By CPA SAM
Where Do I Put The Money?
Q. I’m a new employer and have started withholding taxes from my workers checks. Where do I put the money?
A. Definitely don’t put it under your mattress! Publication 15 from the IRS is what I like to call the Employer’s Tax Bible. Every employer whether new or seasoned should look through that document each year. Within its pages, you will see a schedule of how often you must remit the taxes you withhold from employee checks to the IRS. The section that relates to your question is chapter 11 “Depositing Taxes”. The frequency depends on the total amount of tax liability you report. Certain employers can remit their totals with their quarterly 941. Certain employers must make a deposit monthly. Still others get semi-weekly treatment. The largest employers have a next-day obligation for deposits. You can make your deposits using the EFTPS system, or take a paper coupon and check to the bank. If you are using a payroll service, they can likely handle the deposits for you.
All money withheld from employee checks must remain in trust once it comes out. The employee is relying on you to put their tax payments into an account and pay it for them. Then, once per year when they file their taxes, those payments will count toward their tax liability. Many employers recently have been convicted of not paying these taxes and instead running with them or spending them on business or personal expenses. You don’t what to join that crowd. Here is a link of some of the cases where employers didn’t pay over the money they withheld.
Tags: banking, EFTPS, Employer, liability, Payroll, tax deposits, tax withholding
