Chapter 13 Payroll Liabilities and Tax Records

unemployment taxes

Collected to provide funds for workers who are temporarily unemployed

Normal Balance for a Payroll account

Credit

Normal balance for an Expense Account

Debit

Form 940

Annual form to report the employer's federal unemployment tax

The entry for Salaries Expense is recorded each pay period but the entry for Payroll Tax Expense is recorded only at the end of the year.

FALSE

When a business transfers money from its regular checking account to the payroll checking account, the check is written for the amount of *gross earnings*

FALSE *Net Pay*

Federal withholding taxes and social security taxes are normally paid *once a year* by the employer

FALSE *Quarterly*

*Employees' wages* are a liability of the business

FALSE Taxes are liabilities. Wages are paid off immediately

Form 8109

Federal Tax Deposit Coupon, identifies the type of tax and tax period

Federal Unemployment Tax Act (FUTA)

Federal Unemployment law requiring employers to pay unemployment taxes

Federal Deposit tax coupon

Form that is prepared and sent with the employer's check to show the amount of federal payroll taxes being sent to the government

What are taxes in relation to the business?

Liabilitites

How often are taxes paid?

Once a quarter

What are employee and employer taxes in relation to the business?

Operating Expenses

What are the FICA taxes?

Social Security Tax and Medicare tax

State Unemployment Tax Act (SUTA)

State Unemployment law requiring employers to pay unemployment taxes

The cash in bank account is credited for the total amount that is paid by the employer to the employees

TRUE

Payroll Tax Expense

The account used to record the employer's payroll taxes, which are business expenses

Form 941

The employer's quarterly federal tax return that reports accumulated amounts of FICA and federal income taxes withheld from employees' earnings, as well as FICA tax owned by the employer

Salaries Expense

The expense account often used to record employees' earnings - = gross pay of all employees

Form W-3

Transmittal of Wage and Tax Statements; summarizes the information on Forms W-23

Electronic Federal Tax Payment System (EFTPS)

Used by larger businesses to make deposits

Form W-2

Wage and Tax Statement; summarizes an employee's earnings and withholding for the calendar year; reports 1. gross earnings 2. federal income tax withheld 3. FICA taxes withheld 4. state and local income taxes withheld