1. Section 3Tax Liability Payments and Tax Reports What You’ll Learn  How to pay payroll tax liabilities.  Which tax reports are prepared and filed. What You’ll Learn  How to pay payroll tax liabilities.  Which tax reports are prepared and filed.

2. Why It’s Important Business owners must pay their payroll liabilities and file payroll tax reports promptly and accurately. Why It’s Important Business owners must pay their payroll liabilities and file payroll tax reports promptly and accurately. Section 3Tax Liability Payments and Tax Reports (cont'd.) Key Terms  Federal Tax Deposit Coupon  Electronic Federal Tax Payment System  Form 940  Form 941  Form W-2  Form W-3 Key Terms  Federal Tax Deposit Coupon  Electronic Federal Tax Payment System  Form 940  Form 941  Form W-2  Form W-3

3. FICA and Federal Income Taxes One payment is made for: 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.  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. Section 3Tax Liability Payments and Tax Reports (cont'd.)

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

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

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

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

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

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

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

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