Let’s continue with the second segment of paying taxes, last time I explained what the taxes are in payroll. As the employer, you need to send the taxes to the appropriate Federal and State agencies. You can send in the payments electronically or send it by mail with a coupon. The federal coupon is known as Form 8109 (Federal Tax Deposit Coupon). Please contact your state and local government on how to send the taxes to them.
You become liable for payroll taxes on the date you pay your employees regardless of when they did the work for that paycheck. This is known as constructive receipt. For example, if you paid an employee on the first of each month and it covers the pay period of the previous month. All the IRS cares about is the actual paydate and that determines when your liability is.
These are the Federal Tax Deposit Schedules for Federal Withholding, Social Security (FICA,OASDI), and Medicare:
Monthly Depositors: If your company’s federal tax liability during the lookback period (7/1/05-6/30/06) was less than $50,000, then you’re a monthly depositor. Taxes are due by the 15th of the following month. For example, January taxes are due by February 15th; however, if the 15th falls on a bank holiday, it will be due the next banking day.
Semi-weekly Depositors: If your lookback period was more that $50,000, then you are a semi-weekly depostior. Taxes are normally due three banking days after the end of the period. The IRS determines the due dates as follow: 1) If the pay date falls on Wednesday, Thursday, Friday, then taxes are due on the following Wednesday. 2) If the pay date falls on Saturday, Sunday, Monday, and Tuesday, then taxes are due on the following Friday.
Next Day Deposit Rule: If you accrue $100,000 or more in federal tax liability at any point during a deposit period. The taxes must be sent the next banking day within regardless if you were a monthly depositor or a sem-weekly depositor. This may happen if you issue bonuses at year end to your employees and the tax liability amounts are greater than $100,000.
Quarterly Depositors: If you know your company will owe less than $2500 in federal taxes for a quarter, you can choose to pay the taxes at the end of the quarter.
Annual Depositors: The IRS will sent you a written confirmation informing you that you are an annual filer Form 944 and your total annual federal tax liability is less than $2500 for the entire year.
Now let’s approach the other taxes of when Federal Unemployment Taxes (FUTA) and State Unemployment Insurance (SUI) Taxes are due. The due dates for these taxes are different compared to the regular federal taxes.
FUTA – These taxes are due at the end of the quarter April 30 for Quarter 1, July 31 for Quarter 2, October 31 for Quarter 3, and January 31 for Quarter 4. If the FUTA tax hasn’t reach the $500 threshold, then taxes do not need to be sent in until the following quarter. (Note: if the $500 FUTA threshold is not met for the entire year, then it’s not due until January 31 of the following year). Payments can be made electronically or using the 8109 Federal Tax Deposit Coupon.
SUI- These taxes are due at the end of the quarter. April 30 for Quarter 1, July 31 for Quarter 2, October 31 for Quarter 3, and January 31 for Quarter 4. Please verify with your state of how these payments can be sent?
