Section 2Employer’s Payroll Taxes

Section 2Employer’s Payroll TaxesWhat You’ll Learn

How to calculate the employer’s

FICA taxes.

How to calculate federal and state

unemployment taxes.

How to journalize and post

employer’s payroll taxes.

What You’ll Learn

How to calculate the employer’s

FICA taxes.

How to calculate federal and state

unemployment taxes.

How to journalize and post

employer’s payroll taxes.

Why It’s Important

In addition to the amounts withheld

from employees’ payroll checks, the

employer owes taxes based on the

weekly payroll. These taxes are

liabilities of the business.

Why It’s Important

In addition to the amounts withheld

from employees’ payroll checks, the

employer owes taxes based on the

weekly payroll. These taxes are

liabilities of the business.

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)

Key Terms

Federal Unemployment Tax Act (FUTA)

State Unemployment Tax Act (SUTA)

Payroll Tax Expense

Key Terms

Federal Unemployment Tax Act (FUTA)

State Unemployment Tax Act (SUTA)

Payroll Tax Expense

The Employer’s FICA TaxesThe Employer’s FICA Taxes

The current rates are 6.2% for social security tax and 1.45% for Medicare tax.

The employer and the employee pay social security tax on gross earnings up to the maximum taxable limit per employee.

The employer and the employee pay Medicare tax on all gross earnings. There is no maximum taxable limit.

The current rates are 6.2% for social security tax and 1.45% for Medicare tax.

The employer and the employee pay social security tax on gross earnings up to the maximum taxable limit per employee.

The employer and the employee pay Medicare tax on all gross earnings. There is no maximum taxable limit.

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)

Federal and State Unemployment TaxesFederal and State Unemployment Taxes The Federal Unemployment Tax Act

(FUTA) and the State Unemployment Tax Act (SUTA) require employers to pay unemployment taxes.

The employer pays both federal and state unemployment taxes.

The maximum federal unemployment tax is 6.2% on the first $7,000 of an employee’s annual wages.

State unemployment tax rates and maximum taxable amounts vary among states.

The Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA) require employers to pay unemployment taxes.

The employer pays both federal and state unemployment taxes.

The maximum federal unemployment tax is 6.2% on the first $7,000 of an employee’s annual wages.

State unemployment tax rates and maximum taxable amounts vary among states.

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)

Journalizing the Employer’s Payroll TaxesJournalizing the Employer’s Payroll Taxes The employer’s payroll taxes are

business expenses recorded in the Payroll Tax Expense account.

Use the Social Security Tax Payable and the Medicare Tax Payable accounts to record both the employees’ and the employer’s FICA taxes.

Record the employer’s unemployment taxes in the Federal Unemployment Tax Payable and State Unemployment Tax Payable accounts.

The employer’s payroll taxes are business expenses recorded in the Payroll Tax Expense account.

Use the Social Security Tax Payable and the Medicare Tax Payable accounts to record both the employees’ and the employer’s FICA taxes.

Record the employer’s unemployment taxes in the Federal Unemployment Tax Payable and State Unemployment Tax Payable accounts.

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)

Journalizing the Employer’s Payroll Taxes (con’t.)

Journalizing the Employer’s Payroll Taxes (con’t.)

JOURNAL ENTRY

Demonstration Problem 13-2 & 13-3

$546.58 $244.68

6.2%

$57.22

1.45%

$31.57

.8%

$213.11

5.4%

13-2,

26

200-June 23 Payroll Tax Expense 546.58

Social Security Tax Payable 244.68Medicare Tax Payable 57.22State Unemployment Tax Payable 213.11Federal Unemployment Tax Payable 31.57

Payroll Register 6/23

$546.58 $244.68 $57.22

$31.57 $213.11

Check Your Understanding p326Check Your Understanding p326

•Thinking Critically 1&2•Problem 13-2 & 13-3•Thinking Critically 1&2•Problem 13-2 & 13-3

Section 2 Employer’s Payroll Taxes (con’t.)Section 2 Employer’s Payroll Taxes (con’t.)