Lesson 13 4
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LESSON 13-4. Paying Payroll Taxes and Unemployment Taxes. PROCESS. Record Employee Payroll Taxes Salary Expense Federal Income, Social Security, Medicare & Deductions (UW) Record Employer Payroll Taxes Payroll Tax Expense

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LESSON 13-4

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Lesson 13 4

LESSON 13-4

Paying Payroll Taxes and Unemployment Taxes


Process

PROCESS

  • Record Employee Payroll Taxes

    • Salary Expense

    • Federal Income, Social Security, Medicare & Deductions (UW)

  • Record Employer Payroll Taxes

    • Payroll Tax Expense

    • Social Security 6.2%, Medicare 1.45%, Federal Unemployment .8%, State Unemployment 5.4%

  • Report ALL taxes to Government

    • Form 941 (quarterly), W3 and W2 (yearly)

  • Pay ALL Withholding taxes to Government

    • Employee and Employer Payroll Taxes


Lesson 13 4

  • Record Employee Payroll Taxes – Each Payroll Period

  • Record Employer Payroll Taxes – Each Payroll Period


When to pay government

WHEN TO PAY GOVERNMENT

  • Payments for taxes to Government:

    • Called a deposit

    • Can be paid by three different methods:

      • Next banking day after payroll period

      • Semi-weekly

      • Monthly

  • Two amounts determine frequency of paying government taxes

    • Amount of taxes collected in the current period AND

    • Amount of taxes owed during a prior 12-month period

      • Large amounts of taxes = payments every few days

      • Low amounts of taxes = payments once a month

        • Less than $50,000 in previous 4 quarters = monthly


Paying employee income tax social security tax and medicare tax

PAYING EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX

lookback period: 12-month period that ends on June 30th of the prior year

Examples:

For 2010: twelve-month period ending June 30 of 2009: if <50,000 monthly depositor


Process1

PROCESS

  • Record Employee Payroll Taxes – Each Payroll

    • Federal Income, Social Security, Medicare

  • Record Employer Payroll Taxes – Each Payroll

    • Social Security 6.2%, Medicare 1.45%, Federal Unemployment .8%, State Unemployment 5.4%

  • Report taxes to Government – Quarterly/Yearly

    • Form 941 (quarterly) – By end of month following quarter

    • W3 and W2 (yearly)

  • Pay Withholding taxes to Government

    • Pay both employee and employer taxes

    • Pay payroll taxes by 15th of next month

    • Pay unemployment taxes - by end of month following each quarter


New employers

NEW EMPLOYERS

  • New Employers:

    • Monthly schedule depositors for the first year of business

    • New employers fill out the 8109 coupon book


Calculating payroll tax

Calculating Payroll Tax

January 15. Check No. 347.Paid cash for liability for employee income tax, for the month of December. Refer to your General Journal and Payments Journal for your numbers to complete this.

DEC15th Dec 31st Total

Employee Income Tax for December

Total Employee Income Tax

Social security tax for employee

Social security tax for employer

Total Social Security

Medicare tax for employee

Medicare tax for employer

Total Medicare

Total Payroll Tax Paid for the Month of December:

Dec 31st: Total fed: $383, SS $351.39, Medicare $82.17

  • What accounts are impacted and how?

  • Do Payables Increase or Decrease?

  • When Paid?


Journalizing employee payroll taxes

JOURNALIZING EMPLOYEE PAYROLL TAXES

January 15. Paid cash for liability for month of December employee income tax, $764.00; social security tax, $1411.00; and Medicare tax, $330.00; total, $2,505. Check No. 347. (employee and employer taxes)


Coupon 8109 federal deposit coupon

COUPON 8109, FEDERAL DEPOSIT COUPON

2

5

0

5

0

0


Journalizing payment of liability for federal unemployment tax

JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX

January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367.

Cash Payments

  • What Journal will you use?

  • When is Unemployment paid?

  • What quarter are we paying for?

  • What accounts are impacted and how?

By end of next month after quarter

Fourth – Oct - Dec


Journalizing payment of federal unemployment tax

JOURNALIZING PAYMENT OF FEDERAL UNEMPLOYMENT TAX

January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367.


Coupon 8190 federal unemployment

COUPON 8190 - FEDERAL UNEMPLOYMENT


Journalizing payment of state unemployment tax

JOURNALIZING PAYMENT OF STATE UNEMPLOYMENT TAX

January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $233.55. Check No. 368.


Coupon 8109 state unemployment

COUPON 8109 – STATE UNEMPLOYMENT


Purchase savings bonds

PURCHASE SAVINGS BONDS

January 15. Paid cash for US Savings Bonds for employees, $150.00 C347

  • What accounts are impacted and how?

  • Do Payables Increase or Decrease?

Decrease as Debit


Record purchase savings bonds

RECORD PURCHASE SAVINGS BONDS

February 1. Paid cash for US Savings Bonds for employees, $150.00 C369


Terms review

TERMS REVIEW

  • lookback period


Review

REVIEW

  • WTG 13-4


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