This page turns FICA into a quarterly routine and answers common employer questions. For background, see the FICA overview and the rules and numbers page.
The Paycheck-to-Deposit Relay
The Paycheck-to-Deposit Relay is our name for a quarterly review that follows one paycheck's tax from the pay stub to the deposit and then to the return, checking each handoff. It suits the weeks before each Form 941 due date.
- Check worker status. Generally, a worker is an employee if you have the right to control how the work is done. Our employee versus contractor guide explains the test, and Form SS-8 asks the IRS for a determination.
- Test the withholding. On a sample paycheck, confirm 6.2% Social Security up to $184,500 for 2026, 1.45% Medicare with no cap, and 0.9% only on wages over $200,000.
- Set the deposit schedule. Before each new year, check the lookback: $50,000 or less reported means monthly, and more means semiweekly. A $100,000 day means a deposit by the next business day.
- Match deposits to pay dates. Filing Form 941 does not make a deposit; deposits go by electronic transfer on their own schedule.
- Report liabilities, not deposits. On Form 941 line 16 or Schedule B, enter the tax owed for each period.
- File on time. Form 941 is due the end of the month after each quarter, and W-2s for 2026 are due Monday, February 1, 2027. Forms 1099-NEC follow the same January 31 rule.
- Keep records. Employment tax records should be kept at least 4 years.
Common mistakes
- Filing the return and assuming the deposits are done.
- Not re-checking the lookback schedule each year. A $100,000 day turns a monthly depositor into a semiweekly one.
- Entering deposits instead of liabilities on line 16 or Schedule B, which invites the averaged deposit penalty.
- Paying other creditors first while payroll taxes go unpaid. The IRS cites this as a sign of willfulness.
- Paying a working S corporation owner no salary or a very low one.
- Believing the tip and overtime deductions remove FICA.
When to talk to an attorney
A CPA cannot answer these questions. An attorney can.
- The IRS proposes a trust fund recovery penalty against you personally or asks for a responsible-person interview.
- An IRS Criminal Investigation contact, summons or special-agent visit concerns payroll taxes.
- You want to contest an assessed trust fund penalty in court.
- A payroll tax debt travels with a business sale, closing or entity change.
A CPA can help with the payroll, tax and accounting side of FICA and works alongside the owner's attorney. State payroll taxes are separate; see our Illinois overview, and the Internal Revenue Code guide for the wider tax law.
Frequently asked questions
What are the FICA tax rates for 2026?
An employee pays 6.2% for Social Security on wages up to $184,500 and 1.45% for Medicare with no cap. The employer pays the same rates. Combined, that is 12.4% and 2.9%, the self-employed rates.
Does the employer match the Additional Medicare Tax?
No. An employer starts withholding the 0.9% tax once an employee's wages pass $200,000 in the year, with no matching share, whatever the filing status. The employee's final tax uses a threshold that depends on filing status.
Do the tip and overtime deductions remove FICA?
No. They are income tax deductions for workers. FICA still applies to those wages, and both the employee and employer shares are owed.
Who can be personally liable for unpaid payroll taxes?
The trust fund recovery penalty can reach any responsible person who willfully fails to pay over the tax: officers, partners, employees, accountants, directors and check signers, not only owners. Some unpaid, honorary board members of tax-exempt groups are excluded. It equals the unpaid withheld income tax and employee FICA share. Our trust fund recovery penalty guide has more.
Official sources
- IRS: Employment taxes and the trust fund recovery penalty
- IRS: Independent contractor, self-employed or employee
- IRS: How long should I keep records
- IRS: Publication 15, Employer's Tax Guide
This page is a plain-language summary. The official source controls if there is any difference.