1997 Tax Help Archives  

Form 941 - Deposit Requirements

This is archived information that pertains only to the 1997 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

The tax liability on a Form 941 return includes your employees' withheld federal income tax, social security tax, Medicare tax, and your share of social security and Medicare tax.

If you accumulate a liability for these taxes of $500 or more per quarter, you must deposit this amount by making payment to an authorized financial institution or the Federal Reserve bank for your area. Deposits are made either by Federal Electronic Tax Payment System (EFTPS) if required or by using a Form 8109, Federal Tax Deposit Coupon, ( F-T-D Coupon) which must accompany your payment. It is very important that it shows the correct employer identification number and name and that you clearly mark the correct type of tax and tax period on each F-T-D coupon, as this information is used by the IRS to credit your account. Your check or money order should be made payable to the financial institution or Federal Reserve bank where you make your deposit, not the IRS.

New employers who apply for an employer identification number are sent an F-T-D coupon book. The IRS will keep track of the number of coupons you use and will automatically send you additional F-T-D coupons when you need them. If necessary, the IRS will assist you in completing blank coupons, which can be used to make a deposit if you do not have pre-printed Forms 8109. For more information, call the IRS at 1-800-829-1040.

To avoid a penalty, it is important that deposits be made timely. If the deposit due date falls on a Saturday, Sunday, or legal holiday, the deposit will be due the next banking day.

You must deposit the Form 941 taxes based on either a monthly or semi-weekly deposit schedule. New employers are generally monthly depositors for at least the first year. Otherwise your deposit status for 1998 is based on the amount of taxes you reported on Form 941 for the period July 1, 1996, through June 30, 1997. This is called the lookback period.

If you reported taxes of $50,000 or less on Forms 941 for the lookback period, you are a monthly schedule depositor and generally must deposit each month's Form 941 taxes on or before the 15th day of the following month. For example, taxes for January must be deposited by February 15th.

If you reported taxes of more than $50,000 for the lookback period, you are a semi-weekly schedule depositor and generally must deposit Form 941 taxes on or before Wednesday or Friday, based on the following schedule:

  1. The employment taxes on payments made to your employees on Wednesday, Thursday, and/or Friday must be deposited by the following Wednesday.
  2. The taxes on payments made to your employees on Saturday, Sunday, Monday, and/or Tuesday must be deposited by the following Friday.

Whether you are a monthly depositor or a semi-weekly schedule depositor, and you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit them on the next banking day. If this $100,000 deposit rule applies and you are a monthly schedule depositor, you become a semi-weekly depositor at least for the remainder of 1998 and for 1999.

Beginning in 1997, if total deposits in 1995 were more than $50,000 you must make electronic deposits for all depository tax liabilities that occurred after June 30, 1997. The Electronic

Federal Tax Payment System (EFTPS) must be used to make electronic deposits. Failure to make required deposits electronically will result in a Failure Deposit Penalty. However, the penalty will be waived through June 30, 1998, if timely deposits are made using paper coupons. If you are not required to make electronic deposits, you may voluntarily participate in EFTPS.

Refer to Publication 966 for Electronic Federal Tax Payment System information and Publication 15, Employer's Tax Guide for deposit requirements. Publications can be ordered by calling 1-800-829-3676, or downloaded from this web site.

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