Topic Number 757 - Forms 941 and 944 – Deposit Requirements
As an employer, you're generally required to deposit the employment taxes reported on Forms 941, Employer's QUARTERLY Federal Tax Return or Form 944.pdf, Employer's ANNUAL Federal Tax Return. Both forms report federal income tax withheld from your employees, along with the employer's and employees' shares of social security and Medicare tax. The amount of employment taxes you reported on your Forms 941 or 944 determines which deposit schedule you must use, monthly or semiweekly. For the rules on filing requirements, refer to Topic No. 758.
Liability under $2,500: If you're 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, provided you don't incur a $100,000 next-day deposit obligation during the current quarter.
Similarly, if you're 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're 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, as long as you've made deposits for the first, second, and third quarters according to the applicable deposit rules. Employers below the $2,500 threshold who aren't required to make deposits and instead remit employment taxes with their Forms 941 or Form 944 may choose to deposit the taxes or pay the amount shown as due on the Form 941 or Form 944 as provided by the form instructions.
Liability of $2,500 or more: Unless you're eligible to make payments with your return, you must deposit your taxes. If you're a Form 941 filer and you're not sure your total tax liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter wasn't less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure-to-deposit penalties.
When to Deposit
You must make deposits according to one of two deposit schedules, monthly or semiweekly. The schedule you use for the current calendar year depends on the amount of employment taxes you reported during your lookback period. If you've filed only Form 941, the lookback period is the 12 months (covering four quarters) ending on June 30th of the prior year. If you filed Form 944 in either of the two previous years or you're filing Form 944 in the current year, the lookback period is the calendar year two years prior to the year for which you’re depositing (see Chapter 11 of Publication 15, (Circular E), Employer's Tax Guide).
Monthly Schedule Depositor - If you reported taxes of $50,000 or less during the lookback period, you're a monthly schedule depositor, and you generally must deposit your employment taxes on payments made during a given month on or before the 15th day of the following month. For example, you must deposit taxes on payments made in January by February 15. If the 15th of any calendar month falls on a Saturday, Sunday, or legal holiday in the District of Columbia, the deposit is due by the next business day. A business day is any day other than a Saturday, Sunday, or legal holiday in the District of Columbia.
Semiweekly Schedule Depositor - If you reported taxes of more than $50,000 for the lookback period, you're a semiweekly schedule depositor, and you generally must deposit your employment taxes based on the following schedule:
- If your payday is on Wednesday, Thursday, and/or Friday, you must deposit these taxes by the following Wednesday.
- If your payday is on Saturday, Sunday, Monday, and/or Tuesday, you must deposit these taxes by the following Friday.
If you're required to make a deposit on a day that's not a business day, the deposit is considered timely if you make it by the close of the next business day. For example, if you're required to make a deposit on a Friday and that Friday is a legal holiday in the District of Columbia, the deposit will be considered timely if you make it by the following Monday (if that Monday is a business day). A statewide holiday that is not a legal holiday in the District of Columbia doesn't delay the due date of federal tax deposits. Semiweekly schedule depositors have at least 3 business days following the close of the semiweekly period to make a deposit. If any of the 3 weekdays after the end of a semiweekly period is a legal holiday in the District of Columbia, you'll have an additional day for each of those days to make the required deposit.
$100,000 Next-Day Deposit Rule - Regardless of whether you're 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 taxes by the next business day after you accumulate the $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 Chapter 11 of Publication 15.
New Employer - If you're 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're a monthly schedule depositor unless the $100,000 Next-Day Deposit Rule applies.
How to Deposit
You must make all federal tax deposits using electronic funds transfer, generally by using the Electronic Federal Tax Payment System (EFTPS). EFTPS is a free service provided by the Department of Treasury. For your EFTPS deposit to be on time, you must schedule the deposit by 8 p.m. Eastern Standard Time the day before the date the deposit is due. Visit EFTPS.gov or call 800-555-4477 to enroll. You may also find additional information in Publication 966.pdf, Electronic Federal Tax Payment System, A Guide to Getting Started. If you don't want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Services provided by a third party may have a fee and a different cutoff time.
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 Collection Service (FTCS) for a same-day payment. If you anticipate that you'll ever need to use the same-day payment method, be sure to arrange this ahead of time with your financial institution. Please check with your financial institution regarding availability, deadlines, and costs. Your financial institution may charge you a fee for payments made this way.
You're 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 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.