LESSON 12 2 Determining Payroll Tax Withholding CENTURY
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LESSON 12 -2 Determining Payroll Tax Withholding CENTURY 21 ACCOUNTING © Thomson/South-Western
Determining Payroll Tax Withholding n Payroll taxes– taxes based on the payroll of a business n Business is required by law to withhold certain payroll taxes from employee salaries n Payroll taxes are based of employee total earnings n ACCURATE and DETAILED payroll records must be maintained n Payroll taxes are a liability to the employer until paid to the government CENTURY 21 ACCOUNTING © Thomson/South-Western
Employee Income Tax n Federal income tax must be withheld from employee earnings n Some require state, city or county income taxes as well n Taxes are forwarded to the government periodically CENTURY 21 ACCOUNTING © Thomson/South-Western
Withholding allowance certificate n Read p. 346 n Withholding allowance: deduction from total earnings for each person legally supported by a taxpayer, including the employee n Employers must have W-4 on file n Tax withheld is based on the employee’s marital status and number of allowances n Read FYI p. 346 CENTURY 21 ACCOUNTING © Thomson/South-Western
5 EMPLOYEE’S WITHHOLDING ALLOWANCE page 346 CERTIFICATE 3 2 1 4 5 1. 2. 3. 4. 5. Write the employee’s name and address Write the employee’s social security number. Check the appropriate marital status block. Write the total number of withholding allowances claimed. The employee signs and dates the form. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 12 -2
6 EMPLOYEE’S INCOME TAX WITHHOLDING page 348 – MARRIED PERSONS 1 2 3 1. Select the appropriate table. 2. Locate the employee’s total earnings. 3. Intersection of wages and number of allowances column. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 12 -2
Examples on Reading Charts n 1. 2. Take out a piece of paper Single, paid semimonthly, TE=$1050. 00 Married, paid semimonthly, TE= $1050. 00 CENTURY 21 ACCOUNTING © Thomson/South-Western
Employee Social Security and Medicare n Read p. 349 n SS = federal tax for old age, survivors, and disability insurance n Medicare- federal tax paid or hospital insurance n Accounted for and reported separately n Paid by both the Employee and Employer n Employees withhold and deposit employee and contribution and then they match it CENTURY 21 ACCOUNTING © Thomson/South-Western
Social Security n Calculated on Employee earnings up to a maximum paid in a calendar year n Tax base= maximum amount of earnings on which tax is calculated n Congress sets tax rate and base for SS n 6. 2% max $87, 000 in a calendar year CENTURY 21 ACCOUNTING © Thomson/South-Western
Medicare n n No tax base 1. 45% FYI p. 349 Practice WT/ OYO CENTURY 21 ACCOUNTING © Thomson/South-Western
11 TERMS REVIEW n n n page 350 payroll taxes withholding allowance social security tax Medicare tax base CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 12 -2
Review Quiz 1. What is payroll? 2. How many hours were worked if employee arrived at 8: 29 and departed at 12: 02? 3. How is overtime calculated in this text? 4. What is the % for Social Security and Medicare? Is there a tax base? 5. Where does an employer get the information used to determine the amount of federal income tax withheld? 6. Federal income tax withholdings are based on what two factors? 7. Who pays SS tax and Medicare tax -Employee or employer? CENTURY 21 ACCOUNTING © Thomson/South-Western
- Expanded withholding tax computation
- Expanded withholding tax computation
- Withholding tax form 2307
- Withholding tax contractors
- Withholding tax for commission
- 5 withholding tax on rent
- Compensation computation
- South carolina state tax withholding form
- Payroll taxes journal entry
- Extinction effects have not been documented clearly in
- 165 withholding statement excel file
- Conclusion of gst
- Ralphs annual income is about $32 000