Form 941 - Deposit Requirements
The tax liability on a Form 941 (PDF), Employer's Quarterly Federal Tax Return includes your employees' withheld Federal income tax, social security tax, Medicare tax, and your share of social security and Medicare tax. If you accumulate a liability for these taxes of $2,500 or more per quarter, you must deposit this amount by making payment to an authorized financial institution. Deposits are made either by the Electronic Federal Tax Payment System (EFTPS), or by using a Form 8109, Federal Tax Deposit Coupon, which must accompany your payment. If you use the coupon, it is very important that it show the correct employer identification number, name, and type of tax and tax period, as this information is used by the IRS to credit your account. Your check or money order should be made payable to the financial institution where you make your deposit, not to the IRS.
New employers who apply for an employer identification number are sent a federal tax deposit (FTD) coupon book. The IRS will keep track of the number of coupons you use and will automatically send you additional FTD coupons when you need them. If necessary, the IRS will assist you in completing blank coupons, which can be used to make a deposit if you do not have preprinted Form 8109. For more information, call the IRS at 1-800-829-4933.
You must deposit the Form 941 taxes based on either a monthly or semiweekly deposit schedule. Which schedule you use for the calendar year 2005 is based on the amount of taxes you reported on Form 941 for the four calendar-quarters from July 1, 2003, through June 30, 2004. This is called the lookback period.
If you reported taxes of $50,000 or less on Form 941 for the lookback period, you are a monthly schedule depositor, and generally must deposit each month's Form 941 taxes on or before the 15th day of the following month. For example, taxes for January must be deposited by February 15th.If you reported taxes of more than $50,000 for the lookback period, you are a semiweekly schedule depositor, and generally deposit due dates will fall on Wednesday or Friday, based on the following schedule:
- The employment taxes on payments made to your employees on Wednesday, Thursday, and/or Friday, must be deposited by the following Wednesday.
- The taxes on payments made to your employees on Saturday, Sunday, Monday, and/or Tuesday, must be deposited by the following Friday.
You always have at least 3 banking days to make a deposit. If any of the 3 weekdays after the end of the semiweekly period is a holiday on which banks are closed, you have one additional day to deposit.
Whether you are a monthly 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 them on the next banking day. If this happens, you become a semiweekly depositor for the remainder of the calendar year and for the following calendar year.
If the deposit due date falls on a Saturday, Sunday, or legal holiday, the deposit will be considered timely if made by the next banking day.
If you are a new employer, your taxes in the lookback period are considered to be zero. Therefore, in the first year of business you are a monthly schedule depositor unless the $100,000 next day deposit rule applies. There are penalties for depositing late, or for mailing payments directly to the IRS that are required to be deposited.
You must make electronic deposits for all depository tax liabilities for the year 2005 if you made more than $200,000 in aggregate deposits for all types of Federal depository taxes in 2003 or if you were required to make electronic deposits in 2004. If you are required to make electronic deposits through EFTPS and fail to do so or make your deposit using a paper coupon Form 8109, you may be subject to a 10% penalty.
Even if you do not have to make electronic deposits, you may voluntarily participate in EFTPS. To enroll in EFTPS, call 1-800-945-8400 or 1-800-555-4477, or to enroll online, visit www.eftps.gov. For general information about EFTPS, call 1-800-829-1040 for individuals or 1-800-829-4933 for businesses.