1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Accounting April 23, 2015 Chapter 13-3 & 13-4 notes 13-3 & 13-4 WT & OYO 13-3 & 13-4 Application 1 LESSON 13-3

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 13-3 Reporting Withholding And Payroll Taxes

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning EMPLOYER ANNUAL REPORT TO EMPLOYERES OF TAXES WITHHELD Each employer who withholds taxes from employee earnings must furnish each employee with an annual report of these withholdings Shows total year’s earnings and the amounts withheld Internal Revenue Service (IRS) Form W-2, Wage and Tax Statement Employers are required to furnish Form W-2 to each employee by January 31 each year If an employee ends employment before Dec. 31 st, W-2 must be furnished within 30 days of the last date of employment 3 LESSON 13-3

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Form W-2 Four copies are prepared for each employee Copies B and C are given to the employee Attach Copy B to tax return Keep Copy C for personal record Employer sends Copy A to the Social Security Administration Employer keeps Copy D for the business’s records Businesses in states with state income tax must prepare additional copies 4 LESSON 13-3

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 13-3 EMPLOYER ANNUAL REPORT TO EMPLOYEES OF TAXES WITHHELD page 378

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning PREPARING EMPLOYER’S QUARTERLY FEDERAL TAX RETURN Employers are required by law to file a quarterly federal tax return Submitted every three months on Form 941, Employer’s Quarterly Federal Tax Return All information is obtained from employee earnings records See page 380 for steps to prepare an employer’s quarterly federal tax return 6 LESSON 13-3

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 13-3 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379 (continued on next slide) 1 2 1. Heading2.Number of employees

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 13-3 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379 (continued on next slide) 3.Total quarterly earnings 4.Income tax withheld 5.Employee and employer social security and Medicare taxes 7.Total taxes 6.Social security plus Medicare taxes 4 5 3 6 7

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 13-3 EMPLOYER’S QUARTERLY FEDERAL TAX RETURN page 379 (continued from previous slide) 888 9 8. Total taxes for each month9. Total taxes

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES Form W-3, Transmittal of Wage and Tax Statements is sent to the Social Security Administration by February 28 th each year Reports the previous year’s earnings and payroll taxes withheld for all employees Employers with more than 250 employees must send the information to the IRS in computer files rather than forms W-2 and W-3 10 LESSON 13-3

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 13-3 EMPLOYER ANNUAL REPORTING OF PAYROLL TAXES page 381

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 13-4 Paying Withholding and Payroll Taxes

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning PAYING WITHHOLDING AND PAYROLL TAXES The payment of payroll taxes with the government is referred to as a deposit Two amounts determine how often deposits are made to the federal government: Amount of payroll taxes collected during the current deposit period Amount of payroll taxes owed during a prior 12-month period Lookback period – 12-month period that ends on June 30 th of the prior year 13 LESSON 13-3

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning PAYING THE LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX The IRS provides businesses with the following flowchart to assist them in determining when to make tax deposits 14 LESSON 13-4 page 383

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning FORM 8109, FEDERAL DEPOSIT COUPON New employers are monthly schedule depositors for the first calendar year of business IRS issues a monthly Form 8109 coupon book After lookback period, business evaluates whether a change in its deposit period is required Hobby Shack classified as a monthly depositor 15 th of every month Federal tax payment including federal income, social security, and Medicare identified as 941 tax 15 LESSON 13-3

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning FORM 8109, FEDERAL DEPOSIT COUPON Deposits can also be made using the Electronic Federal Tax Payment System (EFTPS) Businesses having deposits of more than $200,000 during calendar year must use EFTPS 16 LESSON 13-3

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 13-4 FORM 8109, FEDERAL DEPOSIT COUPON page 384

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 13-4 JOURNALIZING PAYMENT OF LIABILITY FOR EMPLOYEE INCOME TAX, SOCIAL SECURITY TAX, AND MEDICARE TAX 1 2 3 4 5 page 385 January 15. Paid cash for liability for employee income tax, $757.00; social security tax, $1,451.38; and Medicare tax, $339.42; total, $2,547.80. Check No. 347. 1.Write the date. 2.Write the titles of the three accounts debited. 3.Write the check number. 4.Write the debit amounts. 5.Write the amount of the credit.

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning FORM 8109, FEDERAL DEPOSIT COUPON Federal unemployment insurance is paid by the end of the month following each quarter if the liability amount is more than $100 And all unemployment tax liabilities outstanding at the end of a calendar year should be paid Reported on Form 940 19 LESSON 13-3

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 13-4 PAYING THE LIABILITY FOR FEDERAL UNEMPLOYMENT TAX page 386

21. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 13-4 JOURNALIZING PAYMENT OF LIABILITY FOR FEDERAL UNEMPLOYMENT TAX 12345 page 387 January 31. Paid cash for federal unemployment tax liability for quarter ended December 31, $34.60. Check No. 367. 1. Write the date. 5. Write the amount of the credit to Cash. 4. Write the debit amount. 3. Write the check number. 2. Write the title of the account debited.

22. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 13-4 JOURNALIZING PAYMENT OF LIABILITY FOR STATE UNEMPLOYMENT TAX page 387 January 31. Paid cash for state unemployment tax liability for quarter ended December 31, $233.55. Check No. 368. 1. Date 5. Credit amount 4. Debit amount 3. Check number 2. Account debited 12345