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b.

Under section 2(a) of the Railroad

96 Department of the Treasury


Internal Revenue Service
Unemployment Insurance Act for days of
sickness due to on-the-job injury,
c. Under the Railroad Retirement Act, or
d. More than 6 months after the calendar

Instructions for Form CT-1 month the employee last worked.


● Payments made specifically for traveling or
other bona fide and necessary expenses that
Employer’s Annual Railroad Retirement Tax Return meet the rules in the regulations under
section 62.
Section references are to the Internal Revenue Code unless otherwise noted. ● Payments for service performed by a
nonresident alien temporarily present in the
United States as a nonimmigrant under
Paperwork Reduction Act for all depository tax liabilities that occur after
subparagraphs (F), (J), (M), or (Q) of the
June 30, 1997. See How to Make Deposits
Notice under Depositing Taxes on page 2. Immigration and Nationality Act.
We ask for the information on this form to If compensation earned in any month by an
carry out the Internal Revenue laws of the General Instructions employee in the service of a local lodge or
United States. You are required to give us the division of a railway-labor-organization
information. We need it to ensure that you are Purpose of Form employer is less than $25, do not count it as
complying with these laws and to allow us to Use this form to report taxes imposed by the taxable compensation.
figure and collect the right amount of tax. Railroad Retirement Tax Act (RRTA). Successor employers should see section
You are not required to provide the 3231(e)(2)(C) and Cir. E, Employer’s Tax
information requested on a form that is Who Must File Guide (Pub. 15), to see if they can use the
subject to the Paperwork Reduction Act File Form CT-1 if you paid one or more predecessor’s compensation paid against the
unless the form displays a valid OMB control employees compensation subject to RRTA. maximums.
number. Books or records relating to a form If you are an employer or third-party payer Compensation is considered paid when it is
or its instructions must be retained as long as of sick pay that is subject to Tier I railroad actually paid or when it is constructively paid.
their contents may become material in the retirement and Medicare taxes, you must file It is considered constructively paid when it is
administration of any Internal Revenue law. Form CT-1. See Pub. 15-A, Employer’s credited to the account of an employee or set
Generally, tax returns and return information Supplemental Tax Guide, for details. apart for the employee without any limit or
are confidential, as required by Code section However, see the exceptions under the condition on how and when the payment is to
6103. definition of compensation below. Report sick be made and when it is made available for
The time needed to complete and file this pay payments on lines 11 through 14. the employee to draw on at any time and to
form will vary depending on individual control.
circumstances. The estimated average time Where and When To File Any compensation paid during the current
is: File Form CT-1 with the Internal Revenue year that was earned in the prior year is
Recordkeeping—Part I, 9 hr., 34 min.; Part II, Service Center, Kansas City, MO 64999. taxable at the current year’s tax rates, and
3 hr., 7 min.; Learning about the law or the Due Date.—File Form CT-1 on or before the compensation must be included with the
form—Part I, 2 hr., 23 min.; Part II, 0 hr., 0 February 28, 1997. current year’s compensation on lines 5
min.; Preparing, copying, assembling, and through 14, as appropriate.
sending the form to the IRS—Part I, 6 hr., Definitions
15 min.; Part II, 3 min. Employer and Employee.—The terms
Employer (Including
If you have comments concerning the “employer” and “employee” used in these Supplemental Annuity
accuracy of these time estimates or instructions are defined in section 3231 and Work-Hour Tax) and Employee
suggestions for making this form simpler, we in the applicable regulations.
would be happy to hear from you. You can Tax Rates
Compensation.—Compensation means Employer Tax Rates for 1996.—Employers
write to the Tax Forms Committee, Western
payment in money, or in something that may must pay Tier I, Tier II, and supplemental
Area Distribution Center, Rancho Cordova,
be used instead of money, for services annuity work-hour taxes. Tier I tax is divided
CA 95743-0001. DO NOT send the tax form
performed as an employee of one or more into two parts. The amount of compensation
to this address. Instead, see Where and
employers. It includes payment for time lost subject to each tax is different.
When To File below.
as an employee. It does not include:
The employer’s Tier I tax is 6.2% of the
Items To Note ● Any benefit provided to or on behalf of an first $62,700 of compensation paid in 1996.
employee if at the time the benefit is provided The employer’s Tier I Medicare tax is 1.45%
Tax Rates and Compensation Bases it is reasonable to believe the employee can
for 1997 of all compensation paid in 1996.
exclude such benefit from income, for
The employer’s Tier II tax is 16.10% of the
● Tier I tax—6.2% each for employer and example, under sections 74(c), 117, and 132.
first $46,500 of compensation paid in 1996.
employee of the first $65,400 of Section 74(c) deals with employee
compensation paid in 1997 achievement awards; section 117 deals with The employer is also subject to a
scholarship and fellowship grants; and supplemental annuity work-hour tax at the
● Tier I Medicare tax—1.45% each for rate of 34 cents for each employee work-hour
employer and employee on all compensation section 132 deals with certain fringe benefits.
This also applies to payments to a medical in 1996. (See the instructions for line 1 for the
paid in 1997 definition of work-hours.)
savings account under section 220. For more
● Tier II employee tax—4.9% of the first information on what benefits are excludable, For more information on the special
$48,600 of compensation paid in 1997 see Pub. 15-A. supplemental annuity tax, see the line 2
● Tier II employer tax—16.10% of the first ● Payments made to or on behalf of an instructions.
$48,600 of compensation paid in 1997 employee or dependents under a sickness or Employee Tax Rates for 1996.—You must
Medical Savings Accounts.—Generally, accident disability plan or a medical or withhold the employee’s part of Tier I and Tier
employer contributions to an employee’s hospitalization plan in connection with II taxes. The employee’s Tier I tax is 6.2% of
medical savings account are excluded from sickness or accident disability. This applies to the first $62,700 of compensation paid in
compensation. Therefore, you are not Tier II and supplemental annuity work-hour 1996. The employee’s Tier I Medicare tax is
required to withhold or pay railroad retirement taxes only. 1.45% of all compensation paid in 1996.
taxes on these contributions. Note: For purposes of employee and The employee’s Tier II tax is 4.90% of the
Electronic Deposit Requirement.—If your employer Tier I taxes, compensation does not first $46,500 of compensation paid in 1996.
total deposits of social security, Medicare, include sickness or accident disability
railroad retirement, and withheld income payments made—
taxes were more than $50,000 in 1995, a. Under a worker’s compensation law,
generally you must make electronic deposits
Cat. No. 16005H
Concurrent Employment to make deposits by electronic funds transfer not a banking day, the deposit normally due
and fail to do so, you may be subject to a on Wednesday may be made on Thursday
If two or more related corporations that are
10% penalty. Taxpayers who are not required (allowing 3 banking days to make the
rail employers employ the same individual at
to make electronic deposits may voluntarily deposit).
the same time and pay this individual
participate in EFTPS/RRBLINK. For $500 Rule.—If your total railroad retirement
through a common paymaster, which is one
information on EFTPS, call 1-800-945-8400 or taxes for the year are less than $500, no
of the corporations, corporations are
1-800-555-4477. (These numbers are for deposits are required. Pay this tax with the
considered a single employer. They have to
EFTPS information only.) For information on Form CT-1. However, if you are unsure that
pay, in total, no more in railroad retirement
RRBLINK, call 1-314-425-1294. you will accumulate less than $500, deposit
and Medicare taxes than a single employer
would. See Regulations section 31.3121(s)-1 When Your Deposits Are Due.—For Tier I under the appropriate deposit rules so that
for more information. and Tier II taxes, you are either a monthly or you will not be subject to failure to deposit
semiweekly schedule depositor. The IRS will penalties.
Withholding or Payment of notify you if you have a change in your $100,000 One-Day Rule.—If you accumulate
deposit schedule (whether you are a monthly $100,000 or more on any day during a
Employee Tax by Employer or semiweekly schedule depositor) for the deposit period, you must deposit the tax by
You must collect the employee railroad coming calendar year. If you do not receive the next banking day (whether you are a
retirement tax from each employee by the notification, you must determine your own monthly or semiweekly schedule depositor).
deducting it from the compensation on which deposit status. (For when to deposit the For monthly schedule depositors, the deposit
employee tax is charged. If you do not supplemental annuity work-hour tax, see period is a calendar month. The deposit
withhold the employee tax, you are liable for Supplemental Annuity Work-Hour Tax on periods for a semiweekly schedule depositor
the tax. If you withhold too much or too little page 3. For information on the special are Wednesday through Friday and Saturday
tax because you cannot determine the supplemental annuity tax, see the line 2 through Tuesday. For purposes of the
correct amount, you should correct the instructions.) $100,000 one-day rule, do not continue
amount withheld by an adjustment, credit, or Your deposit schedule for a calendar year accumulating railroad retirement tax liability
refund according to the regulations relating to is determined from the total railroad after the end of a deposit period. For
the RRTA. retirement taxes reported on your Form CT-1 example, if a semiweekly schedule depositor
If you pay the railroad retirement tax for for a lookback period. The lookback period is has accumulated a liability of $95,000 on a
your employee rather than withholding it, see the second calendar year preceding the Tuesday (of a Saturday-through-Tuesday
Rev. Proc. 83-43, 1983-1 C.B. 778, for current calendar year. For example, the deposit period) and accumulated a $10,000
information on how to figure and report the lookback period for 1997 is 1995. If you liability on Wednesday, the $100,000 one-day
proper amounts. reported $50,000 or less of railroad rule does not apply. Thus, you must deposit
retirement taxes for the lookback period, you $95,000 by Friday and $10,000 by the
Group-Term Life Insurance are a monthly schedule depositor for the following Wednesday.
Include in compensation the cost of current year; if you reported more than In addition, once you accumulate at least
group-term life insurance over $50,000 you $50,000, you are a semiweekly schedule $100,000 in a deposit period, stop
provide to an employee. This amount is depositor. There are two exceptions—the accumulating at the end of that day and
subject to Tier I, Tier I Medicare, and Tier II $500 rule and the $100,000 one-day rule. The begin to accumulate anew on the next day.
taxes, but not Federal income tax deposit schedules and exceptions are For example, Fir Co. is a semiweekly
withholding. Include this amount on your discussed below. schedule depositor. On Monday, Fir Co.
employee’s Form W-2, Wage and Tax Monthly Deposit Schedule.—Under the accumulates taxes of $110,000 and must
Statement. monthly deposit schedule, employee and deposit this amount by Tuesday, the next
Former employees must pay the employer Tier I and Tier II taxes accumulated banking day. On Tuesday, Fir Co.
employee’s share of these taxes with their during a calendar month must be deposited accumulates additional taxes of $30,000.
income tax returns. You must separately by the 15th day of the following month. Because the $30,000 is not added to the
include on Form W-2 the part of New employers.—During the first calendar previous $110,000, Fir Co. must deposit the
compensation that consists of payments for year of your business, your taxes for the $30,000 by Friday following the semiweekly
group-term life insurance over $50,000 and lookback period are considered to be zero. deposit schedule.
the amount of railroad retirement taxes owed Therefore, you are a monthly schedule If you are a monthly schedule depositor
by the former employee for coverage depositor for the first year of business (but and you accumulate a $100,000 railroad
provided after separation from service. see the $100,000 One-Day Rule below). retirement tax liability on any one day, you
See Cir. E for more information. Semiweekly Deposit Schedule.—Under the become a semiweekly schedule depositor for
semiweekly deposit schedule, Tier I and Tier the remainder of the calendar year and for
Depositing Taxes II taxes accumulated on payments made on the following calendar year. For example,
How To Make Deposits.—In general, you Wednesday, Thursday, and/or Friday must be Employer B started its business on February
must deposit railroad retirement taxes of deposited by the following Wednesday. 1, 1997. Because this was the first year of its
$500 or more with an authorized financial Amounts accumulated on payments made on business, the railroad retirement tax liability
institution or a Federal Reserve bank or Saturday, Sunday, Monday, and/or Tuesday for its lookback period is considered to be
branch. Use Form 8109, Federal Tax Deposit must be deposited by the following Friday. zero, and it would be a monthly schedule
Coupon, with each deposit to indicate the Deposits on Banking Days Only.—If a depositor. On February 5, it paid
type of tax deposited. To avoid a possible deposit is required to be made on a day that compensation for the first time and
penalty, do not mail your deposit directly to is not a banking day, the deposit is accumulated a railroad retirement tax liability
the IRS. Records of your deposits will be sent considered timely if it is made by the close of of $40,000. On February 12, Employer B paid
to the IRS for crediting to your business the next banking day. In addition to Federal compensation and accumulated a liability of
accounts. and state bank holidays, Saturdays and $60,000, bringing its accumulated
Electronic deposit requirement.—If your Sundays are treated as nonbanking days. For (undeposited) railroad retirement tax liability
total deposits of social security, Medicare, example, if a deposit is required to be made to $100,000. Because Employer B
railroad retirement, and withheld income on Friday and Friday is not a banking day, the accumulated $100,000 on February 12, it
taxes were more than $50,000 in 1995, you deposit will be considered timely if it is made became a semiweekly schedule depositor on
must make electronic deposits for all by the following Monday (if Monday is a February 13. It will be a semiweekly schedule
depository tax liabilities that occur after June banking day). depositor for the rest of 1997 and for 1998.
30, 1997. The Electronic Federal Tax Employer B must deposit the $100,000 by
Semiweekly schedule depositors will always February 13, the next banking day.
Payment System (EFTPS) or RRBLINK must have at least 3 banking days to make a
be used to make electronic deposits. deposit. If any of the 3 weekdays after the Adjustments and the Lookback Rule.—
However, if you make your Form CT-1 end of a semiweekly period is a banking Determine your railroad retirement tax liability
deposits through the Federal Reserve Bank of holiday, you have one additional day to for the lookback period based on the railroad
New York as required by Rev. Proc. 83-90, deposit. For example, if you have railroad retirement tax liability you reported on your
1983-2 C.B. 615, you may continue to use retirement taxes accumulated for payments original Form CT-1. If you made adjustments
that method of payment. If you are required made on Friday and the following Monday is to correct errors on previously filed Forms

Page 2
CT-1, these adjustments do not affect the Caution: If taxes that must be withheld are Determining Number of Hours Included in
amount of the railroad retirement tax liability not withheld or are not paid to the IRS, the Daily, Weekly, or Monthly Rates.—If a
for purposes of the lookback rule. If you trust fund recovery penalty may apply. The collective bargaining agreement specifies the
report adjustments on your current Form penalty is 100% of such unpaid taxes. This number of hours included in a rate, use that
CT-1 to correct errors on prior year returns, penalty may apply to you if these unpaid number. Otherwise, report the number of
include these adjustments as part of your taxes cannot be immediately collected from hours the individual usually works even
railroad retirement tax liability for the current the employer or business. The trust fund though on occasion the employee may work
period. If you filed Form 843, Claim for recovery penalty may be imposed on all fewer or more hours. For example, an
Refund and Request for Abatement, to claim persons who are determined by the IRS to be individual on an all-service rate who normally
a refund for a prior year overpayment, your responsible for collecting, accounting for, observes the office hours usually worked by
railroad retirement tax liability does not and paying over these taxes, and who acted employees generally would be reported at 8
change for either the prior year or the current willfully in not doing so. See Cir. E for more hours per day, 5 days per week—or 174
year for purposes of the lookback rule. details. hours per month. Unless otherwise provided
For example, an employer originally Interest is charged on taxes paid late at the in a collectively bargained rule, 174 hours
reported a railroad retirement tax liability of rate set by law. should be used as the standard hourly factor
$45,000 for the lookback period (1995). The for monthly rated employees.
employer discovered during March 1997 that Specific Instructions Compensation Paid on a Mileage or
the tax during the lookback period was Final Return.—If you stop paying taxable Piecework Basis.—Compensation not based
understated by $10,000 and corrected this compensation, you must file a return and on time (hour, day, month), such as
error with an adjustment on the 1997 Form check the box at the top of the form. compensation paid by the mile or by the
CT-1. The employer is a monthly schedule piece, must be converted into the number of
depositor for 1997 because the lookback Line 1. Supplemental Annuity hours represented by the compensation paid.
period railroad retirement tax liabilities are Work-Hour Tax If an employee is paid by the mile, 1
based on the amounts originally reported and The supplemental annuity work-hour tax rate work-hour equals the number of miles in a
were less than $50,000. The $10,000 is 34 cents for each employee work-hour of workday, divided by 8 hours. For a collective
adjustment is treated as part of the 1997 tax service performed during 1996. bargaining agreement that specifies the
liability. number of hours in a workday, the number of
Multiply the work-hours (whether actual or hours specified in the agreement may be
Accuracy of Deposits Rule safe harbor) for which compensation was used instead of 8.
paid by $0.34 and enter the result on line 1.
You are required to deposit 100% of your Safe Harbor Method for 1997.—Rather than
railroad retirement tax liability on or before Except for employees covered by a figuring work-hours separately for each
the due date. However, penalties will not be supplemental pension plan established by a employee, you may choose to count the
applied for depositing less than 100% if both collective bargaining agreement between you number of employees who received any
of the following conditions are met. and those employees, you are required to compensation during the month and multiply
report work-hours for which you compensate that figure by 164 to determine the number of
1. Any deposit shortfall does not exceed
the employee, whether or not the employee work-hours subject to the supplemental
the greater of $100 or 2% of the amount of
performs services, that involve a time or annuity work-hour tax for that month. Count
taxes otherwise required to be deposited, and
mileage factor. each employee who is paid compensation
2. The deposit shortfall is paid or deposited
Work-Hours.—Include time actually worked during the month, even if the individual is
by the shortfall makeup date as described
(including overtime); time paid for vacations part-time, temporary, or seasonal.
below.
and holidays; time (but not cash payments) A terminated employee is counted in the
● Monthly Schedule Depositor. Deposit or allowed for meals; away-from-home terminal
pay the shortfall with your return by the due month of termination (if the employee
time; called and not used, runaround, and received compensation in that month), but
date of Form CT-1 for the period in which the deadheading time; and time for attending
shortfall occurred. You may pay the shortfall not in any later month in which the employee
court, investigations, and claim and safety does not perform services for the employer
with Form CT-1 even if the amount exceeds meetings. Report hours representing
$500. as an employee, even if the terminated
payments to make up guarantees (other than employee is paid compensation in a later
● Semiweekly Schedule Depositor. Deposit weekly or monthly money guarantees) only if month. For example, an employee who
the shortfall by the first Wednesday or Friday, the payments are made for time not actually receives compensation during the month of
whichever is earlier, falling on or after the worked. Report hours representing payments termination and receives a final paycheck the
15th of the month following the month in to make up weekly or monthly money following month is counted as an employee
which the shortfall occurred, or, if earlier, the guarantees only if the hours or days included for the month of termination but not for the
due date of the return. For example, if a in the assignments are not actually worked. following month.
semiweekly schedule depositor has a deposit Report the number of hours paid for overtime,
shortfall during January 1997, the shortfall regardless of the rate at which paid. All If you are going to use the safe harbor
makeup date is February 19, 1997 compensation paid as arbitraries or method for 1997, you must choose it by
(Wednesday). allowances independently of the rate and not checking the box on your timely filed 1996
specifically related to hours or miles, Form CT-1. If you choose the safe harbor
Supplemental Annuity Work-Hour Tax.—
including vacation allowances based on method, you must use it for the entire year.
Supplemental annuity work-hour tax
accumulated during a month must be compensation earned in the previous year, Line 2. Special Supplemental Annuity
deposited by the first date after the 15th day should be converted to hours by dividing by Tax
of the following month on which railroad the appropriate hourly rate.
retirement taxes are otherwise required to be If you are exempt from the supplemental
Generally, do not report hours representing
deposited. For example, Employer B annuity work-hour tax on line 1 on some or all
medical expense reimbursements or
accumulates supplemental annuity work-hour of your employees because they are covered
payments for periods of absence from work
tax for the month of February. The by a supplemental pension plan established
due to sickness or accident disability. Do not
supplemental annuity work-hour tax must be by a collective bargaining agreement, you are
report hours representing payments made
deposited the next time railroad retirement subject instead to a special supplemental
under arrangements that advance or
taxes are required to be deposited after annuity tax. The tax is equal to the total
reimburse to employees their business and
March 15. For a monthly schedule depositor supplemental annuities paid to those
away-from-home traveling expenses if fully
this would be April 15. employees on or after April 1, 1970, plus a
accounted for and substantiated. See the
percentage for administrative costs. The
regulations under section 62. Do not include
Penalties and Interest travel expenses paid under a nonaccountable
Railroad Retirement Board will notify you of
the amount due and the deposit requirement
The law provides penalties for failure to file a plan even though they are included in
on Form G-241, Summary Statement of
return, late filing of a return, late payment of compensation. Do not report tips, amounts
Quarterly Report of Railroad Retirement
taxes, or late deposits unless reasonable representing bonuses, amounts received by
Supplemental Annuity Tax Liabilities. Enter
cause is shown for the delay. If you are the exercise of an employee stock option, or
that amount on line 2 and attach Form G-241
unavoidably late in doing any of these, send any separation or severance payments.
to Form CT-1.
an explanation with the return.
Page 3
Line 3. Adjustments to Supplemental Daily Record of Tips and Report to Employer, line 16. You cannot claim any excess credit
Annuity Work-Hour Tax a booklet for daily entry of tips and forms to from line 3 here.
report tips to employers, may be obtained Except for adjustments for fractions of
You may take a credit on line 3 in an amount
from the IRS. cents, amounts entered on line 16 must be
equal to the total monthly reduction of
employee supplemental annuities under Tips are considered to be paid at the time explained by a statement. Attach a full sheet
section 2(h)(2) of the Railroad Retirement Act the employee reports them to you. You must of paper that shows at the top your name,
of 1974. The Railroad Retirement Board will collect both income tax and employee employer identification number, calendar year
furnish you with Form G-245, Summary railroad retirement tax on tips reported to you of the return, and “Form CT-1.” Include in the
Statement of Quarterly Report of Railroad by employees from the employee’s statement the following information:
Retirement Supplemental Tax Credits, compensation (after deduction of employee a. An explanation of the adjustment that
identifying the supplemental annuity railroad retirement and income tax) or from the entry is intended to correct showing the
work-hour tax credit accruing to you. Enter other funds the employee makes available. amount of compensation subject to Tier I and
the amount on line 3 and attach a copy of Apply the compensation or other funds first to Tier II taxes and the respective tax rates.
Form G-245 to Form CT-1. the railroad retirement tax and then to income b. The years to which the adjustment
tax. You do not have to pay the employer relates.
The credit may not be more than your
railroad retirement taxes on tips.
monthly tax liability based on 34 cents for c. The amount of the adjustment for each
each work-hour for which you paid Stop collecting the 6.2% Tier I employee year.
compensation. You may apply excess credits tax when the employee’s wages and tips
reach the maximum for the year ($62,700 for d. The name and account number of any
against your supplemental annuity work-hour employee from whom employee tax was
tax accruing in later months. You cannot 1996). However, your liability for Tier I
employer tax on compensation continues until undercollected or overcollected.
claim an excess on line 16.
the compensation, not including tips, totals e. The manner in which you and the
If the amount you enter on line 3 differs employee have settled any undercollection or
$62,700 for the year.
from that certified by the Railroad Retirement overcollection of employee tax.
Board, attach an explanation to Form CT-1. If, by the 10th of the month after the month
you received an employee’s tip income Note: For making adjustments for prior year
Include the tax credit certified by the Railroad
report, you do not have enough employee returns, a timely filed return is considered to
Retirement Board in your explanation of line 3
funds available to deduct the employee tax, be filed on the last day of February of the
adjustments.
you no longer have to collect it. year after the close of the tax year. Generally,
Line 5. Tier I Employer Tax the adjustment may be made only within 3
Line 10. Tier II Employee Tax years of that date.
Show the amount of compensation (other
than tips and sick pay) subject to Tier I tax. Show the amount of compensation, including Fractions of Cents.—If there is a difference
Do not show more than $62,700 per tips reported, subject to Tier II employee tax. between the total employee tax on lines 8, 9,
employee. Multiply by 6.2% and enter the Only the first $46,500 of the employee’s 10, 13, and 14 and the total actually
result. compensation for 1996 is subject to this tax. deducted from your employees’
Multiply by the employee tax rate of 4.90% compensation due to fractions of cents
Line 6. Tier I Employer Medicare Tax and enter the result. For tips, see instructions added or dropped in collecting employee tax,
Show the amount of compensation (other for line 9 above. report this difference on line 16 as a
than tips and sick pay) subject to Tier I Note: Any compensation paid during the deduction or an addition. If this is the only
Medicare tax. Multiply by 1.45% and enter current year that was earned in prior years entry on line 16, do not attach an explanation
the result. (reported to the Railroad Retirement Board on of the adjustment to your return. Write
Form BA-4, Report of Creditable “Fractions of cents only” in the margin.
Line 7. Tier II Employer Tax Compensation Adjustments) is taxable at the Line 17. Adjusted Total of Employer
Show the amount of compensation (other current year tax rates. Include such
compensation with current year compensation
and Employee Railroad Retirement
than tips) subject to Tier II tax. Do not show
more than $46,500 per employee. Multiply by on lines 5 through 10, as appropriate. Taxes Based on Compensation
16.10% and enter the result. Subtract line 16 from line 15 if the net
Lines 11 Through 14. Tier I Taxes and adjustment on line 16 is a decrease in tax
Line 8. Tier I Employee Tax Tier I Medicare Taxes on Sick Pay reported. Add line 16 to line 15 if the net
Show the amount of compensation, including Show the amounts of sick pay payments adjustment on line 16 is an increase in tax
tips reported, subject to employee Tier I tax. during the year subject to Tier I taxes and reported.
Do not enter more than $62,700 per Tier I Medicare taxes. If you are a railroad
employee. Multiply by 6.2% and enter the employer paying your employees sick pay, or
Line 19. Total Deposits for the Year
result. a third-party payer who did not notify the Show the total railroad retirement taxes you
employer of the payments (thereby subject to deposited using Form 8109, wire transfer, or
Line 9. Tier I Employee Medicare Tax the employee and employer parts of the tax), EFTPS/RRBLINK. Also include the
Show the amount of compensation, including make entries on lines 11 through 14. If you overpayment applied from the 1995 return.
tips reported, subject to employee Tier I are subject to only the employer or employee
Medicare tax. Multiply by 1.45% and enter part, complete only the applicable line.
Line 20. Balance Due
the result. Multiply by the appropriate rate and enter the Subtract line 19 from line 18. You should
Tips.—Cash tips received by an employee in result on the applicable line. have a balance due only if line 18 is less than
the course of employment must be reported $500 unless the balance is a shortfall amount
Line 16. Adjustments to Taxes Based for monthly schedule depositors as explained
to you by the employee by the 10th of the
month following the month the tips are on Compensation earlier under Accuracy of Deposits (98%
received. No report is required for any month Use line 16 to show (a) corrections of Rule).
in which the tips were less than $20, but underpayments or overpayments of taxes Enter on your check or money order your
otherwise tips should be reported for every reported on prior year returns, (b) credits for employer identification number, “Form CT-1,”
month regardless of the total of overpayments of penalty or interest paid on and the year to which the payment applies.
compensation and tips for the month. An tax for earlier years, and (c) reports of
employee must furnish you with a written fractions of cents added or dropped in Line 21. Overpayment
statement of tips, signed by the employee, deducting employee tax from compensation If you deposited more than the correct
showing (a) his or her name, address, and paid for the year. Do not include the 1995 amount of taxes for the year, you can have
social security number, (b) your name and overpayment that is applied to this year’s the overpayment refunded or applied to your
address, (c) the calendar month or period for return (this is included on line 19). If you are 1997 Form CT-1 by checking the appropriate
which the statement is furnished, and (d) the reporting both an addition and a subtraction, box.
total amount of tips. Pub. 1244, Employee’s enter only the difference between the two on
Signature
Be sure to sign the return.

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