Federal Tax Deposits (FTDs) for Form 941 are made up of withholding taxes or trust funds (income tax and Federal Insurance Contributions Act (FICA) taxes, which are Social Security and Medicare held in trust), that are actually part of your employee’s wages, along with the employer’s share of FICA. FTDs for Form 940 are taxes paid by the employer to provide for unemployment compensation to workers who have lost their jobs. Only the employer pays FUTA tax; it is not deducted from the employee’s wages. These taxes need to be paid as they become due in order to avoid penalties. If you have a deposit requirement, you must deposit electronically. You can deposit electronically via the Electronic Federal Tax Payment System (EFTPS). EFTPS deposits must be initiated by 8 p.m. eastern time the day before the due date. EFTPS is also used to pay other types of taxes; not just employment taxes.
Who Must Make Deposits?
Employers may have two separate employment tax deposits:
Employers filing Form 941, Employer’s Quarterly Federal Tax Return, with $2,500 or more tax due in the current quarter and $2,500 or more tax due in the prior quarter OR
Employers filing Form 940, Employer’s Annual Federal Unemployment Tax Return (FUTA), with over $500 tax due per quarter.
When To Make Deposits?
If you have a deposit requirement for Form 940, make the deposit by the last day of the first month after the quarter ends.
If you have a deposit requirement for Form 941, there are two EASY ways to remember:
Make a deposit the same day you pay your employees OR
Make the deposit before the due date.
Form 941 Deposit Due Date. If you are a new employer and have never filed 941 forms, you are aMonthly Schedule Depositor for the first calendar year of your business unless you are a special exception to the rule. Monthly Schedule Depositors should deposit taxes from all of their paydays in a month by the 15th of the next month, even if they pay wages every week.
Employers with prior payrolls and taxes of $2,500 or more per quarter must determine if they make either Monthly Schedule Deposits, or Semiweekly Schedule Deposits.
This determination is based on your Form 941 taxes during a four-quarter Lookback Period.
Identify your Lookback Period.
Your Lookback Period for Calendar Year 2016
3rd Quarter October 1
4th Quarter January 1
1st Quarter April 1
Add the total taxes reported during the Lookback Period.
Determine your deposit schedule.
If the total taxes you reported in the Lookback Period were: Then you are a:
$50,000 or less Monthly Schedule Depositor
More than $50,000 Semiweekly Schedule Depositor
Monthly Schedule Depositors
Deposit each month’s taxes by the 15th day of the following month (for example, taxes from paydays during July are deposited by August 15).
Semiweekly Schedule Depositors
For wages paid Saturday, Sunday, Monday, or Tuesday, deposit by the following Friday.
For wages paid Wednesday, Thursday, or Friday, deposit by the following Wednesday.
If you accumulate a tax liability of $100,000 or more on any day during a deposit period, you must deposit the tax by the next business day, whether you are a monthly or semiweekly schedule depositor. Monthly depositors must then follow the semiweekly schedule for the rest of the year. For more information about the $100,000 One-Day Rule and the applicable deposit period, refer toPublication 15, Circular E, Employer’s Tax Guide, Depositing Taxes.
Deposit rules are based on when wages are paid, not earned. For example, Monthly Schedule Depositors with wages earned in June, but paid in July, deposit August 15.
If the due date for a deposit falls on a non-business day, the deposit is considered timely if it is made by the close of the next business day. Business days include every calendar day other than Saturdays, Sundays, or legal holidays. The term “legal holiday” means any District of Columbia legal holiday. Previously, legal holidays included statewide legal holidays.
How Are Deposits Made?
Federal Tax Deposits (FTDs)
Making Federal Tax Deposits is a process most businesses must do throughout the year.
If you have a deposit requirement, you must deposit electronically.
Employers required to make deposits must deposit electronically. You can deposit electronically via the Electronic Federal Tax Payment System (EFTPS). The IRS encourages employers who are not required to deposit taxes to take advantage of EFTPS to avoid common errors and automate the payment process. EFTPS is fast, secure and available 24 hours a day, 7 days a week. Check out the most frequently asked questions about EFTPS: Publication 966, Choices for Paying ALL Your Federal Taxes (PDF).
If you are a new employer and received an EIN after January 2004, most likely you are already pre-enrolled in the Electronic Federal Tax Payment System (EFTPS) as part of our express enrollment (PDF) initiative for new businesses. You should have received a confirmation package with an EFTPS PIN and instructions on how to activate your EFTPS enrollment.
For more information on Express Enrollment for new businesses refer to Publication 4275 (PDF) found on IRS.gov.
For employer’s mailing address changes, complete Form 8822-B, Change of Address Form – Business.
If you have a deposit requirement, do not send tax payments with your tax return directly to the IRS. For more information, refer to “Depositing Taxes” in Publication 15, Circular E, Employer’s Tax Guide.
Need to make a same-day payment?
If an employer is unable to initiate an EFTPS payment in time to make a required deposit, a same-day wire transfer may be an option. Employers should check with their financial institution to find out if this service is offered and if there are any applicable fees associated with using this method to make a payroll deposit.