Payroll Tax Deposits and Returns

 

Federal taxes withheld from employees' pay, the employer's share of FICA, and the employer's FUTA payment must be timely deposited, by cash, check, or electronically with an authorized federal depositary institution.  Income and FICA taxes are deposited on a monthly or semiweekly schedule, depending on a look-back rule.  Accumulated income and FICA taxes of $100,000 or more are deposited the next banking day.  Mandatory electronic deposits are required for employers whose accumulated federal taxes exceed certain monetary thresholds.  FUTA taxes are deposited quarterly on a per-employee wage base of $7,000.  Due to these timing considerations, taxes are deposited long before any tax returns are filed.  Employers file quarterly tax returns, Form 941, to reconcile the income and FICA taxes withheld from employees' pay.  FUTA taxes are reconciled annually on Form 940. Continue Tax Deposits and Returns

 

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FAQs

1. The safe-harbor rule for tax deposits provides relief to employers that can't deposit the full amount on time, if the shortfall doesn't exceed the greater of $100 or 2% of the total due. Does the one-day deposit rule override the safe harbor if the shortfall is $100,000 or more? 
   
   

2. What is an authorized depositary? 
   
   
3. We're a small business that usually pays (not deposits) our withheld income and FICA taxes with our quarterly 941 form. We're looking for a more systematic way to do this. Can we deposit $200 every couple of weeks, rather than hold the money and submit a $2,500 payment at the end of a quarter?
   
   
4. The company deposits taxes electronically, through the IRS's Electronic Federal Tax Payment System (EFTPS). We recently discovered that the previous Payroll manager didn't make a deposit related to February taxes. As far as we can tell, she didn't hit the "Make Payment" button enough times. The deposit has since been made, but we're worried that the company will be hit with a failure-to-deposit penalty. There is proof that the deposit was attempted. Apparently, she saved a screen shot of what she thought was the final EFTPS page. What's next? 
   
   
5. Does it count if the company deposits its taxes with the bank, which subsequently makes an electronic transfer into the IRS's account?