How and When to Deposit Employment Taxes: The 2026 Compliance Guide

As all payroll professionals know, federal income tax withheld must be deposited at the employee and employer level for social security and Medicare. Firstly, there are two schedules for depositing, semi-monthly and monthly. Under the monthly schedule, employers must deposit their employment taxes by the 15 day of the following month. Those following the semi-monthly system, must deposit employment taxes for payments made on Wednesday, Thursday, or Friday by the FOLLOWING Wednesday. If payments are made on a Saturday, Sunday, Monday, or Tuesday, employment taxes must be deposited by the following FRIDAY.

But how and when does a payroll person do this? Here’s a quick breakdown.

The Lookback Period: Monthly vs. Semi-Weekly Depositor

The IRS uses a lookback period to determine your deposit schedule. The lookback period is the 12-month period ending June 30 of the prior year.

• If you reported $50,000 or less in employment taxes during the lookback period, you’re a monthly depositor. Deposit by the 15th of the following month.
• If you reported more than $50,000, you’re a semi-weekly depositor. Deposit by Wednesday for Saturday-Tuesday paydays, or by Friday for Wednesday-Friday paydays.
• New employers are monthly depositors for their first calendar year.

The $100,000 Next-Day Deposit Rule

If your accumulated tax liability reaches $100,000 or more on any day during a deposit period, you must deposit by the next business day — regardless of whether you’re normally a monthly or semi-weekly depositor. Once triggered, this rule makes you a semi-weekly depositor for the remainder of the calendar year and the following year.

Failure-to-Deposit Penalties

Days Late - Penalty

• 1-5 days - 2% of unpaid deposit
• 6-15 days - 5% of unpaid deposit
• 16+ days - 10% of unpaid deposit
• 10+ days after first IRS notice - 15% of unpaid deposit

These penalties apply to the amount of the shortfall, not the entire deposit. The IRS may waive penalties for first-time offenders or if the employer can demonstrate reasonable cause.

2026 Form 941 Filing Deadlines

• Q1 (January-March): Due April 30, 2026
• Q2 (April-June): Due July 31, 2026
• Q3 (July-September): Due October 31, 2026
• Q4 (October-December): Due January 31, 2027

If you’ve deposited all taxes on time and in full, you have an additional 10 days to file (deadline extends to the 10th of the following month).

EFTPS: Electronic Filing Requirement

All federal tax deposits must be made electronically through the Electronic Federal Tax Payment System (EFTPS). Employers must enroll in EFTPS before they can make deposits — enrollment can take up to two weeks, so new employers should register immediately after obtaining their FEIN.

Publication 15 from the Internal Revenue Service

 A quick review of Publication 15 from the Internal Revenue Service (IRS) can alert an employer on which schedule he or she must use. It is determined by the total of an employer’s tax liability reported on Form 941 during a lookback period. Forms like this are used to report quarterly and annual payments. Here is a description of Form 941 and others used for depositing withheld income tax for BOTH the employee and employer.

• Form 941: Employer’s Quarterly Federal Tax Return. This is used to report income taxes, social security, and Medicare tax withheld from each employee’s paycheck and to pay the employer’s portion of FICA – a combination of Medicare and social security.
• Form 943: Employer’s Annual Federal Tax Return for Agricultural Employees. This form is used for anyone who pays one or more farm/payroll-tax-insights/tax-return-fica workers, when that worker’s wages were subject to FICA.
• Form 944: Employer’s Annual Federal Tax Return. This form is used for small employers – whose combined withheld federal income taxes are $1,000 or less. These small employers only deposit taxes once a year.
• Form 945: Annual Return of Withheld Federal Income Tax. This form is used to report withheld income tax from non-payroll payments. Examples include taxable income such as gambling winnings, or Indian gaming profits. Other examples of non-payroll payments are pensions and backup withholding.

Another important payment only employers must make (i.e. does not get removed from an employee’s paycheck) is Federal Unemployment Taxes or FUTA tax. This is reported by filing out and depositing Form 940 – which is an Employer’s Annual Federal Unemployment (FUTA) Tax Return. FUTA helps pay for unemployment compensation to workers who’ve lost jobs. This is a quarterly filing.

Form 940, Form 943, Form 944, and Form 945 are all due by January 31 of the upcoming year. Form 941 – which has a quarterly schedule – is due by April 30, July 31, October, and January 31 or whatever the fourth quarter of the previous year ends on.