How payroll taxes get paid
You pay payroll taxes through the IRS, using a system called the Electronic Federal Tax Payment System (EFTPS) or through your bank's bill pay service. The IRS does not come to your business — you send the money on a schedule they set based on how much you owe. Most employers pay weekly, biweekly, or monthly, depending on the size of their payroll.
The money you send covers three things: federal income tax withheld from employee paychecks, the employer's share of Social Security and Medicare taxes, and the employee's share of those same taxes (which you withheld from their pay). State and local taxes, if your area has them, go to your state or city through a separate system.
You do not pay all three at once. The IRS tells you when each payment is due based on how much you owe in a given period. Missing a payment date costs you penalties and interest, so the schedule matters.
Key Takeaways
- The IRS requires you to pay federal payroll taxes on a set schedule — usually weekly, biweekly, or monthly — depending on how much you owe.
- EFTPS is the IRS's official payment system, but you can also pay through your bank's bill pay or by mailing a check with Form 941-V.
- You must pay both the taxes withheld from employee paychecks and the employer's matching portion of Social Security and Medicare taxes.
- State and local payroll taxes are paid separately to your state or city, not to the IRS.
- Payments are due on specific dates set by the IRS; missing a due date triggers penalties and interest on top of what you owe.
Setting up EFTPS to pay federal taxes
EFTPS is the IRS's official payment system and is free to use. You enroll at eftps.gov by providing your employer identification number (EIN), business name, and contact information. The enrollment process takes about five minutes, and the IRS mails you a PIN within two weeks. You will need that PIN to log in and make payments.
Once you have your PIN, you can schedule payments up to 120 days in advance. This means you can set up your entire quarter's payments at once if you know your payroll schedule. You can also make same-day payments if you miss a important date, though the IRS charges a small fee for same-day service.
EFTPS works on a calendar-day basis, not a business-day basis. If a payment is due on a Saturday or Sunday, the IRS considers it on time if you submit it by the preceding Friday. If it is due on a holiday, you have until the next business day.
Paying through your bank instead of EFTPS
Many employers use their bank's bill pay service instead of EFTPS because it fits into their existing banking routine. You set up a payee called "Internal Revenue Service" and enter the payment amount and due date, just like paying any other bill. Your bank then sends the money to the IRS on your behalf.
The catch is timing: your bank needs several business days to process the payment and send it to the IRS. If you pay through bill pay on the due date itself, you will likely miss the important date. Most banks recommend submitting payment at least three business days before the IRS due date to be safe.
When you pay by check, you must include Form 941-V (the payment voucher) with your check. This form tells the IRS which tax period the payment covers and which business it is for. Without it, the IRS may not know where to credit your payment.
Understanding your payment schedule
The IRS uses a lookback period to decide how often you must pay. If your total payroll taxes in a lookback period (usually the past four quarters) were less than $50,000, you pay monthly. If they were $50,000 or more, you pay semiweekly (twice a week). A few very large employers pay daily.
Monthly payments are due by the 15th of the following month. Semiweekly payments are due on Wednesdays (for payroll from Wednesday through Friday of the previous week) and Fridays (for payroll from Saturday through Tuesday). The exact dates shift slightly each year, and the IRS publishes a full calendar on its website.
Your payment schedule can change. The IRS recalculates it every January based on the previous four quarters of tax liability. If your payroll shrinks, you might move from semiweekly to monthly. If it grows, you might move the other direction.
What happens if you miss a payment important date
The IRS charges a failure-to-pay penalty if you do not send money by the due date. The penalty is usually 0.5% of the unpaid tax per month, up to 25%. You also owe interest on the unpaid amount, which the IRS sets quarterly and compounds daily.
If you miss a payment, pay it as soon as you realize the mistake. The sooner you pay, the less interest accrues. The IRS does not forgive the penalty automatically, but you can request penalty relief if you have a reasonable cause — for example, if a key employee left suddenly and payroll processing fell behind. You request relief by filing Form 843 (Claim for Refund and Request for Abatement).
Repeated missed payments can trigger an IRS audit or a notice that you must pay taxes more frequently (for example, moving from monthly to semiweekly). In extreme cases, the IRS can seize your business bank account or place a lien on your assets.
Reconciling your payments at year-end
Throughout the year, you make regular payments based on your payroll estimates. At the end of the year, you file Form 941 (Employer's Quarterly Federal Tax Return) for each quarter, which shows exactly how much tax you withheld and how much you paid. If you paid more than you owed, the IRS refunds the difference. If you paid less, you owe the balance.
Form 941 is due by the last day of the month following the end of each quarter. For example, the Q1 form (covering January through March) is due by April 30. If you file late, you owe a penalty on top of any taxes owed.
At the very end of the year, you also file Form 940 (Employer's Annual Federal Unemployment Tax Return), which covers federal unemployment insurance. This is due by January 31 of the following year. State unemployment taxes are filed separately with your state.
Paying state and local payroll taxes
State and local payroll taxes do not go to the IRS — they go directly to your state's tax agency or your city's finance department. Each state has its own system, schedule, and payment methods. Some states use an online portal similar to EFTPS. Others require you to pay through your bank or by check.
Your state tax liability is usually based on the same payroll as your federal taxes, but the rates and schedules vary widely. Some states require monthly payments; others require quarterly or annual payments. A few states have no income tax at all. You can find your state's requirements on your state's Department of Revenue website.
If you have employees in multiple states, you must register for payroll taxes in each state where they work and pay on each state's schedule. This is one reason many small businesses use payroll software or a payroll service — it tracks all the different important date and calculates the right amounts for each state automatically.
Frequently Asked Questions
What if I cannot pay the full amount by the due date?
Contact the IRS when ready. You can request a short-term extension (up to 120 days) or set up a payment plan if you owe more than $25,000. The IRS charges interest and a setup fee for a payment plan, but it keeps you from being in default. Call the IRS at 1-800-829-1040 or visit irs.gov to explore your options.
Can I pay payroll taxes by credit card?
Yes, but only through a third-party processor. The IRS does not accept credit cards directly, but companies like PayUSA and Official Payments let you pay by card. These processors charge a convenience fee (usually 1.87% to 2.35% of the payment), so it is more expensive than EFTPS or bank bill pay.
Do I need to file Form 941-V if I pay through EFTPS?
No. EFTPS records your payment electronically, so the IRS knows which tax period it covers. You only need Form 941-V when you pay by check. If you pay through your bank's bill pay, check with your bank — some banks include the voucher information electronically, and others require you to mail the form separately.
What is the difference between semiweekly and monthly payment schedules?
Semiweekly means you pay twice a week on specific days (Wednesday and Friday). Monthly means you pay once a month by the 15th. The IRS assigns your schedule based on how much you owed in payroll taxes over the past four quarters. Larger payrolls require more frequent payments so the IRS gets money sooner.
Can I change my payment method after I start?
Yes. If you enrolled in EFTPS but prefer to pay through your bank, you can stop using EFTPS and switch to bill pay anytime. If you switch to a different payment method, make sure you know the new important date — bank bill pay requires more lead time than EFTPS because your bank needs days to process the payment.