 In this discussion, we will discuss the discussion question of Discuss payroll taxes paid by the employer and taxes paid by the employee Whenever we think of the payroll taxes, we do want to keep straight and figure out and record properly The taxes that would be withheld by the employer and the taxes that are the employer's taxes Meaning payroll taxes, we can think of them being broken out into two components Those paid by the employee, those paid by the employer This is important when we actually record the payroll taxes because it can be a bit confusing The journal entries for payroll taxes are one of those that are a bit longer, bit more confusing And difficult to understand in some ways First step to understanding them is to better understand what are the employee payroll taxes responsibilities What are the employer payroll taxes and how do we record them The employee taxes are going to include things such as the federal income tax, the social security and Medicare And it may be good when we actually list out the taxes if we had a question like this as an essay question To just list out the taxes and then maybe even list them in a table And then put a column and say whether they are an employee tax, an employer tax, or both Meaning if we put up a table and we list the taxes from top to bottom on the left And have rows for taxes and list the taxes and then have columns which would be listed as this is an employee tax This is an employer tax and this is both an employee and employer tax Then we can kind of check off those columns, that might be a way to start off a question like this So the taxes we have, we have an FIT, federal income tax And that's going to be an employee tax, so if we put that on our table we'd say that's just the employee tax Meaning it's only coming out of the employee wages, it's not being paid technically by the employer We'll go back to that in a second, but then we got the Medicare or the social security tax Which is part of the FICA taxes It is both an employee tax and employer tax Meaning there's an employee and employer portion to it Then we've got Medicare, which too is also FICA tax, part of FICA, the law FICA And therefore it and also has an employee portion and an employer portion And then we've got the FUTTA tax, federal unemployment tax act tax And it's an employer only tax, so we would just check off the employer portion there And then oftentimes they list SUTA as well even though it's a state tax and we typically focus on the Fed here But the state and the Fed for FUTTA and SUTA often related, therefore SUTA, often listed out as well Which could be, I would list that as a federal and employer tax for sure And possibly an employee tax depending on the state, so the state could differ Okay, so if we go through those and add a little bit more detail, now we'll go back to the federal income tax It's an employee E tax, the federal income tax or FIT And that means that the employee is the one that's going to be taking it, paying it So the employer is actually the one that makes the transaction, but they're taking it out of the employee paycheck So the calculation to get to net pay from gross pay for the employee includes the reduction of federal income tax FIT Then we have social security which has an employee and employer portion Which is often quite confusing to some people because we start to think they're the same thing And we report them in different areas and can get them mixed up There's going to be an employee portion which is like 6.2% of wages which will reduce once again the gross pay to arrive at the net pay Then there'll also be an employer portion that will come out of the employer paycheck or the employer checking account And then we've got the Medicare also employee and employer portion Meaning there will be a portion coming out of gross pay to get to net pay And there will be an employer portion that will have to be paid as well Then we've got the federal, the FUTA, federal unemployment tax And that's going to be an employer only tax, one that we may not be as familiar with Because it does not come out of our paycheck typically, the employer pays it based on employee wages So that's a payroll tax coming out of the employer paycheck Then SUTA, we won't get into too much detail but typically that'll mirror FUTA and be at least an employer tax And possibly employee tax based on the state that we're in It's important to note that when we actually record the payroll taxes It's only the employer taxes, the employer portion of social security, the employer portion of Medicare and FUTA Which is all employer portion, which will be included as an expense as payroll tax expense So in other words, the payroll taxes that are social security, Medicare and FIT paid by the employee Although payroll taxes to the employee are not really payroll taxes to the employer The employer will record the expense as just payroll expense part of what they owe to the employee The fact that they're taking some of that payment owed to the employee And paying it not to the employee but to the employee's responsibilities of taxes Means that it first gets recorded as a liability and then we pay off the liability But it never gets recorded as payroll tax expense The payroll tax expenses will be the employer portions of the payroll taxes And when we process the payroll The end