Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Payroll and Payroll Taxes

Financial Accounting

9. Current Liabilities

Payroll and Payroll Taxes

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Multiple Choice

Which of the following payroll-related taxes must the employer pay by law?

Federal Unemployment Tax (FUTA)

Employee's portion of Medicare tax

Employee's portion of Social Security tax

Employee's federal income tax

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Verified step by step guidance

Understand the distinction between employer-paid taxes and employee-paid taxes. Employers are required to pay certain payroll-related taxes by law, while employees have their own tax obligations deducted from their wages.

Review the Federal Unemployment Tax Act (FUTA). Employers are required to pay FUTA tax to fund unemployment benefits. This tax is not deducted from employees' wages; it is solely the employer's responsibility.

Clarify the Medicare tax and Social Security tax. These taxes are part of the Federal Insurance Contributions Act (FICA). Employers are required to match the employee's portion of these taxes, but the employee's portion is deducted from their wages.

Understand the employee's federal income tax. This tax is withheld from the employee's wages by the employer, but it is not paid by the employer. The employer's role is to remit the withheld amount to the IRS.

Conclude that the employer is legally obligated to pay FUTA tax and match the employee's portion of Medicare and Social Security taxes, but the employee's federal income tax and the employee's portion of Medicare and Social Security taxes are not directly paid by the employer.