Payroll Journal Entry
Definition
The entry recording a pay run, debiting gross wages and employer contributions to expense and crediting net pay plus each withholding and contribution liability. Settling those liabilities later is a separate entry that clears them to zero.
Related Terms in Payroll
FICA
The US Federal Insurance Contributions Act tax funding Social Security and Medicare, withheld from employee wages and matched by the employer. The Social Security portion applies only up to an annual wage base, and an additional Medicare amount applies above a set income level; both figures are published yearly by the IRS and SSA.
FUTA
The US Federal Unemployment Tax Act levy, paid by employers only and never withheld from employees, funding federal administration of unemployment benefits. It applies to a per-employee annual wage base, and employers paying state unemployment tax on time generally qualify for a substantial credit. Current rates and the wage base come from IRS Form 940 guidance.
SUTA
State Unemployment Tax Act contributions, paid by employers to the state funds that finance unemployment benefits. Each state sets its own wage base and assigns an experience-rated percentage reflecting the employers claims history, so the cost differs by state and by employer.
Form W-4
The IRS form on which a US employee tells their employer how much federal income tax to withhold, reflecting filing status, dependents, multiple jobs and other adjustments. Employees should refile after life or income changes so withholding stays close to actual liability.
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