Section 3 Tax Liability Payments and Tax Reports

1. 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. $ $

2. Section 3 Tax Liability Payments and Tax Reports (cont'd.) 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 $ $

3. Section 3 Tax Liability Payments and Tax Reports (cont'd.) 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. $ $

4. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Payment of Federal Payroll Tax Liabilities $ JOURNAL ENTRY $ $

5. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Payment of State Income Taxes $ JOURNAL ENTRY $ $

6. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Payment of Federal Unemployment Taxes $ JOURNAL ENTRY $ $

7. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Payment of State Unemployment Taxes $ JOURNAL ENTRY $ $

8. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Payment of Other Payroll Liabilities For example: • insurance premiums • union dues • charitable contributions $ $ JOURNAL ENTRY $

9. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Preparing Payroll Tax Reports • Form W-2 summarizes an employee’s earnings and withholdings for the calendar year. • Form 940 is used 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. $ $ $

10. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Transmittal of Wage and Tax Statements Form W-3 summarizes the information contained on the employees’ Forms W-2. $ $ $

11. Section 3 Tax Liability Payments and Tax Reports (cont'd.) Chapter 13 $ Check Your Understanding $ What accounts are affected when a business pays the federal unemployment tax? $ $