A Federal Tax Deposit (FTD) is a payment made by employers to the IRS to cover payroll taxes, including federal income tax withholding, Social Security taxes, and Medicare taxes. Employers are required to make FTDs regularly, based on the frequency of their payroll, to ensure that taxes withheld from employees’ wages are remitted to the IRS.
FTDs can be made:
- Semi-weekly for larger employers with more frequent payrolls.
- Monthly for smaller employers.
FTDs must be deposited electronically through the Electronic Federal Tax Payment System (EFTPS), and failure to make timely deposits can result in penalties, known as the Failure to Deposit Penalty.
Employers must follow IRS deposit schedules based on their total payroll tax liability, and compliance with FTD requirements is critical for avoiding enforcement actions, such as liens or levies. Properly managing FTDs ensures that employers remain compliant with their tax obligations and avoid additional interest and penalties.