Federal 941 Payroll Tax Look-back Procedures

IRS Notice 931, Deposit Requirements for Employment Taxes, https://www.irs.gov/pub/irs-pdf/n931.pdf lists requirements for depositing payroll taxes such as withheld federal income tax, Social Security and Medicare tax. If your company is currently paying Federal 941 payroll taxes on a monthly deposit schedule, then you should perform an annual checkup to see if you are required to pay these taxes on a semi-weekly schedule.

Now is the ideal time to perform this check as any changes to your deposit schedule should be implemented beginning January 1, 2020. Below is the calculation to make this determination for calendar year 2020:

From Form 941, determine the total tax liability amount for each of the following periods:

Third Quarter 2018          $___________________

Fourth Quarter 2018       $___________________

First Quarter 2019            $___________________

Second Quarter 2019      $___________________

Grand Total                        $___________________

If the total is less than $50,000, your company may remain on the monthly deposit schedule, and your 941 tax deposits are due by the 15^th day of the following month.

If the total is $50,000 or more, your company is required to change to a semi-weekly deposit schedule. This does not mean you must start paying your taxes on a semi-weekly basis; under the semi-weekly deposit schedule, if your pay date is on a Wednesday, Thursday or Friday, then your tax payment is due by the following Wednesday. If your pay date is on a Saturday, Sunday, Monday or Tuesday, then your tax payment is due on the following Friday.

If you are using the EFTPS system to make these payments, payments must be scheduled at least one day in advance to be considered timely.

You are required to make your payments on business days only. If the due date of your deposit falls on a Saturday, Sunday, or legal holiday, your payment is due the following business day.