TAILIEUCHUNG - Lecture Fundamentals of taxation 2014 (7/e) - Chapter 10: Payroll taxes

Chapter 10 - Payroll taxes, when you have completed this chapter, you should understand the following learning objectives: Explain the tax issues associated with payroll and Form 1040; calculate federal income tax withholding, social security, and Medicare taxes on wages and tips; describe the rules for reporting and paying payroll taxes, including deposit penalties and Form 941;. | Payroll Taxes “I want to find out who this FICA guy is and how come he’s taking so much of my money.” -- Nick Kypreos Chapter 10 1 Chapter 10 – Payroll Taxes LO # 1 Payroll and Form 1040 Withholding taxes are imposed on taxpayers to help fund government operations using a “pay as you go” system At the end of the year, the employer is required to summarize an employee’s earnings and taxes withheld on a Form W-2 Form 1040 compares tax liability with tax payments to determine whether a taxpayer will receive a refund or own more money. 10-2 Federal taxes are withheld from a taxpayer’s income to help fund government operations using a “pay as you go” system. At the end of the year, the employer will give an employee a Form W-2 which is the starting point to preparing the Form 1040. The amount of federal income tax withheld from the taxpayer will be compared with the liability determined on the Form 1040 to figure a refund or amount due. 2 LO # 2 Federal Tax Calculations Withholding taxes are an approximation of the proportionate share of total tax liability the employee will owe to the federal government. Form W-4 is completed by the employee to claim withholding allowances. 10-3 When a taxpayer starts a job, a Form W-4 is completed by the employee to claim withholding allowances. These allowances are then used in the calculation of federal withholding from the employee’s gross pay. An employee can complete a W-4 during the year if there are life events that can impact the amount of tax liability at the end of the year. Examples are getting married, divorced, or the birth of a child. The goal is to have only as much federal tax withheld as will approximate the annual tax liability. 3 LO # 2 Federal Tax Calculations Two withholding methods: Percentage Method Uses a range of percentages to calculate taxes Used in computerized systems Wage Bracket Method Uses a table of wage brackets and allowances 10-4 There are two withholding methods available to employers to calculate

• Kế toán - Kiểm toán
• Fundamentals of taxation
• Lecture Fundamentals of taxation 2014
• Gross income
• Payroll taxes
• Federal tax calculations
• Paying payroll taxes
• Partnership taxation
• Partnership formation
• Separately stated items
• Corporate taxation
• Taxable income
• Tax liability
• Tax refunds
• Leture Fundamentals of Taxation
• Income tax formula
• Regressive tax structures
• Average tax rates
• Tax payments
• Tax formula
• Dependency exemptions
• Internal revenue service
• Income recognition
• Social security benefits
• Adjusted gross income
• Adjustments for adjusted gross income
• Health savings account
• Itemized deductions
• Deductible medical expenses
• Local tax deductions
• Self employed business income
• Business expenses
• Business assets
• Capital gains
• Sales of property
• Classifying assets
• Flow through entities
• Rental property
• Tax credits
• Dependent care expenses
• Calculate the credit
• Tax deferred plans
• Employer sponsored plans
• Simplified employee pensions
• Special property transactions
• Like kind exchange rules
• Report involuntary conversions
• Passive activity loss rules
• Individual alternative minimum tax
• At risk rules
• Expanded tax formula
• Proper filing status
• Tax purposes