How often should I pay my federal taxes?

Determining your federal deposit schedule is important for employers responsible for withholding and depositing payroll taxes. The schedule dictates how often you need to deposit these taxes with the IRS. In this article, we'll guide you through the process of determining your federal deposit schedule.

Step 1: Obtain your Employer Identification Number (EIN): Make sure you have your EIN, a unique identifier assigned to your business by the IRS.

Step 2: Review Your Previous Year's Payroll Tax Liability: Calculate the total federal income tax, Social Security tax, and Medicare tax withheld from employee wages in the previous year. Check your payroll records or consult your payroll provider/accountant for this information.

Step 3: Compare the Total Tax Liability: Compare your total tax liability to the IRS thresholds for deposit schedules:

• Monthly Deposit Schedule: If your liability was $50,000 or less, you follow the Monthly Deposit Schedule. Deposit taxes by the 15th day of the following month.
• Semiweekly Deposit Schedule: If your liability was over $50,000, you follow the Semiweekly Deposit Schedule. Deposit taxes on Wednesdays or Fridays, depending on when wages are paid.
• Next-Day Deposit Schedule: If your liability exceeds $100,000 on any given day, you must deposit taxes on the next banking day.
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Step 4: Confirm with the IRS: Visit the IRS website and refer to their "Circular E, Employer's Tax Guide" for the most up-to-date information on federal deposit schedules. This will help you confirm the correct schedule for your business.

Determining your federal deposit schedule is crucial for meeting payroll tax obligations. Follow these steps to assess your tax liability and identify the appropriate deposit schedule. Remember to review your deposit schedule each year, as changes in tax liability may result in a different schedule. If you need further assistance, consult a tax professional or contact the IRS directly.