1. Employer’s Payroll Taxes Accounting II Ms. Alltucker
Chapter 13 Section 2
Employer’s Payroll Taxes
Accounting II
Ms. Alltucker

2. Employer’s Payroll Taxes
What you will learn:
How to calculate the employer’s FICA taxes.
How to calculate federal and state unemployment taxes.
How to journalize and post employer’s payroll taxes.
Why it is important:
In addition to the amount withheld from employees’ payroll checks, the employer owes taxes based on the weekly payroll. These taxes are liabilities of the business.

3. Section 1 Review Journalizing and posting the payroll entry
Records taxes employees are required to pay on their earnings

4. Employer’s Payroll Taxes
Medicare
Social Security
State unemployment
Federal unemployment

5. Computing Payroll Tax Expenses
Employer’s FICA taxes
Both employee and employer pay FICA taxes
Employer pays FICA taxes using the same percentage as employees—using the gross earnings
6.2% social security (maximum taxable limit $84,900 in 2002)
Payroll clerk checks the accumulated earnings record
1.45% Medicare
There is no maximum taxable limit

6. Federal and State Unemployment Taxes
Based on a percentage of the employees’ gross earnings
Collected to provide funds for workers who are temporarily unemployed
Employer pays BOTH federal and state unemployment taxes
Maximum unemployment 6.2% on the first $7,000
.8%  federal unemployment tax
5.4%  state unemployment tax
(total = 6.2%)

7. Journalizing the Employer Payroll Taxes
Payroll tax expense: employer’s payroll taxes are business expenses
Until paid they are liabilities of the business
Accounts used:
Social Security Tax Payable
Medicare Tax Payable
Federal Unemployment Tax Payable
State Unemployment Tax Payable

8. Journalizing the Employer Payroll Taxes
Using the payroll register as a source document

9. Journalizing the Employer Payroll Taxes
Calculations:
Social Security Tax Payable
* .062 = $83.72
Medicare Tax Payable
* = $19.58
Federal Unemployment Tax Payable
* .008 = $10.80
State Unemployment Tax Payable
* .054 = $72.91
Payroll Tax Expense =

10. Journalizing the Employer Payroll Taxes
JOURNAL ENTRY

11. Posting Payroll Taxes to the General Ledger
Refer to page 325 for a review on how to post from the general journal to the general ledger
DON’T FORGET POST REFERENCE NUMBERS

12. Thinking Critically
What does the FICA require of employers and employees?
Explain why the employer’s payroll taxes are a liability of the business.