The amount of federal income taxes withheld from an employee's gross pay is recorded as a liability (option b).
The federal income tax is a tax levied by the United States government on the annual earnings of individuals and corporations. The income tax is imposed on both earned income (wages, salaries, tips, commissions) and unearned income (interest, dividends, and capital gains). The federal income tax is progressive, meaning that taxpayers with higher incomes pay higher tax rates than taxpayers with lower incomes. The tax rate for each income bracket is set by Congress and can be changed at any time.
The liability in this case is the tax liability, and it is described as the money in the form of tax that is owed by the tax authorities. Furthermore, it is also described as the money that is deposited as tax to the government authority.
It can be concluded that the amount of federal income taxes withheld from an employee's gross pay is recorded as a liability (option b).
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