Payroll Tax Payments & Reports: Importance, Procedures, and Liabilities

1. Ch13-2 Review Problems

3. Chapter 13 $ Section 3 Tax Liability Payments and Tax Reports $ • What You’ll Learn • How to pay payroll tax liabilities. • Which tax reports are prepared and filed. $ $

4. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Why It’s Important Business owners must pay their payroll liabilities and file payroll tax reports promptly and accurately. $ • Key Terms • Federal Tax Deposit Coupon • Electronic Federal Tax Payment System • Form 940 • Form 941 • Form W-2 • Form W-3 $ $

5. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ FICA and Federal Income Taxes One payment is made for: $ • social security and Medicare taxes (both the employees’ and the employer’s shares) and • employees’ federal income taxes withheld. • The Federal Tax Deposit Coupon (Form 8109) is prepared and sent with the check. The form identifies the type of tax and the tax period. • Refer to Figure 13-3 on p328. $ $

6. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Payment of Federal Payroll Tax Liabilities $ JOURNAL ENTRY $ $

7. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Payment of State Income Taxes $ JOURNAL ENTRY $ $

8. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Payment of Federal Unemployment Taxes $ JOURNAL ENTRY $ $

9. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Payment of State Unemployment Taxes $ JOURNAL ENTRY $ $

10. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Payment of Other Payroll Liabilities • insurance premiums • union dues • charitable contributions $ $ JOURNAL ENTRY $

11. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Preparing Payroll Tax Reports • Form W-2 summarizes an employee’s earnings and withholdings for the calendar year. • Form 940 to report the employer’s unemployment (state and federal) taxes. • Form 941 is the employer’s quarterly federal tax return on which accumulated amounts of FICA and federal income tax withheld from employees’ earnings, as well as FICA tax owned by the employer, are reported. $ $ $

12. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Transmittal of Wage and Tax Statements Form W-3 summarizes the information contained on the employees’ Forms W-2. $ $ $

13. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ You will need to read this chapter in detail. I did not cover all of the information in lecture. There are a lot of details you should be aware of. $ $ $

14. Demonstration Problems 13-4 & 13-5

15. $375.74 $1459.47 $239.34 $82.50 $47.92 $323.46 18 2003 Oct 6 Employee’s Federal Income Tax Payable 1459.47 Social Security Tax Payable 375.74 Medicare Tax Payable 82.50 Cash In Bank 1917.71 Check #534 6 Employees State Income Tax Payable 239.34 Cash In Bank 239.34 Check #535 6 Federal Unemployment Tax Payable 47.92 Cash In Bank 47.92 Check #536 6 State Unemployment Tax Payable 323.46 Cash In Bank 323.46 Check #537

16. 46 2003 March 16 Hospital Ins. Premiums Payable 283.00 Cash In Bank 283.00 Check #856 16 Life Ins. Premiums Payable 85.60 Cash In Bank 85.60 Check #857 16 Credit Union Payable 350.00 Cash In Bank 350.00 Check #858 16 U.S. Savings Bond Payable 70.00 Cash In Bank 70.00 Check #859

17. Section 3 Tax Liability Payments and Tax Reports (con’t.) Chapter 13 $ Check Your Understanding p337 $ • Thinking Critically 1&2 • Analyzing Accounting • Problem 13-4 & 13-5 $ $