Federal Tax Deposit (FTD)

A Federal Tax Deposit (FTD) refers to the payment employers make to the IRS for withheld federal income tax, Social Security, and Medicare taxes. Timely and accurate deposits are crucial for compliance and avoiding penalties. Mercans’ automated tax management system simplifies FTD scheduling, calculation, and submission—ensuring employers meet all IRS requirements seamlessly.

Key FTD Concepts and Components

FTDs include multiple payroll tax components, each governed by federal regulations that determine how often and how much must be deposited.

Taxes Included in an FTD

  • Federal Income Tax – Withheld from employee wages.
  • FICA Taxes – Social Security and Medicare contributions.
  • FUTA Taxes – Employer-paid unemployment taxes.

Deposit Schedule

Employers follow either a monthly or semiweekly deposit schedule based on the total tax liability during the lookback period.

Lookback Period

A four-quarter period used by the IRS to determine an employer’s deposit frequency.

$100,000 Next-Day Rule

If accumulated payroll taxes reach $100,000 or more on any day, the employer must deposit those taxes by the next business day.

How to Make an FTD

All FTDs must be made electronically through the Electronic Federal Tax Payment System (EFTPS), which provides tracking and confirmation of deposits.

Penalties

Late or inaccurate deposits result in fines ranging from 2% to 15% of the unpaid amount, depending on delay duration.

Importance of Timely FTDs

Adhering to deposit schedules maintains compliance, prevents penalties, and ensures employee tax withholdings are accurately reported. Mercans automates FTD management to reduce administrative risk and ensure continuous compliance.