Question

Baker Company is trying to determine how often it needs to deposit payroll taxes for calendar year 2019. The company made the following quarterly payroll tax deposits during the last two years:

Quarter beginning January 1, 2017	$7,000
Quarter beginning April 1, 2017	7,000
Quarter beginning July 1, 2017	7,500
Quarter beginning October 1, 2017	8,000
Quarter beginning January 1, 2018	8,000
Quarter beginning April 1, 2018	8,000
Quarter beginning July 1, 2018	7,500
Quarter beginning October 1, 2018	8,000

Required:

a. What is the amount from the lookback period?

Answer 1

LookBack Period: Lookback period is used to determine how often a company nee dto deposi its payroll taxes for a calender year. The look back period starts from July 1st to June 30 of the previous calender year.

As we want to determine the deposit schedule for 2019 the look back period is from July 1 2017 - June 30 2018.

If the total amount from the lookback period is less than $50,000 the deposit should be made monthly, if it is more than $50,000 it is to be made semi-weekly.

In the given situation the amounts for the look back period are as follows.

Quarter beginning July 1, 2017 $7,500

Quarter beginning October 1, 2017 $8,000

Quarter beginning January 1, 2018 $8,000

Quarter beginning April 1, 2018 $8,000

Total amount from the lookback period = $7,500 + $8,000 +$8,000 + $8,000 = $31,500

Hence total Amount from the lookback period = $31,500