Introduction

Quarterly payroll deposits is a shorthand many employers use to describe the combined process of withholding federal income tax and FICA (Social Security and Medicare) from wages, calculating the employer and employee shares, and remitting those amounts to the IRS. In practice the IRS separates two things: (1) deposit frequency (when you must remit employment taxes) and (2) filing frequency (when you file Form 941). Understanding both—and how the IRS determines your deposit schedule—prevents costly penalties.

Key IRS sources

Note: This article is educational. For tailored tax guidance, consult your CPA or payroll specialist. In my practice I regularly confirm deposit schedules using the IRS lookback calculation and have helped clients avoid penalties by switching to EFTPS and automating deposits.

How payroll deposits are determined (overview)

1) Figure your total employment tax liability for each pay period

  • Start with gross wages subject to tax for each employee for the pay period. For federal income tax withholding and FICA, the wage base is ordinarily the taxable wages shown on payroll records. (For specifics about what counts as wages for each tax, see IRS Pub 15.)
  • Calculate federal income tax withholding using employee W-4 and payroll tables or software.
  • Calculate FICA: Social Security and Medicare taxes are applied to wages that are subject to FICA. (Social Security has an annual wage limit; Medicare does not.)

2) Aggregate liabilities by pay date

  • The timing of deposits is based on when wages are paid (pay date), not the payroll period. Keep accurate pay-date records because deposit due dates for semiweekly depositors are triggered by pay dates.

3) Determine your deposit schedule using the IRS lookback period

  • The IRS uses a 12‑month lookback period (the 12‑month period ending June 30 of the previous year) to determine whether you are a monthly or semiweekly depositor for the current calendar year. If you reported $50,000 or less in employment taxes during that lookback period, you are a monthly depositor. If you reported more than $50,000, you are a semiweekly depositor. (Source: IRS — Deposit Employment Taxes.)

Deposit schedules explained

  • Monthly depositors

  • If you are a monthly depositor, you must deposit employment taxes by the 15th day of the month following the month in which the wages were paid. For example, taxes on wages paid on any day in March are due by April 15.

  • Semiweekly depositors

  • If you are a semiweekly depositor, deposit due dates depend on the day wages were paid: wages paid on Wednesday, Thursday, or Friday are due by the following Wednesday; wages paid on Saturday, Sunday, Monday, or Tuesday are due by the following Friday. This makes deposit timing more frequent and requires closer attention when payrolls span different weekdays.

  • Small‑employer exception (pay with Form 941)

  • If your total tax liability for the quarter (after adjustments) is $2,500 or less, you may pay those taxes with your quarterly Form 941 instead of making deposits during the quarter. This is a common source of confusion: “quarterly payroll deposits” often refers to paying on the quarter under this small‑employer rule, but it is an exception to the general deposit rules. (Source: IRS — Deposit Employment Taxes.)

Which payments are sent via EFTPS?

  • Most employers must deposit federal employment taxes electronically using the Electronic Federal Tax Payment System (EFTPS). EFTPS lets you schedule deposits and provides confirmation records—an important control that reduces the risk of missed deposits. Register at https://www.eftps.gov. (Source: IRS / EFTPS.)

How to calculate liability for a pay period (practical steps)

  1. Gather payroll inputs: gross wages, pretax deductions, tip credits, taxable benefits. Use your payroll system to determine wages subject to federal withholding and FICA.
  2. Compute employee withholding using W‑4 information and IRS tax tables (or your payroll software).
  3. Compute employee and employer FICA contributions: 6.2% Social Security (employee) + 6.2% (employer) on wages up to the Social Security wage base; 1.45% Medicare (employee) + 1.45% Medicare (employer) on wages (no wage base). Note: employee 0.9% Additional Medicare applies to higher wages for employee share only; employer portion does not include the additional 0.9%. Confirm current rates and wage base in IRS Pub 15.
  4. Total the federal income tax withheld and the employee and employer FICA amounts for each pay date. This total is the employment tax liability associated with that pay date and drives the deposit amount and timing.

Concrete example

Assume a monthly depositor pays one employee $5,000 on March 15.

  • Federal income tax withheld (example): $600
  • Social Security (6.2% of $5,000): $310 (employee) + $310 (employer) = $620
  • Medicare (1.45% of $5,000): $72.50 (employee) + $72.50 (employer) = $145
    Total employment tax liability tied to that pay date: $600 + $620 + $145 = $1,365.

If you are a monthly depositor, that $1,365 is due by April 15; if a semiweekly depositor and the pay date was a Wednesday, it is due by the following Wednesday.

Quarterly filing vs. quarterly deposit: don’t confuse the two

  • Form 941 (Employer’s Quarterly Federal Tax Return) is the return you file each quarter to report wages, tips, federal income tax withheld, and FICA liabilities. Form 941 filing deadlines are the last day of the month following the end of the quarter (Q1 due April 30, Q2 due July 31, Q3 due October 31, Q4 due January 31). These are filing deadlines — not deposit schedule dates — and are sometimes mischaracterized as “quarterly deposit” due dates. (Source: IRS — Form 941.)

Penalties and interest

  • Failure to deposit on time can trigger penalties and interest. Penalty rates escalate the longer the deposit is late; the IRS also charges interest on unpaid amounts. For some employers, the difference between monthly and semiweekly depositor status can mean much higher frequency of deposits and therefore higher risk of missed deadlines. If you receive an IRS notice, respond promptly and consider abatement options if you have reasonable cause. (Source: IRS — Failure to Deposit Penalties.)

Common mistakes and how to avoid them

  • Confusing Form 941 filing dates with deposit due dates. Fix: Maintain a separate calendar for deposit deadlines and for Form 941 filings.
  • Not knowing your lookback result. Fix: Review last year’s liabilities and confirm monthly vs. semiweekly status ahead of the new calendar year.
  • Missing EFTPS registration. Fix: Enroll in EFTPS well before your first deposit due date.
  • Treating pre‑tax employee deductions incorrectly. Fix: Confirm with payroll provider and IRS Pub 15 which deductions affect FICA and withholding bases.

Practical controls and tips I recommend in practice

  1. Automate: Use payroll software or a payroll provider that files and deposits electronically on your behalf and keeps an auditable trail.
  2. Reconcile monthly: Compare payroll journal entries, EFTPS payment confirmations, and Form 941 figures each quarter to find errors early.
  3. Use EFTPS scheduling: Schedule deposits in EFTPS with confirmation receipts and set internal approval workflows so payments aren’t missed.
  4. Keep a small reserve: Maintain a short‑term cash buffer equal to one payroll cycle’s employment taxes—this prevents forced late deposits when cash is tight.
  5. If you get a notice: Don’t ignore it. Contact your tax advisor immediately; many penalties can be abated with a reasonable‑cause explanation if documentation supports it.

When quarterly deposits truly apply

The phrase “quarterly payroll deposits” most accurately applies to employers who meet the IRS small‑employer exception and pay employment taxes with Form 941 when the total tax per quarter is $2,500 or less. For most employers, however, deposits are monthly or semiweekly. Always check your deposit schedule each year using the IRS lookback rules.

Internal resources

For further reading on basics and common mistakes, see our guide to payroll tax fundamentals and avoiding errors:

Conclusion and next steps

Create a simple checklist:

  • Confirm your IRS deposit schedule using last year’s lookback period.
  • Register for and schedule deposits in EFTPS.
  • Reconcile payroll and deposit records monthly and prepare Form 941 each quarter.

This approach prevents common mistakes, reduces penalty risk, and keeps your payroll process auditable. If you’re unsure how your payroll system calculates taxes or which wages are taxable, contact a payroll provider or tax professional.

Professional disclaimer

This article is educational and reflects general federal rules as of 2025. It is not personalized tax advice. For guidance about your specific business situation, consult a CPA or enrolled agent.

References