How and When to File Payroll Taxes

What are Payroll Taxes?

Payroll taxes are the taxes that you have to pay on the wages (amounts paid to employees for work they have done). Payroll taxes are reported and paid through IRS Form 941, which is the quarterly wage and tax report required for all employers. These taxes include:

• Federal Income Taxes (FIT): These are the taxes that you withhold from your employees’ paychecks. FIT taxes are paid to cover federal expenses such as defense, education, transportation, energy, and the environment, as well as interest on federal debt.
• FICA Taxes (Social Security and Medicare Taxes): These are the taxes that you withhold from employees and the matching amount you retain to be paid by your company. FICA stands for the Federal Insurance Contributions Act.

How Does the IRS Determine Payroll Tax Deposit Schedules?

You cannot deposit payroll taxes at any time you want. Your schedule and frequency are determined based on the lookback period. Here are the steps to find the correct payroll tax deposit dates for your business:

1. Identify the lookback period: The lookback period is the timeframe you use to determine whether you will deposit taxes on a monthly or weekly basis. Your tax liability during the lookback period establishes the schedule you must follow. The lookback period if you are using Form 941 begins on July 1 of a calendar year and extends through June 30 of the following year.
2. Find the total tax liability amount during the lookback period: The best way to find the amounts due for payroll taxes that were paid during the lookback period is to look at your Form 941 (the quarterly wages and tax report). Go to line 12 (total taxes after adjustments and credits). If you reported $50,000 or less in taxes for the lookback period, you are a monthly depositor. If you reported more than $50,000, you are a weekly depositor. If you are a new employer and did not have any employees during the lookback period, you are a monthly depositor for your business’s first fiscal year.

Payroll Tax Deposit Due Dates

Monthly deposits must be made by the 15th day of the month following the month in which you paid employees. For example, if you paid employees in July, you must make the deposit no later than August 15.

Weekly deposit due dates are determined by the payday:

• If payday is Saturday, Sunday, Monday, or Tuesday, you must deposit the taxes by the following Friday.
• If payday is Wednesday, Thursday, or Friday, you must deposit the taxes by the following Wednesday.

There is a special rule for large tax liabilities, known as the next-day deposit rule. If your payroll tax liabilities exceed $100,000, you must deposit the taxes by the next day after the accumulation of that liability, and you must continue to make next-day deposits for the rest of that year and the following year.

Penalties for Payroll Tax Deposits

You must deposit 100% of the tax owed on or before the due date. You may be penalized if you deposit less than the required amount, or if you send those payments by mail instead of using the approved electronic deposit system.

There is no penalty for deposit errors if they do not exceed $100 or 2% of the required payroll tax amount to be deposited. You must rectify the balance on the designated payment date to avoid further penalties.

How to Make Federal Payroll Tax Deposits

You can

Payment using Form 941 is required if your total tax liability for the quarter is less than $2,500. In all other cases, you must file electronically using the Electronic Federal Tax Payment System (EFTPS) through the Internal Revenue Service (IRS) online or another electronic method approved by the IRS.

Payroll Services and Payroll Programs

If all this work seems overwhelming, consider utilizing a payroll service or payroll program. A payroll service is an outside company that handles all your payroll functions, including sending reports and payments when due for federal and state payroll taxes.

A payroll program can assist you with all the details and can make deposits on your behalf by connecting to your payroll account. Be sure the program can remind you of payment deadlines.

Note: Having a payroll program or payroll service does not mean you do not need to understand your tax responsibilities with the IRS. You still need to be aware of reports and payments due and their deadlines.

Frequently Asked Questions (FAQs)

How can I make federal payroll tax deposits? You must make payroll tax deposits via Electronic Funds Transfer (EFT). You cannot send a check to the IRS for these deposits. Most businesses use the Electronic Federal Tax Payment System (EFTPS) for federal tax deposits.

Where can I send my 941 payment? You may be able to send your payroll tax deposit by mail if your total tax due is less than $2,500 for the current or prior quarter and you did not have $100,000 in taxes on any day during the deposit period. The mailing address for the IRS depends on the state where your business is located. See the instructions for Form 941 (page 8) for a list of these addresses.

Would you like to read more content like this? Sign up for The Balance newsletter to get daily insights, analyses, and financial tips delivered straight to your inbox every morning!

Source: https://www.thebalancemoney.com/how-and-when-do-i-make-payroll-tax-deposits-398821

.lwrp .lwrp-list-row-container{
display: flex;
justify-content: space-between;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: calc(12% – 20px);
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){

}
.lwrp .lwrp-list-item img{
max-width: 100%;
height: auto;
object-fit: cover;
aspect-ratio: 1 / 1;
}
.lwrp .lwrp-list-item.lwrp-empty-list-item{
background: initial !important;
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{

}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{

}
.lwrp .lwrp-title{

}.lwrp .lwrp-description{

}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: 100%;
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){

}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{

};
}