One of the many payroll obligations an employer has is the requirement to make payroll tax deposits. A bi-weekly payroll depositor – or a monthly payroll depositor, depending on your classification – is the easiest way to handle this responsibility.
The question of when to make your payroll deposits is determined by a few factors. You must make periodic payroll tax deposits based on the collective amount of your actual tax obligation. The required deposit consists of federal income tax withheld from employees’ wages, the Social Security and Medicare taxes withheld as well as the employer’s portion of social security and Medicare taxes.
After allowing for any credits you may have received, you will have your net obligation. This amount determines how often you deposit as an employer.
Luckily, you don’t need this information to invest in a bi-weekly payroll depositor, or a monthly payroll depositor if you are so classified. Most payroll software, like AMS Payroll , have several options to accommodate a range of businesses and employers.
What Does the IRS Say?
The IRS uses two different sets of deposit rules to determine when businesses must deposit their social security, Medicare, and withheld federal income taxes. These schedules tell you when a deposit is due after you have a payday.
Your deposit schedule is not determined by how often you pay your employees. Your deposit schedule depends on the total tax liability you reported on Form 941 during the previous four-quarter lookback period (July 1 of the second preceding calendar year through June 30 of last year). See section 11 of Pub. 15 (Circular E) for details. If you filed Form 944 in either 2011 or 2012, your lookback period is the 2011 calendar year.
Before the beginning of each calendar year, determine which type of deposit schedule you must use.
If you reported $50,000 or less in taxes during the lookback period, you are a monthly schedule depositor.
If you reported more than $50,000 of taxes during the lookback period, you are a semiweekly schedule depositor.
See $100,000 Next-Day Deposit Rule in section 11 of Pub. 15 (Circular E) if you accumulate $100,000 or more of taxes on any day during the deposit period. //www.irs.gov/instructions/i941/ch01.html#d0e843
Making Deposits
Deposits must be made using the EFTPS- Electronic Federal Tax Payment System using a credit card, debit card, or bank draft. However, having a payroll software do the work for you is the easiest possible option. Visit 1099-etc.com for our AMS Payroll module download that will enable you to stay in compliance with your Payroll filing.
Our AMS Payroll Module supports Federal payroll forms such as the 941, 940, 943, 944 and 1040 Sch H.
- Includes SUI forms for all 50 states, the District of Columbia
- Electronically file 941, 944, and 940 forms.
- Exports data to the W-2/1099 Forms Filer for year-end processing.
- Includes the ability to magnetically/electronically file nearly 30 state quarterly returns.
- State and Federal Tax deposit information, as well as disbursements, can be recorded.
- Prints Client Letters.
- Certified Payroll report included.
For IRS guidelines on rules and regulations regarding your payroll tax deposits, please visit www.IRS.gov.