A lookback period is the time period used to calculate an employer’s total payroll tax liability, which is then used by the IRS to determine your payroll tax deposit schedule. It determines when you’ll deposit the employer’s portion of social security and Medicare and the social security, Medicare, and Federal income tax you withheld from your employees’ paychecks.
The lookback period runs from July 1 to June 30 (of the prior year). The lookback period for 2018 is
July 1, 2016 to September 30, 2016
October 1, 2016 to December 31, 2016
January 1, 2017 to March 31, 2017
April 1, 2017 to June 30, 2017
Payroll Tax Deposit Schedules
To help you figure out your payroll tax deposit schedule, look at your Form 941 for each quarter in the lookback period. You’ll want to look at your total taxes after adjustments – Line 10 (for quarters ending before December 31, 2016) or Line 12 (for quarters beginning after December 31, 2016).
Look at the total taxes after adjustments for each quarter and add them together for your total tax liability for the lookback period.
If your total tax liability was less than $10,000, you’re probably an annual depositor. Instead of filing Form 941 every quarter, you would file Form 944 every year.
The lookback period for annual depositors is a little different; it’s the second prior calendar year. For 2018, the lookback period is the 2016 calendar year.
If your tax liability for the current or prior quarter was less than $2,500, you’re probably a quarterly depositor. You’ll deposit your payroll taxes when you file your quarterly Form 941.
If your total tax liability for the lookback period was $50,000 or less, you’re probably a monthly depositor. You’ll deposit your payroll taxes by the 15th day of the following month. For example, you would deposit your October taxes by November 15th.
If your total tax liability was more than $50,000, you’re probably a semi-weekly depositor. Your deposit schedule will depend on what day your payday falls.
If your payday is on Saturday, Sunday, Monday, or Tuesday, you’ll deposit your payroll taxes by the following Wednesday.
If your payday is on Wednesday, Thursday, or Friday, you’ll deposit your payroll taxes by the following Friday.
If at any point you have a tax liability of $100,000 or more for a single payroll run, then you must deposit your payroll taxes by the next business day.
If you still have questions about payroll tax deposit schedules, look at IRS Publication 15.