When an Insufficient Employment Tax Deposit May Not Cause a Penalty

You are required to deposit 100% of your employment tax liability on or before the deposit due date. However, penalties will not be applied for depositing less the 100% if both of the following conditions are met:

  • Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited and
  • The deposit shortfall is paid or deposited by the shortfall makeup date described next

Makeup Date For Deposit Shortfall:

  • Monthly schedule depositor.
    • Deposit the shortfall or pay it with your return by the due date of your return for the return period in which the shortfall occurred.
    • You may pay the shortfall with your return even if the amount is $2,500 or more.
  • Semiweekly schedule depositor:
    • Deposit by the earlier of:
      • The first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred or
      • The due date of your return (for the return period of the tax liability).

Do Your Payroll Online!
Get started with Intuit Online Payroll Software and make running payroll simple so you can focus on what you love.

QuickBooks Self-Employed
For Freelancers and independent Contractors

- Organzie your financial data into one central accounting system on the cloud
- Software kept up to date.
- Your data kept secure
- Anytime, anywhere data access.
- Pay your quarterly estimated taxes online.
- Export Schedule C to TurboTax at year-end for faster filing.
- Save up to 50% off QuickBooks Self-Employed. Track every deduction! Start your free trial now!

Have an accounting or bookkeeping question? Email it to me.