Multiple Choice
Which of the following payroll taxes is paid only by the employer?
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9. Current Liabilities
Payroll and Payroll Taxes
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Which of the following is considered an employer payroll cost?
A
Employer's share of Social Security and Medicare taxes
B
Employee's federal income tax withholding
C
Employee's share of health insurance premiums
D
Employee's contribution to a 401(k) plan
Verified step by step guidance1
Understand the concept of employer payroll costs: These are expenses incurred by the employer related to compensating employees, beyond the gross wages or salaries paid to them.
Identify the employer's obligations under payroll taxes: Employers are required to pay their share of Social Security and Medicare taxes, which are part of the Federal Insurance Contributions Act (FICA). This is separate from the amounts withheld from employees' paychecks.
Differentiate between employer costs and employee deductions: Employee deductions, such as federal income tax withholding, health insurance premiums, and contributions to a 401(k) plan, are amounts subtracted from the employee's gross pay and are not considered employer payroll costs.
Focus on the employer's share of Social Security and Medicare taxes: This is a mandatory payroll cost for employers, as they must match the amounts withheld from employees for these taxes.
Conclude that the employer's share of Social Security and Medicare taxes is the correct answer, as it represents a direct cost to the employer related to payroll.
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