TaxBandits Knowledge Base

What is a $100,000 next-day deposit obligation?

The $100,000 next-day deposit obligation is a special rule requiring certain employers to deposit employment taxes by the next business day if they accumulate $100,000 or more on any day during a deposit period.

Impact on Monthly Schedule Depositors:
If a monthly schedule depositor accumulates $100,000 or more in taxes in a single day, they:

• Must deposit the tax by the next business day.
• Automatically become a semiweekly depositor for the rest of the calendar year and the following calendar year.

Check out the examples below for further clarification:$100,000 next-day deposit obligation, Form 941 next-day deposit, IRS next-day deposit obligation, $100,000 deposit IRS 941

Example 1: Monthly Schedule Depositor

• Scenario:
  Star LLC is a monthly schedule depositor and must deposit taxes by the 15th of the following month.
   
• Tax Activity:
  • February: Accumulated $25,000 in taxes, deposited by March 15.
  • March 1: Accumulated $123,000 in taxes.
     
• Outcome:
  • Star LLC exceeds the $100,000 threshold and must deposit the tax by the next business day, March 2.
  • They are now a semiweekly depositor for the rest of the calendar year and the following calendar year.
     

Example 2: Semiweekly Schedule Depositor

• Scenario:
  Mat LLC is a semiweekly schedule depositor.
   
• Tax Activity:
  • Monday: Accumulated $125,000 in taxes.
  • Tuesday: Accumulated an additional $15,000 in taxes.
     
• Outcome:
  • Mat LLC must deposit the $125,000 by the next business day, Tuesday, under the $100,000 next-day deposit rule.
  • The additional $15,000 can be deposited by Friday, following the semiweekly deposit schedule, since it does not exceed $100,000.