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Accounting At Your Fingertips, 2e by George Murray, CPA.

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8.3 Making Payroll Deductions

Mandatory Deductions

Voluntary Deductions

A number of deductions serve to reduce gross pay to the amount an employee ultimately takes home. This subchapter explains the different types of deductions and shows you how to account for them.

Mandatory Deductions

By law, employers are required to make a number of payroll deductions. For most businesses these are FICA taxes (Social Security and Medicare), federal income taxes, and state income taxes. Employers deduct these taxes from all employee paychecks and then remit the money to the appropriate tax authority.

In certain states, a deduction for state disability insurance is also required, as explained later in this section. In addition, if an employee is under union ...

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