Forms 941 and 944
Deposit Requirements for Employers

Employers must deposit employment taxes reported on Form 941 or Form 944, including federal income tax and Social Security and Medicare contributions. Your prior filings determine whether you follow a monthly or semiweekly deposit schedule. These schedules are based on wage payment dates, not accounting accruals. For details on deposit rules and filing requirements, see IRS Topic No. 758.

What are Forms 941 and 944?

• Form 941: This form is filed quarterly and is used to report federal income tax withheld from employees, as well as Social Security and Medicare taxes.
• Form 944: Smaller employers who owe $1,000 or less in payroll taxes annually may be eligible to file this form. Unlike Form 941, it is filed once a year.

The IRS determines whether you should file Form 941 or Form 944 based on your payroll size. Typically, the IRS notifies eligible small businesses when they can use Form 944.

Tax Liabilities under $2,500

• Form 941 Filers:
• If you are required to file Form 941 and your employment tax liability for the preceding or current quarter is less than $2,500, you may pay the taxes directly with your timely filed return instead of making a deposit.
• However, this option is only available if you do not incur a $100,000 next-day deposit obligation during the current quarter.
• Form 944 Filers:
• If you are required to file Form 944 and your employment tax liability for the year is less than $2,500, you can pay the amount with your timely filed return instead of making deposits.
• For a fourth-quarter liability of less than $2,500, you may pay it with your return if deposits were made for the first three quarters.

Tax Liabilities of $2,500 or More

For liabilities of $2,500 or more:

• You must deposit taxes according to the monthly or semiweekly rules.
• If you're unsure whether your total liability will be less than $2,500 for the current quarter, follow the appropriate deposit schedule to avoid penalties.

Employment Tax Deposit Schedules

When it comes to depositing your employment taxes, you'll need to follow one of two deposit schedules: monthly or semiweekly. The schedule that applies to you depends on the amount of taxes you reported during your lookback period. see IRS Topic No. 757.

What is the Lookback Period?

Your lookback period is determined by the amount of employment taxes you reported. Here’s how it works:

• If you've only filed IRS Form 941, your lookback period covers the 12 months (4 quarters) starting on July 1st of the second preceding year and ending on June 30th of the prior year.
• If you’ve filed IRS Form 944 in the past or are filing it this year, your lookback period is the calendar year two years before the current year.

For more information on the lookback period and depositing taxes, check Publication 15

Monthly Schedule Depositor

If you reported $50,000 or less in employment taxes during your lookback period, you're considered a monthly schedule depositor. This means you'll typically need to deposit taxes for payments made during a month by the 15th day of the following month. For instance, taxes on payments made in January must be deposited by February 15th.

Semiweekly Schedule Depositor

If your reported taxes exceed $50,000 during the lookback period, you're a semiweekly schedule depositor. You must deposit taxes according to the following schedule:

• For wages paid on Wednesday, Thursday, and/or Friday, deposits are due the following Wednesday.
• For wages paid on other days, deposits are due by the following Friday.

It’s essential to note that these schedules are based on your tax liability, not your payroll frequency.

$100,000 Next-Day Deposit Rule

Whether you are on the monthly or semiweekly schedule, if your accumulated taxes total $100,000 or more on any single day, you must deposit them by the next business day. This rule requires you to switch to the semiweekly depositor schedule for the rest of the calendar year and the following year.

New Employer Guidelines

Starting a business? If you're a new employer, your tax liability for any quarter before you started or acquired your business is considered zero. As a result, in your first year, you'll be on a monthly deposit schedule unless the $100,000 next-day deposit rule applies.

How to Make Payroll Tax Deposits

To stay compliant with federal tax requirements, all tax deposits must be made electronically. You can make payments through the IRS Business Tax Account, IRS Direct Pay for businesses, or by using EFTPS (Electronic Federal Tax Payment System), a free service offered by the U.S. Department of Treasury.

Learn more about the IRS EFTPS tax payment method

Key Details for EFTPS

• Deadline: To ensure your deposit is on time, schedule it by 8 p.m. Eastern Time the day before it's due.
• Enrollment: Visit EFTPS.gov or call 800-555-4477 (800-733-4829 for TDD) to sign up.
• Additional Resources: You can refer to Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started, for more information.

Alternative Payment Methods

If you prefer not to use EFTPS directly, you can arrange for a trusted third party—such as a tax professional, financial institution, or payroll service—to deposit on your behalf. Keep in mind, that these third parties may charge a fee and have different cutoff times.

Same-Day Payments

If you miss the 8 p.m. Eastern deadline for an EFTPS deposit transaction, you can still make your deposit on time using the Federal Tax Collection Service (FTCS) for same-day payments. Be sure to arrange this option in advance with your financial institution, as they may charge a fee, and service availability may vary.

Penalties for Late or Incomplete Deposits

You are required to deposit the full amount (100%) of your tax liability by the due date. If you make a late deposit, pay less than required, or mail payments directly to the IRS instead of making the proper deposit, penalties may apply. However, in certain cases, the IRS may choose to waive these penalties.