# How to Calculate Gross Monthly Income From Annual

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Calculating your monthly income can be helpful for budgeting purposes. You can more effectively figure out how much of your income to set aside for personal expenses and how much discretionary income you have. Potential lenders and mortgage companies also often use your gross monthly income to figure how much you can afford to pay and how much credit to extend. Before you calculate your gross monthly income, you must figure out your total annual salary or gross take-home pay.

## What is Gross Monthly Income?

Gross monthly income is the amount you earn in one month, before deductions for taxes and other expenses. It includes base salary together with any overtime, commissions or bonuses that you regularly receive. If you are employed, the amount may be specified on your job offer letter, and you can find your annual "gross pay" reported on your most recent W-2 form from your employer. . Alternatively, you can take your annual salary and find your gross monthly salary from that. Your net monthly income is different, since this is what you have left over after taxes and deductions. For instance, you might earn \$6,000 gross each month, but only receive a take-home amount for \$4,800.

## Calculating Gross Monthly Salary If You Are Employed

Start by finding a recent pay stub. Look for the "gross" amount your paycheck reports for the pay period. The "gross" amount is larger than the "net" – your income after taxes and deductions. Multiply the "gross" amount by 52 if you're paid weekly. Multiply the "gross" amount by 26 if paid biweekly, by 24 if paid semimonthly or by 12 if paid once per month. The result equals your gross annual income. Finally, divide the result (your annual income) by 12 for the number of months in one year to find your gross monthly income.

## Calculating Mnthly Gross Pay If You Are Self-Employed

This time, start by finding your most recent Schedule C if you have been self-employed for at least one full tax year. Look for the "net profit" line on the Schedule C, the gross amount you earned after deducting allowable costs such as employee labor, space rental and advertising expenses. Then, gather all self-employment records that document your income if you've been self-employed for less than a year and have not yet filed a Schedule C. Documents may include sales receipts from clients and Form 1099s for independent contractor work.

Add all anticipated sources of self-employment income for the remainder of the year. Deduct allowable business expenses, such as advertising expenses, employee salaries and inventory expense, to arrive at your "net profit." Divide your "net profit" by 12 (number of months in one year) to find your gross monthly income, the amount you earn before paying taxes.