IRS Form 941: The Lookback Period and Deposit Schedules

IRS Form 941, Employer’s Quarterly Federal Tax Return, is used by an employer to report federal income tax withheld from employees (including withholding on sick pay and supplemental unemployment benefits) plus the employer’s and employees’ share of social security and Medicare tax. It must be filed each quarter. The amount of taxes reported during the lookback period determines which schedule an employer must use to deposit their tax liability. In this post we’ll take a closer look at the lookback period and deposit schedules.

Lookback Period

The lookback period for filing Form 941 is 12 months, covering four quarters, ending on June 30 of the previous year. IRS Notice 931 provides the following example:

Taxes in the lookback period are considered to be zero for a new employer. 

There is a different lookback period if an employer filed a Form 944, Employer’s Annual Federal Tax Return, in the current year or in either of the previous two years. You can learn more about that here.

IRS Form 941 Deposit Schedules

There are two deposit schedules: monthly and semiweekly.

An employer is a monthly schedule depositor if they reported $50,000 or less in taxes during the lookback period. In general, monthly deposits of employment taxes are due by the 15th of the following month. For example, taxes on January payments are due February 15. Deposit dates are not to be confused with form filing dates (which are generally the last day of the month following the end of a quarter).

An employer is a semiweekly schedule depositor if they reported more than $50,000 in taxes during the lookback period. Deposits of employee taxes are due based on the following schedule:

• If payday is on Wednesday, Thursday, or Friday, deposits are due the following Wednesday.
• If payday is on Saturday, Sunday, Monday, or Tuesday, deposits are due the following Friday.

Whether you are a monthly schedule depositor or a semiweekly schedule depositor, if you accumulate $100,000 or more in taxes on any day during a deposit period, you must deposit the tax by the next business day. This is called the $100,000 Next-Day Deposit Rule, and if it happens, an employer becomes a semiweekly depositor for at least the rest of the calendar year and the following calendar year.

If the due date for a deposit falls on the weekend or a legal holiday, the deposit is due the next business day. A statewide holiday does not delay the due date.

One thing to note is that an employer may deposit their total tax liability at the time they file Form 941 (rather than on a semiweekly or monthly schedule) if they meet the following conditions:

• Their total tax liability for the current quarter or the preceding quarter is less than $2,500 
• They didn’t incur a $100,000 next-day deposit obligation during the current quarter

How to Make a Deposit 

Lastly, for an employer’s deposit to be considered on time, they must schedule the deposit using the Electronic Federal Tax Payment System (EFTPS) by 8 p.m. Eastern Standard Time the day before the due date. If the employer fails to do so, they can arrange for their financial institution to make a same-day wire payment on their behalf. Additionally, if the employer does not want to use the EFTPS in general, they can arrange for their tax professional, financial institution, payroll service, or another trusted third party to make electronic deposits on their behalf. 

Want more tips for filling out IRS Form 941?  Check out the 2021 Guide to Filling Out IRS Form 941.

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