What is the Federal Depository Bank?

Definition:  A Federal depository bank is a bank that has been authorized to accept deposits payable to the Federal government. These banks can accept checks or payments that are payable to the Federal government for taxes like income or payroll taxes.

What Does Federal Depository Bank Mean?

Don’t get this confused with the FDIC. The Federal Deposit Insurance Corporation (FDIC) is an independent agency that insures deposits up to $250,000. So if your bank goes out of business and takes your money, the FDIC will insure your deposit and give it back to you. None of this has to do with Federal Depository Banks. 🙂 The only reason I bring it up is so you don’t get confused when thinking about FDBs. Not all FDIC insured banks are Federal depository banks.


Federal depository banks hold tax witholdings for companies and individuals before they are sent to the IRS. Withholdings and deposit requirements change depending on how big the company’s payroll is, but larger companies can be required to make deposits monthly, biweekly, or even weekly. These payroll taxes usually include FICA and FUTA taxes: Social security, Medicare, Federal unemployment taxes.

These companies not only make payments for these taxes, they also withhold money from their employees’ paychecks for taxes. This money can be deposited in a Federal Depository Bank before actually going to the IRS or US Treasury.

Just remember when you hear Federal depository bank, it doesn’t actually refer to a bank that is FDIC insured, although most if not all Federal depository banks are FDIC insured.

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