When you have employees, your responsibility isn’t just to pay them. You also need to pay the IRS their share, too. How often you pay the IRS depends on your payroll tax deposit schedule. But, not all employers follow the same schedule. Your schedule, and thus payroll tax deposit due dates, depends on the type of employment tax and tax amount.
Simply put, payroll tax deposit requirements can get confusing, especially if you’re a new employer. But neglecting your deposit schedule could cost you.
Let’s get started, shall we?
What are the federal employment taxes?
First things first: You need to know which taxes to deposit to the IRS. A payroll tax deposit schedule dictates when you’ll deposit:
- Federal income tax
- Social Security tax
- Medicare tax
- FUTA tax*
*FUTA tax has separate tax deposit due dates from federal income and FICA (Social Security and Medicare) taxes.
Withhold federal income, Social Security, and Medicare taxes from employee wages. Set aside the withheld taxes until your payroll tax due date (e.g., in a payroll account). You must also pay a matching employer portion of Social Security and Medicare taxes and deposit it with the withheld employee taxes. Employers pay FUTA tax; do not withhold FUTA tax from employee wages.
Why do payroll tax deposit due dates matter?
You get the mail, expecting to find coupons and maybe a couple of bills. But then, you see it. A letter from the IRS. Your heart sinks a little bit, and you rip it open. Sure enough, it’s a Failure to Deposit Penalty letter.
If you neglect your payroll tax deposit schedule, you could receive one of these heart-stopping notices—and the penalties that come with it—from the IRS.
The IRS applies a Failure to Deposit Penalty to employers who:
- Don’t pay their employment tax liability on time
- Pay the incorrect employment tax amount
- Fail to pay tax deposits in the right way (e.g., if you don’t use EFTPS)
The penalties add up the longer you delay depositing payroll taxes. For example, a delay of more than 15 calendar days will cost you 10% of the unpaid tax deposit.
Payroll tax deposit schedule for income and FICA taxes
Your payroll tax deposit schedule is either monthly or semiweekly for income and FICA taxes. In special cases, you must make a next-day deposit.
If a due date falls on a Saturday, Sunday, or federal legal holiday, your deposit is due the next business day.
|Monthly Deposit Schedule||Semiweekly Deposit Schedule||Next-day Deposit Schedule|
|Due Dates||The 15th of the month after paying the taxable wages||Wednesday (if the payday falls on a Wednesday, Thursday, or Friday)|
Thursday (if the payday falls on a Saturday, Sunday, Monday, or Tuesday)
|The next business day (if you accumulate $100,000 or more in taxes on any day)|
Monthly deposit schedule
You must follow a monthly deposit schedule if your total taxes on Form 941, line 12, for the four quarters in your IRS lookback period are $50,000 or less.
Employers who follow a monthly deposit schedule must deposit employment taxes on payments made during a month by the 15th day of the following month.
For example, deposit federal income, Social Security, and Medicare taxes on wages paid in May by June 15.
All new employers make monthly deposits for the first calendar year of business (until you hit $100,000 in taxes on any day, if applicable).
Semiweekly deposit schedule
You must follow a semiweekly deposit schedule if your total taxes on Form 941, line 12, for the four quarters in your lookback period are more than $50,000.
Employers who follow a semiweekly deposit schedule must deposit employment taxes on the:
- Wednesday after payday (if payday fell on a Wednesday, Thursday, or Friday)
- Friday after payday (if payday fell on a Saturday, Sunday, Monday, or Tuesday)
If your deposit schedule is semiweekly, you have at least three business days following the end of the semiweekly period to make a deposit. So if a legal holiday falls on any of the three weekdays after the end of the semiweekly period, you have an additional day to deposit (per legal holiday).
You must make separate deposits if you have more than one payday during a semiweekly period and the paydays fall in different calendar quarters.
Most small businesses follow a monthly or semiweekly deposit schedule. But, some businesses must follow the IRS next-day deposit rule.
If you accumulate $100,000 or more in taxes on any day during a monthly or semiweekly deposit period, you must deposit the tax by the next business day.
And there’s another catch: Monthly depositors who hit $100,000 in taxes become semiweekly depositors for at least the rest of the current and following calendar years.
Payroll tax deposit schedule for FUTA tax
Again, FUTA tax plays by its own rules. Your FUTA tax deposit schedule differs from your federal income, Social Security, and Medicare tax deposit schedule.
FUTA tax follows a quarterly deposit schedule. However, when you deposit depends on the amount of your tax liability.
If your FUTA tax liability is more than $500 in a quarter, deposit the funds by the last day of the month after the end of the quarter.
If your FUTA tax liability is $500 or less in a quarter, you can carry it over to the next quarter. Continue rolling it from quarter to quarter until your total FUTA tax liability (current quarter liability + liabilities from previous quarters) exceeds $500. If your total FUTA tax liability is $500 or less for the year, you can deposit it or pay it with your tax return by January 31.
|Quarter||Quarter End Date||FUTA Tax Deposit Deadline|
|Quarter 1 (January, February, March)||March 31||April 30|
|Quarter 2 (April, May, June)||June 30||July 31|
|Quarter 3 (July, August, September)||September 30||October 31|
|Quarter 4 (October, November, December)||December 31||January 31|
Make sure your payroll taxes are always paid on time to avoid any penalties. If you use Patriot Software’s Full Service payroll, our payroll services will handle federal, state, and local tax filing and deposits for you. Start your free trial to say goodbye to worrying about payroll taxes!This is not intended as legal advice; for more information, please click here.