Transcript Lesson 13-1
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
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
Record Employee Payroll Taxes – Each Payroll Period
Record Employer Payroll Taxes – Each Payroll Period
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
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
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:
Monthly schedule depositors for the first year of business
New employers fill out the 8109 coupon book
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
What accounts are impacted and how?
Employee Income Tax for December
Do Payables Increase or Decrease?
Total Employee Income Tax
When Paid?
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
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)
Page: 15
General
Date
Ck
No
Post.
Ref
Debit
Credit
Accounts
Payable
Debit
Purchases
Discount
Credit
Cash
Credit
COUPON 8109,
Cash Payments Journal
FEDERAL DEPOSIT COUPON
General
Date
Account Title
Jan 15 Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Ck
No
347
Post.
Ref
Debit
Credit
764.00
1411.00
330.00
2 5 0 5 00
Page: 4
Accounts
Payable
Debit
Purchases
Discount
Credit
Cash
Credit
2505.00
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.
What Journal will you use? Cash Payments
When is Unemployment paid? By end of next month after quarter
What quarter are we paying for? Fourth – Oct - Dec
What accounts are impacted and how?
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.
Cash Payments Journal
Page: 4
General
Date
Account Title
Jan 15 Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Ck Post.
No Ref
347
Debit
764.00
1411.00
330.00
Credit
Accounts
Payable
Debit
Purchases
Discount
Credit
Cash
Credit
2505.00
COUPON 8190 - FEDERAL
UNEMPLOYMENT
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.
Cash Payments Journal
Page: 4
General
Date
Account Title
Jan 15 Employee Income Tax Payable
Ck Post.
No Ref
347
Social Security Tax Payable
Medicare Tax Payable
31 Unemployment Tax Payable – Federal 367
Debit
757.00
Credit
Accounts
Payable
Debit
Purchases
Discount
Credit
Cash
Credit
2505.00
1411.00
330.00
34.60
34.60
COUPON 8109 – STATE UNEMPLOYMENT
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
February 1. Paid cash for US Savings Bonds for employees,
$150.00 C369
Cash Payments Journal
Page: 4
General
Date
Account Title
Jan 15 Employee Income Tax Payable
Ck Post.
No Ref
347
Social Security Tax Payable
Medicare Tax Payable
31 Unemployment Tax Payable – Federal 367
31 Unemployment Tax Payable – Federal 368
s
Debit
764.00
Credit
Accounts
Payable
Debit
Purchases
Discount
Credit
Cash
Credit
2505.00
1411.00
330.00
34.60
34.60
233.55
233.55
TERMS REVIEW
lookback period
REVIEW
WTG 13-4
Cash Payments Journal
Page:
General
Date
Account Title
Dec 15 Salary Expense
Ck
No
C315
Post.
Ref
Debit
Credit
5650.00
371.00
Social Security Tax Pay
350.30
Medicare Tax Payable
81.93
U.S Savings Bonds
25.00
C330
Purchases
Discount
Credit
Cash
Credit
4051.10
Employee Income Tax Pay
Dec 31 Salary Expense
Accounts
Payable
Debit
5729.00
4880.23
Employee Income Tax Pay
385.50
Social Security Tax Pay
355.20
Medicare Tax Payable
83.07
U.S. Savings Bonds
25.00
General Journal
Date
Dec
15
Account Title
Payroll Tax Expense
Doc
No.
M56
Page #
Post.
Ref
Debit
4
7
Credit
9
31
3
Social Security Tax Payable
Medicare Tax Payable
5
0 30
8
1 93
9 80
Unemployment Tax Payable - Federal
Unemployment Tax Payable- State
Dec
31
Payroll Tax Expense
Social Security Tax Payable
Medicare Tax Payable
3
7 28
5
5 20
8
3 07
M63
4
7
1
06
3
8 23
Unemployment Tax Payable - Federal
Unemployment Tax Payable- State
2
4 56