Depositing and reporting employment taxes

Depositing employment taxes

In general, you must deposit federal income tax and Additional Medicare tax withheld as well as both the employer and employee Social Security and Medicare taxes.

There are two deposit schedules, monthly and semi-weekly. Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. To determine your payment schedule, review Publication 15 for Forms 941, 944 and 945. For Form 943, review Publication 51.

Deposits for FUTA Tax (Form 940) are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter.

Electronic deposit required

Federal tax deposits must be made by electronic funds transfers (EFT). You can make payments for free through:

• Your business tax account.
• Direct Pay for businesses.
• The Electronic Federal Tax Payment System (EFTPS).

These methods may charge a fee:

• Ask your financial institution to initiate an automated clearing house (ACH) credit payment on your behalf.
• Ask a trusted third party, such as a tax professional or payroll service, to make the payment for you.
• Ask your financial institution to make a same-day tax wire payment for you.

Reporting employment taxes

Generally, employers must report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS. You must also report taxes you deposit by filing Forms 941, 943, 944, 945, and 940 on paper or through e-file. For e-file, go to E-file Employment Tax Forms for additional information. A fee may be charged to file electronically.

Federal income tax and Social Security and Medicare tax

In general, employers who withhold federal income tax, Social Security or Medicare taxes must file Form 941, Employer's Quarterly Federal Tax Return, each quarter. This includes withholding on sick pay and supplemental unemployment benefits.

File Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, if you paid wages to one or more farmworkers and the wages were subject to federal income tax withholding or Social Security and Medicare taxes.

File Form 944, Employer’s Annual Federal Tax Return, if you have received written notification about the Form 944 program.

File Form 945, Annual Return of Withheld Federal Income Tax, if you withhold or are required to withhold federal income tax (including backup withholding) from nonpayroll payments.

Federal Unemployment Tax Act (FUTA)

Only the employer pays FUTA tax, and it is not withheld from the employee's wages. Report your FUTA taxes by filing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

Preparing and filing Form W-2

At the end of the year, the employer must complete Form W-2, Wage and Tax Statement, to report wages, tips and other compensation paid to an employee. File Copy A of all paper and electronic Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, to the Social Security Administration (SSA). File Copy 1 to an employee’s state or local tax department. Forms W-2 are required to be furnished to employees and filed with SSA by January 31.

Employers who file 10 or more information returns, Form 1099 series, Form 1042-S, and Form W-2, are required to file them electronically. Employers are to combine almost all information return types to determine whether a filer meets the 10-return threshold. For more information see Employer W-2 Filing Instructions & Information on the Social Security Administration website.

Due dates

See the Employment Tax Due Dates page for filing and depositing due dates. For more information on depositing and filing these forms, refer to Publication 15, Employer’s Tax Guide.