What is the appropriate accounting treatment to record an employer's FICA liability?

To appropriately account for the employer's FICA liability, the transaction needs to reflect the employer’s obligation to pay FICA taxes. When an employer calculates payroll taxes, they are required to recognize the expense associated with these taxes at the same time they incur the liability.

Debiting payroll tax expense increases the expense account, which accurately reflects the cost incurred by the employer for FICA taxes. The corresponding credit to FICA employer payable establishes a liability on the balance sheet, indicating that the employer owes this amount for the FICA taxes. This double-entry accounting ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced and accurately portrays the company's financial position.

In this context, recognizing the payroll tax expense immediately when the liability arises is essential, as it provides a clear picture of the company’s financial obligations. This treatment accurately aligns with standard accounting practices for payroll liabilities, ensuring compliance and proper recording in the financial statements.