Chapter 13 Payroll Taxes – Journalizng , Reporting and Paying

1. Chapter 13Payroll Taxes – Journalizng,Reporting and Paying

2. So… • EVERY PAY PERIOD: • Pay employees every pay period • Payroll Register • Employee Earnings Record • Use Memorandum to journalize employer payroll taxes (contributions) • General Journal • MONTHLY: • Pay employee and employers contributions electronically (formerly Federal Deposit Coupon) • Use Cash Payment Journal • QUARTERLY: • Report employee and employers payroll taxes using a 941 form • ANNUALLY: • Send a W-3 Transmittal to the Federal government • Send a NJ W-3 Transmittal to the State government • Send W-2s to your employees

3. 13-1: Journalizing • Where? Cash payment special journal • Check number of payroll transfer Salaries Expense Debit - Total Earnings Withholding Payables Credits – Each payroll tax Cash Credit – Net amount of check Use T accounts (Text p. 370) WT 13-1, OYO 13-1, App 13-1

4. 13-2: Employer Contributions • Payroll Register shows EMPLOYEE contributions • EMPLOYER contributions must be made: • Social Security – 6.2% with a maximum of $87,000 • Medicare – 1.45% • Federal Unemployment Tax (FUTA) – 0.8% max of $7,000 • State Unemployment Tax (SUTA) – 5.4% max of $7,000

5. 13-2: Employer Contributions

6. Practice: WT 13-2 • 13-2 Yer Contributions\13-2 WT Yer Contributions.xls Complete OYO 13-2 – Employer Payroll Tax Chart

7. 13-2: Employer Contributions • Journalized each payroll period as a payable • Not paid til quarter or year end • Use Memorandum

8. Practice • 13-2 WT • 13-2 Yer Contributions\13-2 WT Yer Contributions.xls Complete 13-2 OYO PUT IT ALL TOGETHER: Application Problem 13-2

9. 13-3: The W-2 Employer Annual Report to Employees of Taxes Withheld • At year end, prepare a W-2 (Text p. 378) • Submitted to: Federal and State governments, employee, and filed in company files • Business’s name, address and EIN • Employee’s name, address and SS # • Total Wages (Box 1, 3 and 5) • Total Fed income tax withheld (Box 2) • Total SS withheld (Box 4) • Total Medicare withheld (Box 6) Employees use this W-2 to file their personal income taxes.

10. 13-3: The W-3 Employer Annual Reporting of Payroll Taxes • At year end, prepare a W-3 (Text p. 381) • Submitted to: Federal and State governments, and filed in company files • Business’s name, address and EIN • Employee’s name, address and SS # • Total Wages for the Business (Box 1, 3 and 5) • Total Fed income tax withheld for the Business (Box 2) • Total SS withheld for the Business (Box 4) • Total Medicare withheld for the Business (Box 6) The total of all employees’ W-2s

11. 13-3: The 941 – Employer’s Quarterly Federal Tax Return (Text p. 379) • Filed the month following each fiscal quarter • Due April 30th, July 30th, Oct 30th, Jan 30th • Reports the amount of employees’ withholding plus employer contributions that is owed and has been paid Form 941 at irs.gov publications Practice: 13-3 Work Together With a partner: 13-3 OYO Independently: 13-3 App

12. 13-4: Form 8109, Federal Deposit Coupon • Coupons are no longer in use • File electronically - MONTHLY • Once payment is filed, need to journalize Debit: Employee Income Tax Payable Social Security Tax Payable Medicare Tax Payable Credit: Cash w/ check number paid for employee and employer taxes

13. So… • EVERY PAY PERIOD: • Pay employees every pay period • Payroll Register • Employee Earnings Record • Use Memorandum to journalize employer payroll taxes (contributions) • General Journal • MONTHLY: • Pay employee and employers contributions electronically (formerly Federal Deposit Coupon) • Use Cash Payment Journal • QUARTERLY: • Report employee and employers payroll taxes using a 941 form • ANNUALLY: • Send a W-3 Transmittal to the Federal government • Send a NJ W-3 Transmittal to the State government • Send W-2s to your employees