Payroll Tax Deposits and Returns….scary enough for Halloween?

It’s that time of the quarter again….time to discuss payroll taxes.  Payroll taxes are some of the most scrutinized taxes by the IRS.

You have to deposit federal income taxes along with Medicare and social security taxes using Using what the IRS calls the “lookback period”, you can determine what deposit schedule you are on.  You will either be a Monthly Depositor or Semi-Weekly Depositor.  Before the beginning of the calendar year, you will need to determine how much your payroll tax liability was.  If it was $50,000 or less during the lookback period, you will be a Monthly Depositor.  If it was more than $50,000, you will need to deposit on a Semi-Weekly schedule.  Semi-Weekly does not suggest you only deposit payroll tax every two weeks….the date of your payroll determines your deposit date.

Example of lookback period:

2016 Lookback Period                                                                    2017 Lookback Period

Q3 2014                $10,000                                                               Q3 2015                $15,000

Q4 2014                $10,000                                                               Q4 2015                $15,000

Q1 2015                $10,000                                                               Q1 2016                $15,000

Q2 2015                $15,000                                                               Q2 2016                $15,000

Total = $45,000  Monthly Depositor                                      Total = $60,000   Semi-Weekly Depositor

Payroll Tax Deposit Schedule

Monthly Depositor

You will need to deposit your federal payroll taxes by the 15th of the month following the month payroll was paid.  Example….you’ll pay all of your September payroll taxes on October 15th.

Semi-Weekly Depositor

This gets a little more involved.  You will need to deposit payroll taxes for each payroll you process.

  • Payday – Wednesday, Thursday and/or Friday
  • Deposit by – Following Wednesday
  • Payday – Saturday, Sunday, Monday and/or Tuesday
  • Deposit by – Following Friday

If your tax liability for a deposit period reaches $100,000 on any day, you have to deposit the tax by the close of the following business day regardless of your schedule.


FUTA (Federal Unemployment)

In 2016, the Federal Unemployment tax rate is 6% of the first $7,000 you pay to each employee.  In Minnesota, your rate varies with your experience rating and can go up or down.  Your FUTA deposits are due the last day of the month following the close of the quarter.


Payroll Tax Returns

You will also need to file your payroll tax returns.  These returns will reconcile the amount of tax you deposited with the amount you are liable for.  Depending on what accounting system you use, you may file these forms electronically or by mail.


  • 941(Quarterly Payroll Tax Return)
  • April 30th, July 31st, October 31st, and January 31st
  • 944 (Annual Payroll Tax Return)
  • January 31st (Annually, for prior year)
  • 940 (Annual FUTA Return)
  • January 31st (Annually, for prior year)


Failure to Pay

Paying and filing any payroll tax late will cause penalties and potentially interest.

  • 1-5 Days Late
  • 2% of the past due amount
  • 6-15 Days Late
  • 5% of the past due amount
  • 16 or more Days Late
  • 10% of the past due amount

This penalty may increase to 15% if the IRS has sent a notice and the past due amount remains unpaid.

Failure to File

5% per month of the unpaid tax up to a maximum of 25%

Payroll tax can seem overwhelming but with a good schedule and a good accounting system can be done by yourself.  Using a quality payroll provider can take a lot of that stress and work off your plate.  Payroll providers range from large online providers to your local tax experts.