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

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 11, Problem 4DQ
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

Expert Solution
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 of Solution

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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Chapter 11 Solutions

Accounting
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