HOW OFTEN MUST YOU DEPOSIT PAYROLL TAXES?

If you are an employer, the IRS has various different schedules for determining when you deposit the Social Security taxes, Medicare taxes, and federal income taxes that you withhold from your employees' paychecks.

● QUARTERLY: If your tax liability for the current quarter is less than $2500, or your tax liability for the previous quarter was less than $2500, and you didn't incur a $100,000 next-day deposit obligation during the current quarter, you may remit your payroll taxes quarterly together with your timely filed Form 941.

● MONTHLY: If your tax liability is more than $2500 for the quarter but less than $50,000 for the year, you must deposit your payroll taxes on the 15th of each month following the month the wages/salaries were paid. For example, taxes withheld from employee paychecks in January must be remitted to the IRS by February 15th.

● SEMIWEEKLY: Once your payroll tax liability starts to exceed $50,000 per year, the IRS will send you a letter stating that you are now a semiweekly depositor. In general, you deposit employment taxes for payments made on Wednesday, Thursday, or Friday by the following Wednesday,and you deposit taxes for payments made on Saturday, Sunday, Monday, or Tuesday by the following Friday. You must stay on the semiweekly deposit schedule, even if your tax liability drops below $50,000 per year, until the IRS notifies you otherwise.

● NEXT DAY: When any single payroll has a payroll tax liability that exceeds $100,000, you must deposit the tax by the next banking day.

Note that the above deposit schedules do not affect your filing frequency. Form 941 is due quarterly, regardless of your deposit schedule.

WHAT IS THE DIFFERENCE BETWEEN A TAX LIEN AND A TAX LEVY?

Taxpayers often get tax liens and tax levies confused. A lien is a legal claim against your property to secure payment of your tax debt, while a levy actually takes the property to satisfy the tax debt.

Tax liens are typically filed against the taxpayer's real estate or other large assets such as an automobile. The IRS does not seize the property, but the tax lien prevents the taxpayer from being able to sell the property before paying the tax liability to remove the lien. Further, a tax lien has a negative impact on the taxpayer's credit report and shows up in public records.

A levy on the other hand gives the government the right to take your property. Examples of tax levies include garnishment of the taxpayer's wages or seizure of money in the taxpayer's bank account.

Overdue Taxes Can Jeopardize Your Passport

This month, the IRS will begin implementation of new procedures affecting individuals with tax debts that are classified as “seriously delinquent.” These new procedures require the State Department to deny the passport applications or revoke the passports of seriously delinquent taxpayers.

A taxpayer with a "seriously delinquent" tax debt is generally someone who owes the IRS more than $50,000 in back taxes, penalties and interest. There are several ways such taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

● Paying the tax debt in full

● Entering into a payment arrangement with the IRS, such as an approved installment agreement or accepted offer in compromise

● Having requested or have a pending collection due process appeal with a levy, or

● Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

A passport won’t be at risk under this program for any taxpayer:

● Who is in bankruptcy

● Who is identified by the IRS as a victim of tax-related identity theft

● Whose account the IRS has determined is currently not collectible due to hardship

● Who is located within a federally declared disaster area

● Who has a pending installment agreement or offer in compromise with the IRS

● Who has an IRS accepted adjustment that will satisfy the debt in full

● For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.