What determines how often an employer's payroll deposits are made to the IRS?

What determines how often an employer's payroll deposits are made to the IRS?

• A. The amount of payroll liability
• B. The number of employees
• C. The payroll software used
• D. The company's fiscal year

Answer: (A)

The frequency of payroll tax deposits to the IRS is driven by how much payroll tax liability the employer has. In other words, the bigger the amount you owe in payroll taxes, the more often you must deposit. This isn’t determined by how many employees you have, what payroll software you use, or the company’s fiscal year. The IRS uses the total liability to set your deposit schedule, with higher liabilities moving you toward more frequent deposits. For example, if your liability falls within a certain threshold, you might deposit monthly; if it’s higher, you may need to deposit semiweekly, and on certain high-day situations you may need a next-business-day deposit.