Posting Payroll Entries – Part 3

Part 3 of this series of payroll entry blogs will look into the payroll entries that can be posited to recognized unpaid payroll tax liabilities.


If you process a payroll for your employees and you decide to wait until a later time to submit the corresponding tax payments to the appropriate tax agencies, then you will have payroll tax liabilities to recognize in your books.

So, for example, let say you process a paycheck for an employee who was paid $500 in gross wages, but their actual direct deposit was only $436.75.

So, to recognize both the payroll expenses and the corresponding tax liabilities, you can post the following type of entry:


  • Debit: Gross Wages for $500
  • Debit: $31 for the employer portion of the FICA tax.
  • Debit: $7.25 for the employer portion of the Medicare tax.
  • Credit: Payroll Tax Liability for $101.50 – this is calculated as follows:
    • $31 for employee FICA
    • $31 for employer FICA
    • $7.25 for employee Medicare
    • $7.25 for employer Medicare
    • $25 for employee Federal Withholding (as chosen by the employee on their W-4)
    • We will skip any state tax obligations here for the purposes of this article.
  • Credit: Cash for $436.75 to pay the employee that direct deposit.


Now at a later date, when you submit payment for these exact payroll tax obligations as noted above, here is the bookkeeping entry to recognize this:


  • Debit: Payroll Tax Liability for $101.50.
  • Credit: Cash for $101.50.


Overall, it is always a good idea to monitor your payroll tax liability account to ensure you are paying the full tax obligations due.


Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.


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