No Deposit, Big Return
In an effort to make life easier for small businesses, the IRS recently scrapped monthly employment tax deposit requirements for about 1 million small-business owners. Under the new rules, the IRS will allow businesses to make payments every three months if they have less than $2,500 in quarterly employment taxes. Previously, payments were permitted every three months only if businesses had less than $1,000 in quarterly employment taxes.
The IRS says the new rule is advantageous-it reduces the frequency of deposits, small businesses will encounter fewer mistakes and penalties, and quarterly payments will allow better cash flow. Small businesses that qualify under the new rule may pay their employment taxes when they file Form 941, "Employers Quarterly Federal Tax Return."
Joan Szabo is a writer in Great Falls, Virginia, who has reported on tax issues for more than 14 years.