It is the employer’s responsibility to determine the correct frequency to deposit federal employment taxes. Failure to make timely deposits according to these rules will result in the assessment of penalties:
- New Businesses: A new business employer is required to make employment tax deposits using the monthly deposit rule, unless a daily deposit is required as explained below.
- Monthly Deposit Rule: An employer is required to follow the monthly deposit rule for 2012 if the aggregate amount of employment taxes reported for the period July 1, 2010 to June 30, 2011 is $50,000 or less, unless a daily deposit is required as explained below. Under the monthly deposit rule, deposits are required to be made by the employer of the federal income tax, social security tax and Medicare tax withheld from employees plus the social security tax and Medicare tax of the employer monthly on or before the 15th of the following month. If the 15th falls on a holiday or weekend, the due date is extended to the next banking day.
- Semi- Weekly Deposit Rule: An employer is subject to the semi-weekly deposit rule for 2012 if the aggregate amount of employment taxes reported for the period July 1, 2010 to June 30, 2011 exceeded $50,000, unless a daily deposit is required as explained below. Deposits for payments made on Wednesday, Thursday, and/or Friday are due on or before the following Wednesday. Deposits for payments made on Saturday, Sunday, Monday, and/or Tuesday are due on or before the following Friday. In the event the due date falls on a holiday, employers have three banking days from the end of the semi-weekly period to make the deposit.
- Overlapping Periods: If the semi-weekly period includes the end of the first month of the quarter and the beginning of the second month, or the end of the second month and the beginning of the third month, only one deposit is required. If an employer has payroll for two different reporting quarters within the same semi-weekly period, two deposits must be made.
- Daily Deposit: Employers with an accumulated unpaid employment tax liability of $100,000 or more during the deposit period must deposit within one banking day of the payroll check date. When a monthly depositor becomes subject to this rule, that employer immediately becomes a semi-weekly depositor for the rest of 2012 and for 2013.
- Quarterly Deposit: Form 941 employers with accumulated liability of less than $2,500 for the entire quarter may deposit or remit the amount with a timely filed Form 941, Employer’s Quarterly Federal Tax Return.
- Annual Deposit: Form 944 employers with accumulated liability of less than $2,500 for the entire year may deposit or remit the amount with a timely filed Form 944, Employer’s Annual Federal Tax Return.