The government requires that all employers file and pay their taxes in a timely manner. This includes making federal tax deposits and filing an annual 940 or 940EZ, filing quarterly 941 forms, filing annual 945 forms, and filing annual W-2 wage and tax statements for each employee.
Paying federal taxes
Unless a company qualifies under the small business exception rule, they will be required to make their federal deposits electronically.
It is important to be aware of both legal holidays and business days when it comes to making payments. When the payment due date falls on a weekend, you will have until the close of the next business day to complete your deposit. When the due date falls on a legal holiday, there will be no extension, and payments will need to be completed before the holiday date.
If your company is classified as a small business and has a federal tax liability of less than $2,500 per quarter, electronic payments are not required. A check can be sent along with quarterly returns, but the payment must be received by the date it is due.
Filing federal and FICA taxes
The schedule for filing and paying federal and FICA taxes will be dependent on the size of your company’s tax liability. Towards the end of the current year, the IRS will inform you of the company filing requirements you need to follow. These requirements will be filed:
- Semi-weekly: Large companies may be required to make their payments on a semi-weekly basis. In this payment structure, wages that were paid on Wednesday, Thursday, or Friday, will need to have the taxes withheld paid by the following Wednesday.
- Monthly: For companies with more than $2,500 annually in tax liability. Must be submitted on the 15th day of the month following the withholding period.
- Quarterly: For small businesses with less than $2,500 annual tax liability.
- Annually: For small non-agricultural businesses with less than $1,000 in annual tax liability.
Determining when to deposit the withholding
All companies with more than a $2,500 annual tax liability will need to pay their federal and FICA taxes semi-weekly or monthly, with the payment schedule for your company being determined by a specified look-back period. The look-back period will be comprised of a four-quarter period that ends on June 30 of the previous year. Companies who had a tax liability of less than $50,000 during that period, will be allowed to file and pay on a monthly basis. If higher, then a semi-weekly basis will be required.
For new employers who do not have a look-back period, payments will begin as monthly deposits.