Payroll taxes payable definition
/What are Payroll Taxes Payable?
Payroll taxes payable is a liability account that contains the combined total of payroll taxes deducted from employee pay and the employer portion of payroll taxes. The balance in this account is increased by the addition of new liabilities, and reduced by payments made to the applicable governing authorities. Thus, the account only contains unremitted payroll taxes.
Presentation of Payroll Taxes Payable
The payroll taxes payable account is always classified as a current liability, since the amounts in it are due in less than one year. The receiving government entities usually only allow a business to retain payroll taxes for a few days, so this account can never be classified as a long-term liability.
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FAQs
Can Payroll Taxes Payable be Estimated?
Payroll taxes payable can be estimated at the end of an accounting period when wages have been earned but not yet paid. In this case, employers accrue the related tax liability based on expected withholdings and employer contributions. This ensures that expenses and liabilities are matched to the correct accounting period, even before payment is made.