The Internal Revenue Service has very specific rules for when payroll taxes must be deposited which is determined by the tax reported during the 4 quarter lookback period (July 1 – June 30). If you reported over $50,000 in payroll taxes, the deposit schedule is semi-weekly, $50,000 or less is a monthly deposit schedule.
Taxes are due on the 15th of the month following the month the liability was incurred for monthly depositors. If the 15th falls on a weekend or bank holiday, the deposit is due the next business day. However, if you are an employer who accrues less than $2500 tax liability in the quarter, taxes may be remitted by the last day of the month following the quarter end. For instance, for the first quarter ending March 31, the tax is due April 30.
Under the semiweekly deposit schedule, deposit employment taxes for payments made on Wednesday-Friday by the following Wednesday. Deposit taxes for payments made on Saturday-Tuesday by the following Friday. If you accumulate $100,000 or more in taxes on any day during a monthly or semiweekly deposit period, you must deposit the tax by the next business day, whether you are a monthly or semiweekly schedule depositor.
You must deposit employment taxes by electronic funds transfer. If you fail to make a timely deposit, you may be subject to a 10% failure-to-deposit penalty. Penalties may apply if you do not make required deposits on time or if you make deposits for less than the required amount. Penalties range from 2%-10% depending on how late the taxes are paid. Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability.
To avoid the penalties, mark your due dates on a calendar, or outsource to a professional payroll service. Make sure if you outsource this task that you verify the tax was actually paid as you are still the responsible party if they are not paid timely.