Do Social Security, Medicare, FUTA, and SUTA taxes have separate liability accounts?

• A. True
• B. False
• C. Some have combined liability accounts
• D. Not applicable

Answer: (B)

Understanding payroll tax liabilities: when you process payroll, you record amounts you owe to government authorities. Social Security and Medicare taxes include both the employee portions (withheld from wages) and the employer portions (paid by the employer). FUTA and SUTA are employer payroll taxes. Whether each tax type has its own liability account depends on the company’s chart of accounts. Some organizations keep separate liability accounts for each tax type to track remittances precisely, while others consolidate them into a single Payroll Taxes Payable account or group related items together. Because there isn’t a universal rule requiring a separate liability account for every tax, saying they all must have separate liability accounts isn’t universally true.