Yes, Gusto pays your quarterly taxes. As part of every payroll plan, it calculates your federal and state employment taxes, pulls the money from your bank account after each payroll run, deposits it with the IRS and state agencies on the correct schedule, and files the quarterly returns when they come due. You don’t pay extra for any of that. What you do keep is the legal responsibility for making sure it happens, plus a handful of taxes Gusto was never designed to touch.
Deposits and Filings Are Two Different Jobs
“Quarterly taxes” is shorthand that hides two separate obligations. One is depositing the money you owe throughout the quarter on the schedule the IRS assigns you. The other is filing a return at the end of the quarter that reports what you paid employees and what tax you owed. Gusto handles both, but they run on different clocks, and understanding the split helps you read your bank statements and your Gusto reports.
How Gusto Deposits the Money
Gusto works pay-as-you-go. Each time you run payroll, it totals federal income tax withholding, the employee and employer shares of Social Security and Medicare, and applicable state taxes, then debits that amount from your business bank account, usually within one to three business days of the pay date. Those funds go to the IRS through the Electronic Federal Tax Payment System and to state agencies electronically.
This is what the IRS actually requires. Most employers can’t sit on payroll taxes until quarter-end. Instead, you fall into a monthly or semi-weekly deposit schedule based on a lookback period covering the 12 months ending the previous June 30. Employers who reported $50,000 or less in employment tax during that window deposit monthly; above $50,000 means semi-weekly. New businesses default to monthly.1Internal Revenue Service. IRS Notice 931 – Deposit Requirements for Employment Taxes
You don’t have to track which schedule applies to you. Gusto figures it out, collects the funds after each run, and deposits on time. The visible effect: a tax debit shortly after every payday rather than one large withdrawal each quarter.
Which Returns Gusto Files
Depositing is only half the job. The reporting side runs on quarterly and annual forms, and Gusto submits them electronically.
Form 941
Form 941 is the main quarterly federal return. It summarizes wages paid, federal income tax withheld, and Social Security and Medicare taxes for the quarter. It’s due by the last day of the month after each quarter closes: April 30, July 31, October 31, and January 31.2Internal Revenue Service. Employment Tax Due Dates Gusto files it before the deadline.
Very small employers with $1,000 or less in annual employment tax liability may qualify to file Form 944 once a year instead. That requires IRS approval, and Gusto supports the annual filing if you qualify.3Internal Revenue Service. Instructions for Form 944
Form 940
Federal unemployment tax is reported annually on Form 940, not quarterly, though deposits may be required during the year if accumulated FUTA liability exceeds $500. FUTA is 6.0% on the first $7,000 of each employee’s wages, with a credit of up to 5.4% for timely state unemployment contributions that typically drops the effective rate to 0.6%, or roughly $42 per employee per year.4U.S. Department of Labor. Unemployment Insurance Tax Topic Gusto handles the Form 940 filing and any interim deposits.
State Wage Reports and Withholding Returns
Every state with an income tax or unemployment insurance program requires its own quarterly filings, generally a wage report broken down by employee for unemployment purposes plus a state withholding return. Gusto files these in all 50 states.5Gusto. Multi-State Payroll Solutions for Business State unemployment tax rates vary; new employers are usually assigned a default rate (commonly between 2.7% and 4.1%) that adjusts over time based on claims history.
What You Have to Set Up First
Gusto can’t file or deposit until you provide the right identifiers and give it authority to act on your behalf. Missing or wrong information is the most common reason tax automation stalls, and any penalties still fall on you.
- Federal Employer Identification Number. Your nine-digit federal tax ID from the IRS. No EIN, no federal filings.6Internal Revenue Service. Employer Identification Number
- State tax IDs. A state withholding ID and a separate state unemployment insurance ID for each state where you have employees. You have to register with each state agency yourself. Gusto cannot create these accounts for you.
- Business bank account. Gusto needs your routing and account numbers to debit tax liabilities after each payroll. If an ACH pull fails for insufficient funds, the taxes don’t get paid.
- Reporting Agent Authorization (Form 8655). This IRS form authorizes Gusto to sign and file employment tax returns and make deposits through EFTPS on your behalf. It’s narrower than a Power of Attorney, and it does not transfer your legal liability. The form states that the authorization does not relieve you of responsibility for ensuring returns are filed and deposits are made on time.7Internal Revenue Service. Form 8655 – Reporting Agent Authorization
Check every number you enter during setup. A wrong state unemployment rate or a transposed digit in your EIN can cause rejected filings that take weeks to unwind, and the penalty clock runs regardless of whose keystroke caused the error.
What Gusto Does Not Pay
Gusto’s automation covers employment taxes, meaning taxes that arise from paying W-2 employees. Several tax obligations that owners often assume are covered are not.
- Your personal estimated income taxes. If you take owner distributions or have self-employment income, you probably owe quarterly estimated taxes on Form 1040-ES. Gusto withholds tax from any W-2 salary you pay yourself, but it does not calculate or pay estimated taxes on pass-through business income, investment income, or other non-wage earnings.8Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals
- Corporate income tax returns. Form 1120 for C corporations and Form 1120-S for S corporations are based on business profits, not payroll, and are filed separately by you or your tax preparer.9Internal Revenue Service. About Form 1120, U.S. Corporation Income Tax Return
- Sales and gross receipts taxes. Collected from customers and remitted to state and local authorities on their own schedules.
- Property taxes. Paid to local government, unrelated to payroll.
You Can Still Be Penalized
Automation moves the mechanics off your desk. It doesn’t move the legal exposure. The IRS penalty for a late deposit scales with how many days late you are: 2% for 1 to 5 days, 5% for 6 to 15 days, 10% beyond 15 days, and 15% once the IRS has issued a notice demanding payment. The tiers don’t stack, so a 10-day delay is 5%, not 7%.10Internal Revenue Service. Failure to Deposit Penalty
The most common way Gusto users trigger these penalties is a failed bank debit. If your account can’t cover the tax pull after payroll, Gusto can’t remit the funds, and you’d need to make the deposit yourself through EFTPS. Automated filing may be temporarily suspended for your account until things are back in order. Filing penalties for missing a Form 941 deadline are separate from deposit penalties and accrue monthly, though they’re uncommon when Gusto is filing on your behalf and your account is in good standing.
Keep enough cash in the payroll account to cover both wages and the tax debit that follows, watch for the state agency letters that arrive when a filing rejects, and Gusto will do the rest.