Chapter 8
EMPLOYER TAXES,
PAYMENTS, AND REPORTS
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Employer Identification Number (EIN)
• Everyone must have a ___________________ or an
___________________ (______).
• Employers of one or more persons are required to
have an _____________________ (_____), and it
must be listed on all reports and payments of
employees’ federal income tax withholding and FICA
taxes.
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Employer’s Payroll Taxes
• An employer’s payroll taxes are based on the
•
•
_________ wages paid to employees.
Payroll taxes are an _________ of doing business
A company would ______ ______________________
for the _________ portion of FICA taxes and for
_________ and _________ unemployment taxes.
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Employer’s Matching Portion of FICA Tax
• FICA tax is imposed equally on both _________ and
_________ .
• The employer’s share is determined by _________
the _________ tax rate by the _________ earnings.
• The accountant obtains the Social Security and
Medicare taxable earnings amounts from the payroll
register.
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Employer’s State Unemployment Tax
• The proceeds of the __________________________ (______),
•
which is levied only on the employer in most states, are used to
pay subsistence benefits to unemployed workers.
Green Sales Company is subject to a rate of 5.4 percent of the
first $7,000 of each employee’s earnings; in our example,
$958.20 of earnings are subject to this tax.
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Learning Objective
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Employer’s Federal Unemployment Tax
• The _____________________ (______) is paid only
•
by the _________________.
Green Sales Company is subject to a rate of 6% of the
first $________ of each ________ earnings (the same
amount of earnings that is used for SUTA).
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Steps for Recording the Payroll
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Steps for Recording the Payroll
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Practice Exercise 1
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Learning Objective
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Payments of FICA Tax and Employees’
Federal Income Tax Withholding
• A federal tax deposit includes the combined total of
three items:
• __________________________________
• __________________________________
• __________________________________
• The IRS requires all tax deposits to be made
_________, using the _____________________
__________________ (_______).
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Payments of FICA Tax and Employees’
Federal Income Tax Withholding
Employers submit a return, ________, every ______
(____ consecutive months). The due dates for filing
this return are as follows:
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Federal Tax Deposit
From the October 11 payroll for Green Sales
Company, we determine the following taxes are
owed:
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Federal Tax Deposit
The October 18 payroll for Green Sales Company has the
same taxes as the October 11 payroll. The combined taxes for
the two weeks would be:
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General Journal entry for two week’s taxes
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Practice Exercise 2
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Learning Objective
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Payments of State Unemployment Insurance
• The state tax is usually paid ______ and is due by the
end of the ______ following the end of the ______
(the same due dates for Form 941).
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Payments of State Unemployment Insurance
Green Sales Company makes the journal entry for the first
quarter (covering the months of January, February, and March).
The taxable amount for this quarter was $70,325, so the tax is
$3,797.55 ($70,325 x 0.054).
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Payments of Federal Unemployment Insurance
• The FUTA tax is calculated ________ , during the
________ following the end of each calendar
________ .
• If the accumulated tax liability is greater than $
________, the tax is deposited in a financial
institution, accompanied by a preprinted federal tax
deposit card.
• The due date for this deposit is the ________ of the
________ following the end of the ________ .
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Payments of Federal Unemployment Insurance
Recall that at the end of the first quarter, Green Sales Company
had $70,325 that was taxable. The amount of the tax was
$421.95 ($70,325 x 0.006).
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Practice Exercise 3
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Learning Objective
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Deposits of Employees’ State Income
Tax Withholding
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Practice Exercise 4
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Learning Objective
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Employer’s Quarterly Federal Tax Return
(Form 941)
• The purpose of ___________, Employer’s Quarterly
Federal Tax Return, is to report the tax ________ for
withholdings of employees’ ________ income tax and
________ taxes, and also the ________ share of
FICA taxes.
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Practice Exercise 5
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Learning Objective
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Wage Withholding Statements for Employees
(Form W-2)
• After the __________ (__________ ) and by the
__________ , the __________ must furnish for each
employee a Wage and Tax Statement, known as
______________.
• The source of the information used to complete Form
W-2 is the __________ __________ __________
record.
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Employer’s Annual Federal Income Tax Reports
(Form W-3)
• _______________ , Transmittal of Wage and Tax
Statements, is sent with the accompanying Copy A of
the employees’ W-2 form to the _________________
administration.
• This form is due on _______________, following the
end of the calendar year.
• The amounts shown on __________ must be the
same as the grand totals of the __________ and the
________________________ .
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Reports and Payments of Federal
Unemployment Tax
• Generally all _____________ are subject to the
Federal Unemployment Tax Act.
• These employers must submit an Employer’s Annual
Federal Unemployment (FUTA) Tax Return,
________________, _____________ following the
close of the calendar year.
• This deadline may be extended until _____________
if the employer has made deposits paying the FUTA
_____________ .
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Reports and Payments of Federal
Unemployment Tax
Using Green Sales Company as our example, federal
unemployment taxable earnings by quarter are as
follows:
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Reports and Payments of Federal
Unemployment Tax
On April 30, we now repeat the journal entry for the
first quarter on Green Sales Company’s books.
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Practice Exercise 6
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Learning Objective
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Workers’ Compensation Insurance
• Most states require employers to provide __________
______________ either through plans administered
by the state or through private insurance companies
authorized by the state.
• This insurance provides ______________ insurance
for employees _____ or _____ on the job.
• Generally, the employer pays a _____ in _____ ,
based on the _____ payroll.
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Workers’ Compensation Insurance
For Green Sales company, at the beginning of the year,
the firm’s accountant computed the estimated premium
as follows:
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Workers’ Compensation Insurance
For Green Sales company, at the end of the year, the firm’s
accountant calculated the exact premium as follows:
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Practice Exercise
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Learning Objective
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Workers’ Compensation Insurance
The accountant determines the amount of the adjustment is
$73.19 [$3,646.19 (total exact premium) – $3,573.00 (total
estimated premium paid)]. The accountant then makes an
additional adjusting entry for the extra premium.
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Learning Objective
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Adjusting for Accrued Salaries and Wages
Assume that $2,400 of wages accrued for the time
between the last payday and the end of the year. An
adjusting entry is necessary.
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Adjusting Entry for Accrual of Payroll Taxes
• The following taxes come under the umbrella of the
___________________ account:
• ________________________________
• ________________________________
• ________________________________
• The employer becomes liable for these taxes ____
when the employees are ____________.
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Types of Payroll Fraud
• _________________________________________
_________________________________________
• _________________________________________
_________________________________________
• _________________________________________
_________________________________________
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Internal Controls to Prevent and Detect Payroll Fraud
•________________________
•________________________
________________________
•________________________
________________________
________________________
•________________________
________________________
•________________________
•________________________
________________________
________________________
________________________
•________________________
________________________
________________________
•________________________
________________________
•________________________
•________________________
________________________
________________________
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Practice Exercise 8
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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.