If you withhold taxes from your employees' paychecks, you have to forward them to different government entities. States and the federal Internal Revenue Service (IRS) have different payment deadlines, depending on the type of tax and the amount withheld. In some cases, you have to deposit withholding taxes within days of paying your employees. In other cases, you pay only once per year.
Federal income, Social Security and Medicare taxes are withheld from employees' wages; Social Security and Medicare are matched by you, the employer. Withheld taxes are reported using IRS Form 941.
Income taxes are based on allowances noted on the employee's W-4 form. For instance, two employees who each earn $100 may not pay the same income tax if their marital status and number of dependents differ. However, Social Security and Medicare taxes will be the same.
Taxes must be deposited within a set time after being withheld, according to IRS guidelines. This includes the employer matches for Social Security and Medicare. If your payroll liability is under $50,000 for the previous four quarters, you qualify for monthly deposits and must deposit funds by the15th of the month following your paydays. For example, deposits for all wages paid in July must be made by Aug. 15.
If payroll was over $50,000 for the previous four quarters, you are considered a semi-weekly depositor and must deposit funds by either the Wednesday or the Friday after paying employees, depending on your actual payday.
If payroll taxes are under $1,000 per year, employers may file and deposit an annual report instead of quarterly or semi-weekly. File Form 944 annually in lieu of Form 941.
State and Local Withholding
Many states and local areas also have income tax withholding requirements, which vary. Check with your city, county and state to see your specific reporting and depositing requirements.