Topic 757 - Forms 941 and 944 – Deposit Requirements

Generally, employers are required to deposit the employment taxes reported on Forms 941 (PDF),Employer's QUARTERLY Federal Tax Return, or Form 944 (PDF), Employer's ANNUAL Federal Tax Return, which includes federal income tax withheld from your employees, and the employer and employee shares of social security and Medicare tax. Federal tax deposits must be made by electronic funds transfer. The deposit schedule you must use (either monthly or semiweekly) is determined based on the employment taxes reported on your Forms 941 or 944. For the rules on filing requirements, refer to Topic 758.

Liability under $2,500: If you are required to file Form 941 and your employment tax liability for the preceding quarter or current quarter is less than $2,500, you may pay the taxes for the current quarter with your timely filed return instead of making deposits, so long as you do not incur a $100,000 next-day deposit obligation during the current quarter.

Similarly, if you are required to file Form 944 and your employment tax liability for the year is less than $2,500, you may pay the taxes for the year with your timely filed return instead of making deposits. If you are required to file Form 944 and your employment tax liability for the fourth quarter is less than $2,500, you may pay your fourth quarter liability with your timely filed return, so long as you have made deposits for the first, second, and third quarters according to the applicable deposit rules. Employers below the $2,500 threshold, who are not required to make deposits and instead remit employment taxes with their Forms 941 or Form 944, may choose to deposit the taxes, or use other methods of payment as provided by the form instructions.

Liability of $2,500 or more: Unless you are eligible to make payments with your return, you must deposit your taxes. If you are a Form 941 filer and you are not sure your total tax liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semi-weekly or monthly rules so you won't be subject to failure-to-deposit penalties.

Deposits must be made according to one of two deposit schedules, monthly or semiweekly. Which schedule you use for the current calendar year is based on the amount of taxes you reported during your lookback period. If you have filed only Form 941, the lookback is a 12-month period, covering four quarters, ending June 30 of the prior year. If you filed Form 944 in either of the two previous years, or you are filing Form 944 in the current year, the lookback period is the second prior calendar year. If you reported $50,000 or less of taxes for the lookback period, you are a monthly schedule depositor; if you reported more than $50,000, you are a semiweekly schedule depositor. For more information on lookback periods, refer to Chapter 11 of Publication 15, (Circular E), Employer's Tax Guide.

If you reported taxes of $50,000 or less during the lookback period, you are a monthly schedule depositor, and generally must deposit your employment taxes on payments made during a month on or before the 15th day of the following month. For example, taxes on payments made in January must be deposited by February 15.

If you reported taxes of more than $50,000 for the lookback period, you are a semiweekly schedule depositor, and generally must deposit your employment taxes based on the following schedule:

  1. If your payday is on Wednesday, Thursday, and/or Friday, you must deposit these taxes by the following Wednesday.
  2. If your payday is on Saturday, Sunday, Monday, and/or Tuesday, you must deposit these taxes by the following Friday.

If a deposit is required to be made on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. A business day is any day other than a Saturday, Sunday, or legal holiday. For example, if a deposit is required to be made on a Friday and Friday is a legal holiday, the deposit will be considered timely if it is made by the following Monday (if that Monday is a business day). The term "legal holiday" means any legal holiday in the District of Columbia. (See Chapter 11 of Publication 15, (Circular E), Employer's Tax Guide.) A statewide legal holiday, other than those listed, does not delay the due date of federal tax deposits. Semiweekly schedule depositors have at least 3 business days to make a deposit. If any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the required deposit.

Regardless of whether you are a monthly schedule depositor or a semiweekly schedule depositor, if you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit the tax by the next business day after you accumulate $100,000. If this happens, you become a semiweekly depositor for at least the remainder of the calendar year and for the following calendar year. For details on the $100,000 Next-Day Deposit Rule, see Publication 15, (Circular E), Employer's Tax Guide.

If you are a new employer, your taxes in the lookback period are considered to be zero for any quarter before you started or acquired your business. Therefore, in the first year of business you are a monthly schedule depositor unless the $100,000 next-day deposit rule applies.

All federal tax deposits must be made using electronic funds transfer. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make your deposits on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by a third party may have a fee. For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p.m. Eastern Standard Time the day before the date the deposit is due. To enroll in EFTPS, call 800-555-4477 or visit www.eftps.gov. Additional information on EFTPS is also available in Publication 966 (PDF).

If you fail to initiate a deposit transaction on EFTPS by 8 p.m. Eastern Standard Time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA) for a same-day payment. If you ever need the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Please check with your financial institution regarding availability, deadlines, and costs. Your financial institution may charge you a fee for payments made this way. To learn more about the information you will need to provide to your financial institution to make a same-day payment, visit www.eftps.gov to download the Same-Day Payment Worksheet.

You are required to deposit 100% of your tax liability on or before the deposit due date. Penalties may apply for depositing late, depositing less than the required amount, or for mailing payments directly to the IRS instead of depositing the amounts. The IRS may waive penalties in certain cases. See Publication 15, (Circular E), Employer's Tax Guide, for more information on accuracy of deposit rules and penalties.

For detailed information, see Publication 3151-A (PDF), The ABCs of FTDs: Resource Guide for Understanding Federal Tax Deposits.

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Page Last Reviewed or Updated: July 16, 2014