by Eric Murphy
If you’re a Sole Proprietor, a Partner in a partnership, a member of an LLC, or an officer in a corporation, it’s likely you have employees and yourself on payroll. Due to this fact, it’s necessary for you to pay payroll taxes for Federal Withholding, Social Security, Medicare, as well as North Carolina Withholding taxes.
The frequency in which you pay the taxes is determined by the payroll tax liability incurred in any given Quarter in the Calendar year as follows:
- Liability under $2,500: If you are required to file Form 941 and your employment tax liability for the preceding quarter or current quarter is less than $2,500, you may pay the taxes for the current quarter with your timely filed return instead of making deposits. These would be filed the final days of the months following the end of the quarters on January 31st, April 30th, July 31st, and October 31st. The NC withholding taxes paid in with Form NC-5 should be filed at the same time.
- Liability of $2,500 or more: Unless you are eligible to make payments with your return, you must deposit your taxes. If you are a Form 941 filer and you are not sure your total tax liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won’t be subject to failure-to-deposit penalties.
Per IRS Tax Topic 757, if you reported taxes of $50,000 or less during the previous quarter, you are a monthly schedule depositor, and you generally must deposit your employment taxes on payments made during a given month on or before the 15th day of the following month. For example, you must deposit taxes on payments made in January by February 15. If the 15th of any calendar month falls on a Saturday, Sunday or legal holiday, the deposit is due by the next banking day. This same schedule applies to paying NC withholding taxes with Form NC-5.
Per IRS Publication 15 (Circular E), Employer’s Tax Guide for use in 2015, the following payment schedule must be used for semi-weekly filers (Entities with over $50,000 of tax liability in the previous quarter):
- Deposit Federal Withholding and FICA employment taxes for payroll payments made on Wednesday, Thursday, and/or Friday by the following Wednesday.
- Deposit taxes for payroll payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday.
- Per IRS Tax Topic 757, if any of the 3 days following the date of the payroll payments is a holiday, you have an additional day for each day that’s a holiday to make the payment. For example: If payroll was paid on Friday, September 4th the payroll tax deposits won’t be due until the following Thursday, given that Monday, September 7th, was a holiday.
You will make your deposits online through www.EFTPS.gov and report your deposits quarterly by filing Form 941 or annually by filing Form 944, it all depends on what the IRS instructs you to file based on the payroll thresholds you report in your initial 941 report.
It’s also essential that NC unemployment taxes are paid in for the quarter in the month following the end of the quarter to the NC Division of Employment Security. These are paid in with Form NCUI-101 and must be prepared with the proper SUI rate assigned to your entity from the NC Division of Employment Security at the beginning of the year. If you need the rate, an operator at the Division can provide it for you as long you provide either your Employer Identification Number or Account ID number assigned by the Division. This should be filed at the same time as Form 941 is filed with the IRS.
If you have questions about your payroll taxes and withholdings, contact our office and speak to our payroll specialists. Langdon & Company LLP has experienced professionals that would be glad to assist you in these matters.
Eric ([email protected]) is a senior in our tax practice. He prepares and reviews a combination of both corporate and individual tax returns.