Intermediate Accounting Employee Compensation—Payroll, Pensions, and Other Compensation Issues参考.ppt

Payroll and Payroll Taxes Federal old-age, survivors’, and disability (tax to both the employee and employer) Federal hospital insurance (tax to both employer and employee) Federal unemployment insurance (tax to employer only) Payroll and Payroll Taxes State unemployment insurance (tax to employer only) Individual income tax (tax to employee only but withheld and paid by employer) Federal Insurance Contributions Act (FICA) The Federal Insurance Contributions Act (FICA) provides for FICA taxes from both employers and employees to provide funds for federal old-age, survivors’, and disability benefits for certain individuals and members of their families. The employer is required to withhold FICA taxes from each employee’s wages. In 2007, annual wages up to $97,200 were subject to 6.20% of FICA tax. Federal Hospital Insurance FICA also includes a provision for Medicare tax. This tax differs from the tax previously discussed in that the tax is applied to all wages earned. For 2007, the rate was 1.45% for both employer and employee. Federal Unemployment Insurance The Federal Social Security Act and the Federal Unemployment Tax Act (FUTA) provide for the establishment of unemployment insurance plans. Employers with insured workers employed in each of 20 weeks during a calendar year or who pay $1,500 or more in wages during a calendar quarter are affected. Federal Unemployment Insurance Tax rate on the first $7,000 of wages earned has been 6.2% since 1985. Employer can apply for a credit limited to 5.4% for taxes paid on state unemployment tax, effectively reducing the federal tax to 0.8% (6.2% – 5.4%). No tax is levied on the employee. State Unemployment Insurance State unemployment compensation laws (SUTA) differ across states. Most states only tax employers, but a few tax both. Savings under state merit systems are also allowed as credits in the calculation of the federal contribution. Income Tax Income Tax Accounting for Payroll Taxes Accounting for Payroll Taxes