When you run payroll, Wave automatically collects tax payments from your bank account and remits them to state and federal tax agencies on your behalf.
If an active tax filing blocker remains on your account through the end of the quarter, Wave refunds these collected funds back to your bank account. This lets you remit those tax payments directly to the appropriate agencies and stay compliant.
Why Wave holds the tax payments
If your payroll tax filing is blocked or missing account details affect your tax profile, Wave holds collected tax amounts through the end of the quarter to give you time to resolve the issue. Fixing the issue allows Wave to file and pay your taxes automatically. This helps you avoid late fees.
When to expect your refund
Wave generally processes unremitted tax refunds in the second month after each calendar quarter ends. The typical refund periods are:
- Quarter 1 (Ends March 31): Refund processed in May
- Quarter 2 (Ends June 30): Refund processed in August
- Quarter 3 (Ends September 30): Refund processed in November
- Quarter 4 (Ends December 31): Refund processed in February
How to remit taxes directly
To ensure your business remains compliant after you receive a tax refund, submit your tax payments directly to the appropriate agencies:
- Federal taxes: Make your payment online using the Electronic Federal Tax Payment System (EFTPS)
- State taxes: Log in to your state tax authority agency portal and complete payment following state guidelines
Frequently Asked Questions
How do I categorize these refunds?
Keep your accounting accurate by categorizing both the refund deposit and your direct tax payments correctly in Wave:
- When the refund deposit posts to your Transactions page, categorize it under Payroll Liabilities
- When you submit a direct payment to the tax agency, categorize that withdrawal under Payroll Liabilities as well. For more details, see View and understand your Payroll Liabilities in Wave
What if I can’t submit payments on my own?
If you are unable to submit the payments directly, contact our Support Team. A payroll specialist will verify whether your account status and filing timelines allow Wave to re-withdraw and process these payments for you.