Lookback Period Definition
A lookback period is the time period used to calculate the total employment taxes paid by an employer. It shows the IRS the employer’s full year tax liability and helps the employer determine whether these taxes must be paid on a semi-weekly or monthly basis.
An employer will need to follow a deposit schedule based on the total tax liability reported on Form 941 during a specific time period known as the lookback period. By identifying the lookback period, employers can determine whether they are semi-weekly or monthly depositors. It also tells the IRS about the employer’s tax liability for the full year. An employer’s lookback period is the 12-month time frame ending June 30 of the previous year, which is divided into four quarters. For instance, the lookback period to submit employment tax deposits in 2012 would be the 12-month period ending June 30 of 2011.
What is a Lookback Period?