Which option correctly matches payroll tax with its description according to the material?

Which option correctly matches payroll tax with its description according to the material?

• A. Payroll tax — tax paid on the amount paid to an employee
• B. Self Employment tax — tax paid on net business income
• C. Income Tax — tax paid on all business income (minus deductions)
• D. Corporate tax — tax paid on profits distributed to shareholders

Answer: (A)

Payroll tax is the tax taken from the wages you pay to employees to fund programs like Social Security and Medicare. It is assessed on the compensation period—the amount paid to an employee as wages and salaries—and is typically shared between the employee and the employer. This matches the description that payroll tax is tax paid on the amount paid to an employee. The other descriptions describe different taxes: self-employment tax applies to net earnings from self-employment, not wages paid to employees; income tax is charged on an individual’s total income after deductions (not just wages); corporate tax is on a corporation’s profits, not on distributions to shareholders.

Payroll tax is the tax taken from the wages you pay to employees to fund programs like Social Security and Medicare. It is assessed on the compensation period—the amount paid to an employee as wages and salaries—and is typically shared between the employee and the employer. This matches the description that payroll tax is tax paid on the amount paid to an employee.

The other descriptions describe different taxes: self-employment tax applies to net earnings from self-employment, not wages paid to employees; income tax is charged on an individual’s total income after deductions (not just wages); corporate tax is on a corporation’s profits, not on distributions to shareholders.