When an employer's portion of social security and withheld income taxes for the quarter is less than $2,500, what must they do?

When an employer's portion of social security and withheld income taxes for the quarter totals less than $2,500, the correct action is to file Form 941 without making any deposits. This is because employers who have a tax liability under $2,500 for a quarter are not required to make federal tax deposits. Instead, they can report their tax liabilities on their quarterly Form 941, which summarizes total wages, withholdings, and tax liabilities for the quarter.

This provision is particularly beneficial for smaller businesses or those with fluctuating income, as it reduces the administrative burden of making regular deposits. It also allows the employer to report their taxes on a less frequent basis, streamlining their cash flow management.