Textbook Problem

Which of the following is not considered a roll tax expense?

1. a. FICA Social Security
2. b. Federal income tax withholding
3. c. FICA Medicare
4. d. FUTA
5. e. SUTA

To determine

Identify which of the following item is not considered as payroll tax expense.

Answer to Problem 1QY

b. Federal income tax withholding

Explanation of Solution

Payroll:

Payroll refers to the total amount that is required to be paid by the company to its employees during a week, month or other period. It is the financial record of the wages and bonus, net pay, salary and deductions of a company’s employees.

Justification for the incorrect answer:

Option a, c, d and e:

Payroll tax expense is general expense account which records the employer’s portion of FICA taxes (social security tax, Medicare tax), the federal employment tax (FUTA) and state unemployment tax (SUTA).

Justification for the correct answer:

Option b:

The federal income tax withholding helps the employer in calculating the amount of pay the employer is entitled to pay the employee.

Therefore, from the above given explanation it is observed that Option b (federal income tax withholdings) is the correct answer and other options a, c, d and e are incorrect answer.