Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $160,200 (in 2023), while the self-employed pay 12.4 percent. Unemployment tax is a little more tricky because it goes by state and federal percentage. Liability for income tax withholding is dependent about the employees income and other personal factors. I hope that helps.
@@stmbabi6933 you forgot the other part of FICA: Medicare tax (which has its own threshold where you pay more ($200,000). The entire FICA tax is %15.3.
In the first entry, when salary expense is debited for 2k, why are the witholdings of 453 considered expenses on the companies books, if it is really an expense of the employee
It's not an expense. The withholding are liabilities. The expense is what the employee earned (note that I did not say what was paid to the employee) The $2,000 expense is because the employee earned $2,000. It's not the company's money anymore. They incurred an expense by paying an employee. All that's happening is that instead of giving him/her all $2,000, they are going to hold onto the amount of tax they owe the government. And now the business is simply responsible (liable) for making that transaction (giving the employee's money to the government).
You think they would actually pay it back? lol But I'd wager the journal entry would be: Cash XX Salaries Expense XX Unless your expense was correct, but you wrote the check incorrectly? In that case...my guess is nothing. Your bank reconciliation will reflect a correct amount IF that employee paid you back that amount (and you deposited that money back into the account)
Interesting. From a business owners perspective keeping track of employee expenses must be the most fun part of the job.
Best video I’ve seen, explaining it while visualizing with the books
Thank you!
Thanks for sharing this information. Your videos/lessons have helped me greatly in studying for the CMA. Also, love the website!!
Tax and Social security rates are completely different from country to country
Just use any random percentage rate
I’m still confused :/
Fr
What are you confused about?
can you tell me how you got those numbers while crediting in the journal entry? Is there a formula?
It probably is given to you in the question.
Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $160,200 (in 2023), while the self-employed pay 12.4 percent. Unemployment tax is a little more tricky because it goes by state and federal percentage. Liability for income tax withholding is dependent about the employees income and other personal factors. I hope that helps.
@@stmbabi6933 you forgot the other part of FICA: Medicare tax (which has its own threshold where you pay more ($200,000). The entire FICA tax is %15.3.
Bro can you do Canadian Tax calculations and remittances. Thanks in advance
In the first entry, when salary expense is debited for 2k, why are the witholdings of 453 considered expenses on the companies books, if it is really an expense of the employee
It's not an expense. The withholding are liabilities. The expense is what the employee earned (note that I did not say what was paid to the employee)
The $2,000 expense is because the employee earned $2,000. It's not the company's money anymore. They incurred an expense by paying an employee. All that's happening is that instead of giving him/her all $2,000, they are going to hold onto the amount of tax they owe the government. And now the business is simply responsible (liable) for making that transaction (giving the employee's money to the government).
Hi I was just wondering what the journal entries would be if you overpay an employee and then they pay it back? Thanks very much
You think they would actually pay it back? lol
But I'd wager the journal entry would be:
Cash XX
Salaries Expense XX
Unless your expense was correct, but you wrote the check incorrectly?
In that case...my guess is nothing. Your bank reconciliation will reflect a correct amount IF that employee paid you back that amount (and you deposited that money back into the account)
THANK YOU
After I pay the fica tax??
Makes no sense