, don’t change the number of weeks you’re paid (namely 52 weeks). If you are taking a few weeks off unpaid to travel, subtract 52 from the number of weeks taken. [15] X Research Source
This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
There are 12 references cited in this article that you can view at the bottom of the page.
This article has been viewed 4,226 times.
If you are an hourly waged employee or independent contractor, it is beneficial to calculate your annual wages by hourly earnings. You are usually required to provide information about your annual salary in your application form; or you may want to compare salaries among new career opportunities. Either way, you can calculate your annual salary using simple formulas and basic math.
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