PAYING IRS TAXES

When it is time to record a payment to IRS for FICA and Medicare withholding, we do
it in Peachtree's "Payments" window (on the "Tasks" menu) (see Inputing Payments).

We were told we should save our Federal FICA and Medicare to our Federal Tax Expense
account and our Federal Tax Liability account. Then, when we pay it - we should use
the Journal Entry process to debit the Liability account and credit the cash account
from which the payment is made. This leaves the Expenses account reflecting the expense
and the cash account as the source of the funds with the liability account balanced out after
a corresponding debit and credit. But should we have one tax liability account or one for
each tax (FICA_ER, FICA_EE, Medicare EE, Medicare EE) as at present? We need to clarify
our account structure on this.

Paying our taxes in Peachtree Accounting

Paying our taxes in Peachtree Accounting

The Cash Account is our checking account (1000M00). We list a line for each of the
liability accounts withholdings are posted to. FICA EE, FICA ER, MED EE, MED ER and
in the GL Account field we select from the lookup list the corresponding account
numbers. This transaction debits these accounts offsetting the credits added to
these same accounts when we posted the payroll checks. Save it and go home.

Manual Contents Page

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