{"id":801,"date":"2015-05-13T17:24:54","date_gmt":"2015-05-13T17:24:54","guid":{"rendered":"https:\/\/courses.candelalearning.com\/finacct2x10xmaster\/?post_type=chapter&#038;p=801"},"modified":"2015-05-29T15:07:30","modified_gmt":"2015-05-29T15:07:30","slug":"payroll-accounting-defined","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-finaccounting\/chapter\/payroll-accounting-defined\/","title":{"raw":"Payroll Accounting Defined","rendered":"Payroll Accounting Defined"},"content":{"raw":"If you haven't already, at some point you will most likely receive a paycheck.\u00a0 The first time you do, you will be disappointed.\u00a0 You will want to know who took all your money!\u00a0 But not to worry, this section and the next will explain where it all goes.\r\n\r\nWhat is included in an employee's paycheck?\r\n<ul>\r\n\t<li><strong>Gross Pay<\/strong>:\u00a0 This is the amount of money you are promised either hourly, weekly or annually.<\/li>\r\n\t<li><strong>Federal Income Tax Withheld <\/strong>(also referred to as FIT<strong>)<\/strong>:\u00a0 You will fill out a document called a W-4 when you are hired.\u00a0 This document allows you to claim allowances and a federal filing status for tax purposes.\u00a0 These options along with your gross pay are used to calculate your federal tax withheld.\u00a0 This will reduce your gross pay.<\/li>\r\n\t<li><strong>State Income Tax Withheld <\/strong>(also referred to as SIT<strong>)<\/strong>:\u00a0 A different form than the W-4 but the same concept except it applies to the state.\u00a0 Not all states have a state income tax.\u00a0 This will reduce your gross pay.<\/li>\r\n\t<li><strong>FICA Social Security Tax <\/strong>(also referred to as OASDI):\u00a0 This tax helps fund social security and is calculated as gross pay x 6.2% unless you make OVER $118,500 in 2015 then you are only responsible to pay 6.2% of $118,500 and nothing more.\u00a0 This will reduce your gross pay.<\/li>\r\n\t<li><strong>FICA Medicare Tax<\/strong> (also referred to as HI)<strong>:<\/strong>\u00a0 This tax helps fund medicare and is calculated as gross pay x 1.45%.\u00a0 Everyone must pay the 1.45% of gross pay without limit.\u00a0 This will reduce your gross pay.<\/li>\r\n\t<li><strong>Voluntary Deductions:<\/strong>\u00a0 Any deductions you authorize will also reduce your gross pay.\u00a0 This includes things like medical premiums, 401K and savings accounts, charity donations, etc.<\/li>\r\n\t<li><strong>Net Pay<\/strong>:\u00a0 Finally!\u00a0 This is the amount you will receive after all taxes and voluntary deductions have been taken out.<\/li>\r\n<\/ul>\r\nWait -- this section is on current liabilities so how do they fit in?\u00a0 Your employer will take money out of your paycheck for the items listed above and combine them with other employee amounts to send one big check to the government or business (for voluntary deductions).\u00a0 When you are\u00a0paid, the company records\u00a0liabilities for the amounts taken out of your paycheck.\r\n\r\nDon't think employers are getting off easy!\u00a0 There is a cost (more than gross pay) for having employees.\u00a0 The employer must pay the following on every dollar an employee earns:\r\n<ul>\r\n\t<li><strong>FICA Social Security Tax<\/strong>:\u00a0 This tax helps fund social security and is calculated as gross pay x 6.2% unless\u00a0an employee\u00a0makes OVER $118,500 in 2015 then you are only responsible to pay 6.2% of $118,500 and nothing more for that employee.<\/li>\r\n\t<li><strong>FICA Medicare Tax:<\/strong>\u00a0 This tax helps fund medicare and is calculated as gross pay x 1.45%.\u00a0 Everyone must pay the 1.45% of gross pay without limit.<\/li>\r\n\t<li><strong>Federal Unemployment Tax (FUTA):\u00a0<\/strong> This tax is for unemployment claims and is typically calculated as 0.8% of the first $7,000 of an employee's earnings.\u00a0\u00a0Once the employee has earned more than $7,000 in gross pay for the year, the company no longer has to pay FUTA tax.<\/li>\r\n\t<li><strong>State Unemployment Tax (SUTA):\u00a0<\/strong> This tax is for the state unemployment and does not have a consistent rate.\u00a0 The rate is provided by the state annually and can change each year by business.<\/li>\r\n\t<li><strong>Voluntary Deductions Matching:<\/strong>\u00a0 Any matching funds the company provides for insurance or retirement plans.<\/li>\r\n<\/ul>\r\nIn the next section we will look at the entries required for payroll with both the employee and employer side of the transactions.\r\n<\/div>\r\nhttp:\/\/www.openassessments.com\/assessments\/1203\r\n\r\n&nbsp;\r\n\r\n&nbsp;","rendered":"<p>If you haven&#8217;t already, at some point you will most likely receive a paycheck.\u00a0 The first time you do, you will be disappointed.\u00a0 You will want to know who took all your money!\u00a0 But not to worry, this section and the next will explain where it all goes.<\/p>\n<p>What is included in an employee&#8217;s paycheck?<\/p>\n<ul>\n<li><strong>Gross Pay<\/strong>:\u00a0 This is the amount of money you are promised either hourly, weekly or annually.<\/li>\n<li><strong>Federal Income Tax Withheld <\/strong>(also referred to as FIT<strong>)<\/strong>:\u00a0 You will fill out a document called a W-4 when you are hired.\u00a0 This document allows you to claim allowances and a federal filing status for tax purposes.\u00a0 These options along with your gross pay are used to calculate your federal tax withheld.\u00a0 This will reduce your gross pay.<\/li>\n<li><strong>State Income Tax Withheld <\/strong>(also referred to as SIT<strong>)<\/strong>:\u00a0 A different form than the W-4 but the same concept except it applies to the state.\u00a0 Not all states have a state income tax.\u00a0 This will reduce your gross pay.<\/li>\n<li><strong>FICA Social Security Tax <\/strong>(also referred to as OASDI):\u00a0 This tax helps fund social security and is calculated as gross pay x 6.2% unless you make OVER $118,500 in 2015 then you are only responsible to pay 6.2% of $118,500 and nothing more.\u00a0 This will reduce your gross pay.<\/li>\n<li><strong>FICA Medicare Tax<\/strong> (also referred to as HI)<strong>:<\/strong>\u00a0 This tax helps fund medicare and is calculated as gross pay x 1.45%.\u00a0 Everyone must pay the 1.45% of gross pay without limit.\u00a0 This will reduce your gross pay.<\/li>\n<li><strong>Voluntary Deductions:<\/strong>\u00a0 Any deductions you authorize will also reduce your gross pay.\u00a0 This includes things like medical premiums, 401K and savings accounts, charity donations, etc.<\/li>\n<li><strong>Net Pay<\/strong>:\u00a0 Finally!\u00a0 This is the amount you will receive after all taxes and voluntary deductions have been taken out.<\/li>\n<\/ul>\n<p>Wait &#8212; this section is on current liabilities so how do they fit in?\u00a0 Your employer will take money out of your paycheck for the items listed above and combine them with other employee amounts to send one big check to the government or business (for voluntary deductions).\u00a0 When you are\u00a0paid, the company records\u00a0liabilities for the amounts taken out of your paycheck.<\/p>\n<p>Don&#8217;t think employers are getting off easy!\u00a0 There is a cost (more than gross pay) for having employees.\u00a0 The employer must pay the following on every dollar an employee earns:<\/p>\n<ul>\n<li><strong>FICA Social Security Tax<\/strong>:\u00a0 This tax helps fund social security and is calculated as gross pay x 6.2% unless\u00a0an employee\u00a0makes OVER $118,500 in 2015 then you are only responsible to pay 6.2% of $118,500 and nothing more for that employee.<\/li>\n<li><strong>FICA Medicare Tax:<\/strong>\u00a0 This tax helps fund medicare and is calculated as gross pay x 1.45%.\u00a0 Everyone must pay the 1.45% of gross pay without limit.<\/li>\n<li><strong>Federal Unemployment Tax (FUTA):\u00a0<\/strong> This tax is for unemployment claims and is typically calculated as 0.8% of the first $7,000 of an employee&#8217;s earnings.\u00a0\u00a0Once the employee has earned more than $7,000 in gross pay for the year, the company no longer has to pay FUTA tax.<\/li>\n<li><strong>State Unemployment Tax (SUTA):\u00a0<\/strong> This tax is for the state unemployment and does not have a consistent rate.\u00a0 The rate is provided by the state annually and can change each year by business.<\/li>\n<li><strong>Voluntary Deductions Matching:<\/strong>\u00a0 Any matching funds the company provides for insurance or retirement plans.<\/li>\n<\/ul>\n<p>In the next section we will look at the entries required for payroll with both the employee and employer side of the transactions.<\/p>\n<p><iframe 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