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Chang Company is trying to determine how often it needs to deposit payroll

Question

Chapter 
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Margan is paid II is 
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eBook
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References
Chang Company is trying to determine how often it needs to deposit payroll taxes for calendar year 
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 ﻿The company made the following quarterly payroll tax deposits during the last two years:
Quarter beginning January 
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Quarter beginning April 
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Quarter beginning October 
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Required:
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 ﻿What is the amount from the lookback period?
Amount from lookback period
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 ﻿In 
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give all answer with step by step answer and give final summary

VIPSolutions · Accepted Answer

# Payroll Tax Deposit Schedule Determination

Chang Company needs to determine its payroll tax deposit schedule for **calendar year 2024**. The IRS requires employers to use a "lookback period" to determine whether they are **monthly** or **semiweekly** depositors.

---

## Step 1: Understanding the Lookback Period

- The **lookback period** for 2024 payroll tax deposit requirements is **July 1, 2022 through June 30, 2023**.
- You must total all payroll taxes reported on Form 941 for this period.

---

## Step 2: Gather Quarterly Deposit Data

Here are the quarterly payroll tax deposits:

| Quarter                         | Amount   |
|----------------------------------|----------|
| Jan 1, 2022 – Mar 31, 2022      | $10,000  |
| Apr 1, 2022 – Jun 30, 2022      | $10,000  |
| Jul 1, 2022 – Sep 30, 2022      | $11,000  |
| Oct 1, 2022 – Dec 31, 2022      | $12,000  |
| Jan 1, 2023 – Mar 31, 2023      | $12,000  |
| Apr 1, 2023 – Jun 30, 2023      | $12,000  |
| Jul 1, 2023 – Sep 30, 2023      | $11,000  |
| Oct 1, 2023 – Dec 31, 2023      | $12,000  |

**For the lookback period, use the quarters:**
- Q3 2022 (Jul 1 – Sep 30, 2022): $11,000
- Q4 2022 (Oct 1 – Dec 31, 2022): $12,000
- Q1 2023 (Jan 1 – Mar 31, 2023): $12,000
- Q2 2023 (Apr 1 – Jun 30, 2023): $12,000

---

## Step 3: Calculate the Total for the Lookback Period

$$
\begin{align*}
\text{Lookback Period Total} &= \$11,000 \
&+ \$12,000 \
&+ \$12,000 \
&+ \$12,000 \
\hline
&= \$47,000 \
\end{align*}
$$

---

## Step 4: Determine Deposit Frequency

According to IRS rules:

- **If total payroll taxes during the lookback period are $50,000 or less:**  
  The company is a **monthly depositor**.
- **If over $50,000:**  
  The company is a **semiweekly depositor**.

**Chang Company’s total is $47,000**, which is **less than $50,000**.

---

## Step 5: Final Answers

### a. Amount from the lookback period

- **$47,000**

### b. 2024 Payroll Deposit Frequency

- **Chang Company must make payroll tax deposits monthly in 2024.**
  - **Deposits are due by the 15th of the following month.**

---

## Summary

- **Amount from lookback period:** $47,000
- **2024 deposit frequency:** Chang Company is a **monthly depositor** and must deposit payroll taxes by the 15th day of each month following the month the taxes are withheld.

---

**References:**  
- [IRS Publication 15 (Circular E), Employer’s Tax Guide](https://www.irs.gov/publications/p15)
- [IRS Payroll Tax Deposit Schedules](https://www.irs.gov/businesses/small-businesses-self-employed/deposit-schedules-for-employment-taxes)

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