Employers sometimes pay a "gross-up" to employees to cover taxes associated with taxable fringe benefits they provide.

Question

Quizplus · Accepted Answer

This is true. A gross-up is a payment made by an employer to cover the additional taxes that an employee will owe as a result of receiving a taxable fringe benefit. By providing a gross-up, the employer is essentially covering the cost of the tax liability for the employee.

Employers Sometimes Pay a "Gross-Up" to Employees to Cover Taxes