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Chapter 13. Payroll Accounting, Taxes, and Reports. 13-1: Recording a Payroll. Payroll information for each pay period is recorded in a payroll register. The payroll information for each employee is also recorded on each employee earnings record.

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chapter 13

Chapter 13

Payroll Accounting, Taxes, and Reports

13 1 recording a payroll
13-1: Recording a Payroll
  • Payroll information for each pay period is recorded in a payroll register.
  • The payroll information for each employee is also recorded on each employee earnings record.
  • The payroll register and employee earning records provide all the payroll information needed to prepare payroll and payroll tax reports.
13 1 recording a payroll1
13-1: Recording a Payroll
  • Payroll registers are similar to a special journal, because payroll registers use columns to total debit and credit amounts needed to journalize a payroll.
  • Payroll journal entries are based on the totals of the Earnings Total column, each deduction column, and the Net Pay column.
13 2 recording employer payroll taxes
13-2: Recording Employer Payroll Taxes
  • Employers must pay taxes to the government that they have withheld from employee earnings.
  • Most employers must pay four separate payroll taxes:
      • Employer social security tax
      • Medicare tax
      • Federal Unemployment tax
      • State Unemployment tax
terms
Terms
  • Federal unemployment tax: A tax used for state and federal administrative expenses of the unemployment program.
  • State unemployment tax: A state tax used to pay benefits to unemployed workers.
  • Lookback period: The 12-month period that ends on June 30th of the prior year.
13 2 recording employer payroll taxes1
13-2: Recording Employer Payroll Taxes
  • Social security and Medicare are the only payroll taxes paid by both the employer and the employees.
  • The federal unemployment tax is .8% on the first$7000.00 that an employee earns.
  • The state unemploymenttax is 5.4% on the first $7000.00 that an employee earns.
13 3 reporting withholding and payroll taxes
13-3: Reporting Withholding and Payroll Taxes
  • Each employer who withholds income tax, social security tax, and Medicare tax from employee earnings must furnish each employee with an annual report of these withholdings.
  • Employers are required to furnish Form

W-2 to each employee by January 31st of the next year.

13 3 reporting withholding and payroll taxes1
13-3: Reporting Withholding and Payroll Taxes
  • Four copies (A-D) of Form W-2 are prepared for each employee.
  • Copies B and C are given to the employee, A is sent to the Social Security Administration, and D is kept for company records.
  • Businesses in states with state income tax must prepare additional copies of Form W-2 as well.
13 3 reporting withholding and payroll taxes2
13-3: Reporting Withholding and Payroll Taxes
  • Each employer is required by law to periodically report payroll taxes due to the government.
  • Each employer must file a quarterly federal tax return showing the federal income tax, social security tax, and Medicare tax due to the government.
13 4 paying withholding and payroll taxes
13-4: Paying Withholding and Payroll Taxes
  • Employers must pay to the federal, state, and local governments all payroll taxes withheld from employee earnings as well as the employer payroll taxes.
  • Federal unemployment insurance is paid by the end of the month following each quarter if the liability amount is more than $100.