Federal payroll tax deposits

Federal law requires you, as an employer, to withhold, or take out of your employees’ pay, certain amounts for federal income tax, social security tax, and Medicare tax. Under the withholding system, taxes withheld from your employees are credited to your employees in payment of their tax liabilities. Federal law also requires you to pay the employer’s share of social security tax and Medicare tax; it is not withheld from employees.

All employment taxes must be deposited timely and by the required method. You are required to make timely deposits of:

  • Federal income tax withheld
  • Additional Medicare tax withheld (if applicable)
  • Both the employer and employee social security
  • Medicare taxes
  • Federal Unemployment Tax Act (FUTA) (if applicable)

There are two deposit schedules, monthly and semi-weekly.

Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. To determine your payment schedule, review Publication 15 for Forms 941, 944 and 945. For Form 943, review Publication 51. Deposits for FUTA Tax (Form 940) are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter.

You must use electronic funds transfer (EFTPS) to make all federal tax deposits. See the Employment Tax Due Dates page for information on when deposits are due. If you fail to make a timely deposit, then you may be subject to a failure-to-deposit penalty of up to 15 percent. Depositing the taxes alone does not report the taxes or relieve you of the requirement to file a return. Generally, employers must report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS. You must also report taxes you deposit by filing Forms 941, 943, 944, 945, and 940 on paper or through e-file.