Form 941 and Payroll Tax Deposits: IRS Basics for Rio Grande Valley Employers

Hiring the first employee brings federal payroll tax duties for a small business in Brownsville or the Rio Grande Valley: withholding, deposits, a quarterly return, and year-end wage statements. This article summarizes, in plain language, what the IRS says about Form 941, the deposit schedules, and the year-end forms. Sources were checked on October 30, 2026. This article does not review any business's payroll or tax situation.

What federal employment taxes include

The IRS page on understanding employment taxes describes the main federal pieces an employer handles:

• Federal income tax withheld from employees' wages
• Social Security and Medicare taxes, which include an employee share withheld from pay and a matching employer share
• Additional Medicare Tax withheld from an employee's wages above the threshold the IRS lists (there is no employer match for this tax)
• Federal unemployment (FUTA) tax, which the employer pays from its own funds and does not withhold from employees

Each employee's Form W-4 tells the employer how much federal income tax to withhold. Current rates and wage limits are published in Publication 15 (Circular E), Employer's Tax Guide; this article does not restate them.

Before any of this starts, the business needs an Employer Identification Number, and owners who are self-employed may also have their own quarterly estimated taxes, which are separate from payroll deposits. Our earlier article on EIN basics covers how the IRS issues one. If you are still deciding whether a worker is an employee or an independent contractor, our article on 1099-NEC vs. W-2 workers explains the IRS approach.

Form 941: the quarterly return

According to the IRS page About Form 941, Employer's Quarterly Federal Tax Return, employers use Form 941 to report federal income tax, Social Security tax, and Medicare tax withheld from employees' paychecks, and to report the employer's share of Social Security and Medicare taxes.

The IRS page on employment tax due dates lists the quarterly due dates as April 30, July 31, October 31, and January 31 (for the fourth quarter of the previous year). The same page says that if you deposited all taxes on time, you have 10 more calendar days to file the return, and that a due date falling on a Saturday, Sunday, or legal holiday moves to the next business day.

For the third quarter of 2026, the listed date is October 31, 2026, which falls on a Saturday, so the IRS weekend rule applies.

Form 944 for some small employers

The same due-dates page says small employers with annual employment tax liabilities of $1,000 or less may file Form 944, Employer's Annual Federal Tax Return, if approved by the IRS. According to the About Form 944 and due-dates pages, you file it only if the IRS has notified you in writing.

Deposits: monthly or semiweekly

The IRS page on depositing and reporting employment taxes says there are two deposit schedules, monthly and semiweekly, and that you must determine which one applies before the beginning of each calendar year.

Publication 15 explains how:

• The lookback period. For Form 941 filers, the schedule for a calendar year depends on the total taxes reported on Form 941 during a four-quarter lookback period that runs from July 1 to June 30. If you reported $50,000 or less, you are a monthly schedule depositor. If you reported more than $50,000, you are a semiweekly schedule depositor.
• New employers. For Form 941 filers, the tax liability for any lookback quarter before the business started is treated as zero, so a new business is a monthly schedule depositor for its first calendar year.
• Monthly schedule. Employment taxes on payments made during a month are deposited by the 15th day of the following month.
• Semiweekly schedule. Taxes on wages paid on Wednesday, Thursday, or Friday are deposited by the following Wednesday. Taxes on wages paid Saturday through Tuesday are deposited by the following Friday.
• The $100,000 next-day rule. If you accumulate $100,000 or more in taxes on any day during a deposit period, Publication 15 says you must deposit by the next business day, whether you are a monthly or semiweekly depositor.

The About Form 941 page adds that semiweekly schedule depositors also file Schedule B (Form 941), the Report of Tax Liability.

How deposits are made

The IRS says federal tax deposits must be made by electronic funds transfer. Its deposit page lists free options: your business tax account, IRS Direct Pay for businesses, and the Electronic Federal Tax Payment System (EFTPS). It notes that some other methods, such as a same-day wire, may charge a fee.

FUTA and Form 940

FUTA tax is reported once a year on Form 940. The IRS deposit page says FUTA deposits are required for a quarter in which the tax due exceeds $500, and that the deposit is due by the end of the month following the end of that quarter. Per the due-dates page, Form 940 is due January 31, with 10 extra calendar days if all FUTA tax was deposited on time.

State payroll obligations, such as Texas unemployment tax through the Texas Workforce Commission, are separate and not covered here.

Year-end: Forms W-2 and W-3

The IRS due-dates page says employers file Forms W-2 with Form W-3 with the Social Security Administration to report the prior year's wages and withheld taxes, and must give Form W-2 to employees by January 31. Instructions are on the About Form W-2 page.

Records to keep

The IRS page on employment tax recordkeeping says to keep all employment tax records for at least four years after filing the fourth-quarter return for the year. The list includes your EIN, wage payments, employee details, Forms W-4, deposits with EFTPS acknowledgment numbers, and returns filed.

Step by step: a payroll tax calendar

1. Confirm your EIN and worker status

Make sure the business has an EIN, that each worker is classified under the IRS rules, and that each employee has given you a current Form W-4.

2. Determine your deposit schedule

Before each calendar year, use the lookback period in Publication 15 to confirm whether you are a monthly or semiweekly depositor. A new Form 941 filer starts as a monthly depositor.

3. Set up electronic payments

Enroll in EFTPS or use your business tax account or Direct Pay before the first deposit is due.

4. Mark the quarterly and annual dates

Put the Form 941 dates (April 30, July 31, October 31, January 31), the FUTA quarterly test, and the January 31 dates for Forms W-2, W-3, and 940 on the business calendar.

Frequently asked questions

If I pay a payroll service, am I still responsible?

The IRS deposit page lists a payroll service as one way to make payments, and Publication 15 discusses third-party payer arrangements in its own section. Keeping your own deposit records helps you confirm payments were made.

What happens if withheld taxes are not paid?

Publication 15 explains that if unpaid trust fund taxes cannot be collected from the business right away, the trust fund recovery penalty may be imposed on all persons the IRS determines were responsible for collecting, accounting for, or paying over those taxes and who acted willfully in not doing so. This article does not estimate any penalty.

Questions in Brownsville and the Rio Grande Valley

Garduño Tax & Associates works with individuals, families, and small businesses in Brownsville and South Texas, including payroll and bookkeeping. If you are adding employees and want to organize the IRS forms and dates involved, you can contact the office to talk through the paperwork.