Payroll Tax Deposits: When, How, and What Happens If You're Late

If you have employees, you collect taxes from their paychecks and owe an employer share on top. Those amounts do not go in with your annual return. You deposit them during the year, on a schedule.

What gets deposited

According to IRS Topic No. 757, employers generally deposit withheld federal income tax, along with Social Security and Medicare taxes (both the employee’s share and the employer’s share). Federal unemployment tax (FUTA) follows its own rules.

Monthly or semiweekly?

The IRS assigns your deposit schedule based on a “lookback period,” which is a past 12-month window. If you reported $50,000 or less in total employment taxes in that period, you are generally a monthly depositor. If you reported more than $50,000, you are generally a semiweekly depositor. Check the current IRS guidance each year, because your schedule can change.

Monthly depositors deposit taxes for a month by the 15th day of the following month.

Semiweekly depositors deposit by one of two days, based on the payday:

Payday	Deposit due
Wednesday, Thursday, or Friday	The following Wednesday
Saturday, Sunday, Monday, or Tuesday	The following Friday

The $100,000 rule. If you accumulate $100,000 or more in taxes on any day, you must deposit by the next business day. This applies to both types of depositors.

How to deposit

Employers generally deposit electronically, usually through the Electronic Federal Tax Payment System (EFTPS) or through a payroll provider. Enroll early, because the first-time setup takes time. Check IRS guidance for the current deposit methods.

Returns you also file

Form 941 each quarter reports wages and the taxes you withheld and owe.
Form 940 reports federal unemployment tax once a year.
Forms W-2 and W-3 report each employee’s yearly wages. See also hiring your first employee.

States have their own payroll tax deposits and returns. Check your state agency.

What happens when you are late

The IRS can charge penalties and interest for late or missing deposits, and the penalty rises the longer you wait. Withheld taxes belong to your employees and the government, so do not use them for other bills. If you fall behind, contact a tax professional right away.

Want help with payroll filings? Book a call with FlowTex.

Sources

This article is general information, not tax advice. Deposit rules and schedules can change. Confirm the current rules with the IRS or a qualified professional.