Multiple Choice
Which of the following payroll taxes is paid by both the employee and the employer?
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9. Current Liabilities
Payroll and Payroll Taxes
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Which of the following is NOT an employer payroll cost?
A
Federal income tax withheld from employees' pay
B
Employer's share of Medicare tax
C
State unemployment tax (SUTA) paid by the employer
D
Employer's share of Social Security tax
Verified step by step guidance1
Understand the concept of employer payroll costs: Employer payroll costs are expenses incurred by the employer related to employee compensation, including taxes and benefits that the employer is responsible for paying.
Review the components of employer payroll costs: These typically include the employer's share of Social Security tax, Medicare tax, state unemployment tax (SUTA), and other employer-paid benefits.
Analyze the federal income tax withheld from employees' pay: This is not an employer payroll cost because it is deducted from the employee's wages and remitted to the government on behalf of the employee. The employer does not bear this cost directly.
Compare the options provided: Identify which items are employer payroll costs (e.g., employer's share of Medicare tax, state unemployment tax, employer's share of Social Security tax) and which are not (e.g., federal income tax withheld from employees' pay).
Conclude that federal income tax withheld from employees' pay is NOT an employer payroll cost, as it is an employee obligation and does not represent a direct expense to the employer.
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