How to Calculate an Annual Salary Based on an Hourly Rate
From time to time, situations arise in which you need to calculate an annual salary from an hourly wage. For instance, you must provide your annual salary when applying for credit. It helps to know your annual salary if you have two jobs and want to know how much extra income tax to have withheld so you don't get stuck with a big lump sum payment on tax day.
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Instructions
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Figure out the actual hourly rate. This isn't always the base rate quoted or listed on a paycheck stub. One common adjustment is a shift differential. Employers that have round-the-clock operations, such as hospitals, often pay a shift differential. For instance, a base hourly wage might be $15 per hour, but with a 10 percent differential, the actual rate works out to $16.50 per hour.
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2
Factor in other compensation such as tips or commission. Divide the weekly average of any other compensation by the average hours worked per week, then add that figure to the actual hourly rate (from Step 1). You can find the average weekly compensation and hours by dividing the year-to-date totals on your last paycheck stub by the number of weeks worked so far in the current year. For example, if you earn $240 in tips per week on average, your employer pays you $5 per hour, and you work 20 hours per week, your total hourly wage rate is $240 divided by 20 plus $5 per hour, or $17 per hour.
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3
Calculate your average weekly wages. To do this, multiply the average hours worked by the total wage rate (from Step 2) for all hours worked, up to 40 hours per week. All hours over 40 worked in a week are overtime, and federal law requires you be paid for these hours at one and one-and-a-half times the regular rate. If you work more than 40 hours per week on average, multiply the hours in excess of 40 by 1.5, and add the result to the pay for regular hours.
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Multiply the average pay per week by the number of weeks you expect to work during the year. For most people, this will be 52 weeks. However, if you only work part of the year, multiply the average pay per week by the number of weeks you expect to work.
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