Final answer:
The right answer is A. FICA taxes, which are comprised of Social Security and Medicare taxes. These taxes are split equally between employees and employers, and employers must report the unremitted amounts as a current liability. The real impact on employees might be greater as employer contributions can reduce net wages.
Step-by-step explanation:
The correct answer is: A. FICA taxes. The Federal Insurance Contributions Act (FICA) mandates that both the employer and the employee contribute to Social Security and Medicare. The payroll taxes for Social Security and Medicare are split between the employer and the employee. Each employee has 6.2% of their gross wages withheld for Social Security and 1.45% for Medicare, which the employer also matches. While this is the visible deduction from an employee’s paycheck, it is suggested that the employer’s share might effectively reduce the employee's wages. This means that, in reality, the employees might bear the financial burden of both shares of payroll taxes. Employers are responsible for reporting the total amount of unremitted employee and employer FICA taxes as a current liability on their financial statements.
For those who are self-employed or part of the 'gig economy' and receive a 1099 tax statement, they must cover both the employee and employer portions of FICA taxes. Regardless, all working individuals contribute towards Social Security and Medicare through these taxes to receive retirement, survivor, disability, and healthcare benefits in the future.