Does liability on tax form 941 mean the amount withheld from employee or the amount the taxpayer deposited monthly?

This is the Federal Income Tax and FICA (Social Security) held in trust and to be paid by the employer, to the IRS. If this amount is not paid to the IRS, they can hold you personally responsible and therefore assess you with a CTFP (Civil Trust Fund Penalty). The IRS has the right to hold any persons of authority (in the company) accountable for the liability.

IRS form 941 is used to file your employers quarterly federal tax return for employment taxes. Most companies make monthly deposits to the IRS for their employment taxes. The 941 reconciles all the deposits made to the IRS during the quarter.

The amount paid includes not only the amount withheld for taxes from your employees, but also the matching FICA the company is required to pay to the IRS.

The IRS has a web site that will help you pay your deposits. It is EFTPS.gov. It allows you to make your deposits through bank drafts.

It is also a great idea to use a payroll tax company that can handle all of your tax filing requirements. This will ensure that the deposits and filings are correct and made on time and will keep you out of trouble with the IRS.