What is a $100,000 next-day deposit obligation?
245 views | Last modified 4/24/2023 5:06:00 AM EST | Added by TaxBandits Team

Applicable To
94X 1099 W-2 ACA W-4

A $100,000 next-day deposit obligation in Form 941 refers to a special rule that requires certain employers to make next-day deposits for any employment taxes that accumulate to $100,000 or more on any day during a deposit period.

For example, If you’re a monthly schedule depositor and have accumulated taxes of $100,000 or above at least once in the deposit period, you automatically become a semiweekly depositor for the rest of the calendar year and the following calendar year. Generally, it is not recommended to accumulate tax liability after the deposit period ends.

Check out the example below for further clarification.

Example 1:

Star LLC is a monthly schedule depositor, as per their schedule, they have to deposit the tax before the 15th of the following month. In February, they accumulated the taxes of $25,000 and paid the taxes by March 15. On March 1, they aggregated the taxes of $123,000. Since they have acquired a tax above $100,000, they are liable to deposit the tax by the next day, March 2, according to the $100,000 next-day deposit rule. Also, they become a semiweekly schedule depositor for the rest of the calendar year.

Example 2:

Consider that Mat LLC is a semiweekly schedule depositor who has accumulated a tax liability of $125,000 on Monday. According to the $100,000 next-day deposit rule, they should deposit this tax amount by the next day, Tuesday. They again accumulate the tax of $15,000 on Tuesday. As per the semiweekly schedule, they can deposit it by Friday since it does not exceed $100,000.

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