How to Pay Payroll Taxes | Federal Payroll Tax Deposit Rules & More

How to Pay Payroll Taxes

You must deduct payroll taxes from employees’ wages. But, what do you do with the withheld money? You can’t hold onto it until someone asks for it.

You must pay payroll taxes to the federal government. Some employers might have to send money to their state and local governments, too.

Learn how to pay payroll taxes so you can remain legal and prevent penalties.  

How to pay payroll taxes

Each section below will help you make a payroll tax deposit. You’ll find out when to make a payment and where to send it.

You must also report your payroll tax liabilities. Reporting isn’t discussed in depth in this article, so make sure you also learn how to report employment taxes.

Federal income tax

When you pay federal income tax varies by business. Every business will either use a monthly or semiweekly deposit schedule. You do not get to chose your deposit schedule, nor is it based on how often you pay employees.

Your schedule is based on a lookback period of Form 941. This is the form used to report your federal income tax, Social Security tax, and Medicare tax liabilities. To learn more about the lookback period and how to determine your depositing schedule, see the Instructions for Form 941. You can also find information in Publication 15.

Your deposit schedule can change yearly, so make sure you check your deposit schedule before the beginning of every year.

New businesses are automatically monthly depositors during their first year.

If you are a monthly depositor, your federal income tax payment is due by the 15th day of the next month. For example, federal income tax withheld in January is due by February 15.

If you are a semiweekly depositor, follow the table below:

Payday falls on: Deposit taxes by:
Wednesday, Thursday, Friday The following Wednesday
Saturday, Sunday, Monday, Tuesday The following Friday

You must make your federal income tax deposits by electronic funds transfer. You can do this by using EFTPS, a tax professional, or a payroll tax filing service.

Social Security and Medicare taxes

You must deduct Social Security and Medicare taxes (which make up FICA tax) from employee wages. As the employer, you must also pay a matching portion.

You will deposit FICA tax with the federal income tax. Make sure you deposit both the employee and employer portions of FICA tax. Use the same depositing schedule and deposit all the taxes together using electronic funds transfer.

Federal unemployment tax

Only employers pay federal unemployment tax (FUTA tax). Even though you don’t withhold FUTA tax from employee wages, you must still make regular deposits.

According to the federal payroll deposit rules for FUTA tax, you must make quarterly deposits.

When your FUTA tax liability is more than $500 during a quarter, you must make a deposit. FUTA tax is due by the end of the month following the quarter.

Quarter FUTA tax deposit due date
Quarter 1
January, February, March
April 30
Quarter 2
April, May, June
July 30
Quarter 3
July, August, September
October 31
Quarter 4
October, November, December
January 31

FUTA tax due dates

For example, you owe more than $500 worth of FUTA tax for the first quarter. Your FUTA tax deposit is due by April 30.

You do not have to deposit FUTA tax if your liability for a quarter is $500 or less. Instead, carry your liability over to the next quarter. Once you owe more than $500, including the rolled-over amount, deposit the FUTA tax by the quarterly due date.

Like federal income tax and FICA tax, you must deposit FUTA tax by electronic funds transfer. Once again, you can use EFTPS, a tax professional, or a payroll tax filing service.

State and local taxes

You might have to withhold and pay state and local income taxes, and state unemployment tax.

The rules for paying state and local payroll taxes vary widely. You should check with your state and local departments of taxation or other relevant agencies to learn how to pay your state and local payroll taxes.

What happens if you don’t pay payroll taxes

There are consequences if you don’t make your federal payroll tax deposits. Failure to pay payroll taxes can lead to monetary penalties. The penalty amount increases the later your deposits are. You can also receive criminal penalties, such as steep fines and imprisonment. As you can tell, it is in your best interest to learn how to make payroll tax deposits.

Full Service Payroll Software will automatically withhold and pay payroll taxes for you. You don’t need to do calculations, fill out forms, or make deposits. The software takes care of your tax liabilities. Try Patriot Software’s payroll software for free!

This article is updated from its original publication date of 7/5/2013.

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