Publication 5258 - Federal Tax Deposits (Page 4 of 32) in pdf

Publication 5258 - Federal Tax Deposits Page 4

Why you are here

i ntroDucTion

ou are here to learn about making federal tax deposits. We are here to help

you do that. Our goal is to give you the tools you need to:

Understand the special nature of employment taxes,

›

Compute the required deposit amounts for Forms 941,944, and 940,

›

Determine your deposit schedules and deposit due dates for Forms 941, 944

›

and 940,

Use the Electronic Federal Tax Payment System (EFTPS), and

›

Understand that penalties for late tax deposits are expensive.

›

As we’ve already mentioned, we’ll be discussing the basics of federal tax depos-

its. We’ll first look at what makes employment taxes different from other taxes,

and we’ll discuss the rules for depositing taxes related to Forms 941, 944 and 940.

Then, we’ll outline the methods used to make tax deposits electronically, through

your phone or the Internet. Finally, we’ll explain the financial consequences of not

making correct, timely deposits.

Use this Resource Guide to get familiar with the requirements for making tax depos-

its. By putting this information into practice, you may avoid the resulting penalties

and interest. That means money in your pocket. After all, isn’t that why you’re in

business?

To illustrate how much it will cost you to make your federal tax deposits late, con-

sider this example: Assume your monthly liability for withheld income tax, employ-

ee's share of FICA (social security and Medicare) tax, and your employer’s match-

ing share totals $3,000 per month. Review the graph below to see how quickly the

penalty for making late deposits increases. As you can see, using your trust fund

taxes to finance your business can be very expensive.

FTD Penalty on $3,000 Deposit

$500

$450

$400

$300

$200

$150

$100

$60

1 to 5

6 to 15

16 +

11+ days after

first bill

Days past due date

Publication 5258 - Federal Tax Deposits Page 4

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