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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

For each of the following payroll related taxes, indicate whether they generally apply to (A) employees only, (B) employers only, or (C) both employees and employers:

  1. 1. Federal income tax
  2. 2. Medicare tax
  3. 3. Social security tax
  4. 4. Federal unemployment compensation tax
  5. 5. State unemployment compensation tax

To determine

Payroll: The total payment that a company is required to pay to its employee for the services received is called as payroll.

Payroll withholding deduction: The amounts which the employer withheld from employees’ gross pay to deduct taxes such as federal income tax, state income tax, local income tax, and social security tax are called payroll withholding deduction.

Employer payroll taxes: The taxes which the employer must pay to the employees with their salaries is called employer payroll taxes. Such taxes are not withheld from employees’ gross earnings but instead they are paid by employer.

To indicate: Whether the following payroll-related taxes apply to employees only, employers only, or both employees and employers.

Explanation

Every employer is responsible for paying the following payroll taxes:

  • Employer Federal Insurance Contributions Act (FICA) – Social security taxes.
  • Employer FICA tax – Medicare (medical benefits).
  • State Unemployment Compensation Tax (SUTA).
  • Federal Unemployment Compensation Tax (FUTA)...

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