A liability is a probable future payment of assets or services that a company is currently obligated to make — as a result of past transactions or events. Liabilities are classified into two types of obligations (1) current (short-term), and (2) long-term. Most liabilities arise from transactions or events with little or no uncertainty. Liabilities that occur with little or no uncertainty are established by agreements, contracts, or laws, and are measurable. These liabilities are called known liabilities, or definitely determinable liabilities. Companies incur expenses and liabilities due to obligations for employing staff. Payroll liabilities are important known liabilities that result from salaries and wages earned, employee benefits, and payroll taxes the employer must pay. Payroll liabilities include (1) employee payroll deductions, and (2) employer payroll taxes.
The following video explains Employee Payroll Deductions & Employer Payroll Taxes Link to the video: After viewing the video, for this week’s discussion. submit your initial discussion post by responding to the following:
Explain the difference between a current and a long-term liability. Explain the three important questions concerning the uncertainty of liabilities. State the combined amount (in percent) of the employee and employer FICA-Social Security tax rate. (Assume wages do not exceed $118,500 per year.) What is the 2016 Medicare tax rate? This rate is applied to what maximum level of salary and wages. Which payroll taxes are the employee’s responsibility and which are the employer’s responsibility?