Payroll Accounting, Taxes, and Reports 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. The payroll register and employee earning records provide all the payroll information needed to prepare payroll and payroll tax reports.

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 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 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 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 unemployment tax is 5.4% on the first $7000.00 that an employee earns.

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 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 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 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.