What is true about monthly depositors who report employment taxes?

Monthly depositors are required to report their employment taxes based on their tax liability from the lookback period. Specifically, if a business reports employment taxes of $50,000 or more during this period, it qualifies as a monthly depositor. The lookback period generally refers to the 12-month period ending on June 30 of the previous year. This classification dictates how frequently they need to make deposits—monthly, in this case—ensuring the timely remittance of employment taxes to the IRS.

Understanding the thresholds used to classify depositors is crucial, as they determine the deposit schedules and responsibilities of the business based on their employment tax liabilities.