An employer accrues $2,400 in federal withholding, Social Security, and Medicare taxes during a quarter. Which statement about payment of the tax liability is correct?

• A. The taxes may be reported and paid monthly
• B. The taxes may be reported and paid quarterly based on a calendar year
• C. The taxes may be reported and paid quarterly based on a fiscal year
• D. The taxes may be paid at the end of the year only

Answer: (B)

Payroll taxes are reported and paid on a quarterly basis using Form 941, with the quarters aligned to the calendar year (Jan–Mar, Apr–Jun, Jul–Sep, Oct–Dec). When you accumulate tax liability in a quarter, you file for that quarter and remit the amounts due in that same quarterly period. The calendar-year quarterly schedule is the standard basis most employers use, unless they’re specifically on a different annual schedule.

So the statement that taxes may be reported and paid quarterly based on a calendar year fits the typical practice: the employer files quarterly returns for the calendar quarters, rather than only at year end or on a monthly basis (unless a different deposit schedule applies, which isn’t the focus of this question).