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Baila
Student
Moore, Montana
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How does monthly income cycle calculated ?
Theoretically explain
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John Graham
Music Producer
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Bremerton, Washington
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John’s Answer
Hi Baila! A monthly income cycle (also called a monthly payroll cycle) is a way that companies pay employees once a month. If you have an annual salary basis, then the employer will divide that amount by twelve so that you get paid once a month. If you're on an hourly wage basis, then they take the total hours you worked in a month and multiply it by your hourly wage and then use that to compute your monthly paycheck. Don't forget that the gross amount is only the starting point and then (at least in the US) employers take out various deductions for taxes (FITW - Federal Income Tax Witholding and SITW - State Income Tax Witholding), and possibly other benefit deductions for Social Security, Retirement plans like 401K, Health/Medical insurance, etc.). So in the end your paycheck is your gross monthly pay with all the deductions taken out resulting in your "net" pay. Hope this helps, and good luck!