IRS Payroll Tax Deposit Rules
As an employer, you are responsible for paying state and federal payroll taxes on behalf of your employees. Some payroll taxes, such as income taxes and FICA (Social Security and Medicare) you withhold from your employees. Others, such as FUTA and SUTA, are taxes that you must pay. When figuring out your employees' tax obligations, refer to their W-4 forms. Some taxes are reported and deposited quarterly. Others must be paid based on the deposit schedule determined by the IRS.
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Deposit Schedules
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Generally, there are two deposit schedules for a business: monthly and biweekly. If you are a new business or you reported $50,000 or less in tax liability during the look back period (July 1st through June 30th of the previous year) you report on a monthly schedule. If your taxes exceeded $50,000 during the look back period, you are a biweekly filer.
When to Deposit
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Monthly depositors must deposit payroll taxes such as income tax, Social Security and Medicare, by the 15th of the following month. Semiweekly depositors must deposit payroll taxes by the Wednesday following a pay period that ends on a Wednesday, Thursday or Friday. If the pay period ends on a Saturday, Sunday, Monday or Tuesday, taxes must be deposited by the following Friday.
Exceptions
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If tax liability on any given day exceeds $100,000, it must be deposited the following day.
FUTA and SUTA Filing
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FUTA and SUTA deposits may be made quarterly, depending on the amount you owe. At the point that your FUTA or SUTA liability reaches $500, you must make a deposit in that quarter. For FUTA liability, use Form 940. Otherwise, pay your FUTA and SUTA tax no later than January 31 of the following year.
How to Deposit
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Employers must make deposits online via the Electronic Federal Tax Payment System (EFTPS) or at an authorized financial institution, using a Form 8109, Federal Tax Deposit Coupon, along with their checks. The IRS sends employers pre-filled coupons which they track and automatically refill when necessary. If you do not have a pre-filled coupon, call 1 (800) 829-4933 to request some. If mailing your coupon, use a separate coupon for each type of tax and verify that the EIN and business name are correct. If you are required to use the EFTPS system, failure to do so can result in a penalty. Failure to deposit your tax liability when due may also result in a penalty.
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