Employer's Annual Railroad Retirement Tax Return

2010

Instructions for Form CT-1

Department of the Treasury
Internal Revenue Service

Employer’s Annual Railroad Retirement Tax Return
Section references are to the Internal Revenue Code unless
otherwise noted.

!

CAUTION

What’s New
Changes to tax rates and compensation bases. For
2010 tax rates and compensation bases, see Employer and
Employee Taxes — Tax Rates and Compensation Bases on
page 2.
Tier I employer tax exemption. Qualified employers are
allowed an exemption for Tier I employer tax on
compensation paid to qualified employees after March 31,
2010, and before January 1, 2011. See the instructions for
line 1 on page 5.
Tier I employer tax credit. Qualified employers can claim
a tax credit for Tier I employer tax on compensation paid to
qualified employees from March 19 through 31. See the
instructions for line 15 on page 6.
Federal tax deposits must be made by electronic funds
transfer. Beginning January 1, 2011, you must use
electronic funds transfer to make all federal tax deposits
(such as deposits of employment tax, excise tax, and
corporate income tax). Forms 8109 and 8109-B, Federal
Tax Deposit Coupon, cannot be used after December 31,
2010. Generally, electronic funds transfers are made using
the Electronic Federal Tax Payments System (EFTPS). If
you do not want to use EFTPS, you can arrange for your tax
professional, financial institution, payroll service, or other
trusted third party to make deposits on your behalf. Also,
you may arrange for your financial institution to initiate a
same-day tax wire payment on your behalf. EFTPS is a free
service provided by the Department of Treasury. Services
provided by your tax professional, financial institution,
payroll service, or other third party may have a fee.
For more information about EFTPS or to enroll in EFTPS,
visit the EFTPS website at www.eftps.gov, or call
1-800-555-4477. You also can get Pub. 966, The Secure
Way to Pay Your Federal Taxes.

Reminders
Correcting a previously filed Form CT-1. If you discover
an error on a previously filed Form CT-1, make the
correction using Form CT-1 X, Adjusted Employer’s Annual
Railroad Retirement Tax Return or Claim for Refund. Do not
use line 12 of Form CT-1 to make prior period corrections.
Use Form 843, Claim for Refund and Request for
Abatement, when requesting a refund or abatement of
assessed interest or penalties. For more information, see
section 13 of Pub. 15 (Circular E), Employer’s Tax Guide, or
visit IRS.gov and enter the keywords “Correcting
Employment Taxes.”
Electronic payment. Now, more than ever before,
businesses can enjoy the benefits of paying their railroad
retirement taxes electronically. Whether you rely on a tax
professional or handle your own taxes, the IRS offers you
convenient programs to make it easier. Spend less time on
taxes and more time running your business. Use Electronic
Federal Tax Payment System (EFTPS) to your benefit. To
learn more about EFTPS, visit www.eftps.gov or call EFTPS
Customer Service at 1-800-555-4477.

Beginning in 2011, all deposits of more than $2,500
must be made electronically. For more information,
see Depositing Taxes on page 3.

Where can you get telephone help? You can call the IRS
toll free at 1-800-829-4933 Monday through Friday from 7
a.m. to 10 p.m. your local time (Alaska and Hawaii follow
Pacific time) for answers to your questions about completing
Form CT-1, tax deposit rules, or obtaining an employer
identification number (EIN).
Additional information.
• Pub. 15 (Circular E), Employer’s Tax Guide, contains
information for withholding, depositing, reporting, and paying
employment taxes.
• Pub. 15-A, Employer’s Supplemental Tax Guide, contains
specialized and detailed employment tax information
supplementing the basic information provided in
Pub. 15 (Circular E).
• Pub. 15-B, Employer’s Tax Guide to Fringe Benefits,
contains information about the employment tax treatment of
various types of noncash compensation.
• Pub. 915, Social Security and Equivalent Railroad
Retirement Benefits, contains the federal income tax rules
for social security benefits and equivalent Tier I railroad
retirement benefits.
• The Railroad Retirement Board (RRB) website at
www.rrb.gov contains additional employer reporting
information and instructions.
You can order forms and publications by calling
1-800-829-3676 or visiting IRS.gov.

Photographs of Missing Children
The Internal Revenue Service is a proud partner with the
National Center for Missing and Exploited Children.
Photographs of missing children selected by the Center may
appear in instructions on pages that would otherwise be
blank. You can help bring these children home by looking at
the photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.

General Instructions
Purpose of Form
Use Form CT-1 to report taxes imposed by the Railroad
Retirement Tax Act (RRTA). Use Form 941, Employer’s
QUARTERLY Federal Tax Return, or, if applicable, Form
944, Employer’s ANNUAL Federal Tax Return, to report
federal income taxes withheld from your employees’ wages.

Who Must File
File Form CT-1 if you paid one or more employees
compensation subject to tax under RRTA.
A payer of sick pay (including a third party) must file Form
CT-1 if the sick pay is subject to Tier I railroad retirement
taxes. Include sick pay payments on lines 7a through 10 of
Form CT-1. Follow the reporting procedures for sick pay
reporting in section 6 of Pub. 15-A.

Cat. No. 16005H

Disregarded entities and qualified subchapter S
subsidiaries. Regulations section 301.7701-2(c)(2)(iv)
treats eligible single-owner disregarded entities and qualified
subchapter S subsidiaries (Q Subs) as separate entities for
employment tax purposes. Business owners can no longer
elect to treat the related employment taxes as a liability of
the owner. Instead, report the employment taxes on
employment tax returns filed by the disregarded entity or Q
Sub. For more information, see Disregarded entities and
qualified subchapter S subsidiaries in the Introduction
section of Pub. 15 (Circular E).

1. Certain employee achievement awards under
section 74(c),
2. Certain scholarship and fellowship grants under
section 117,
3. Certain fringe benefits under section 132, and
4. Employer payments to an Archer MSA under section
220 or health savings accounts (HSA) under section 223.
• Stock transferred to an individual pursuant to the exercise
of an incentive stock option (as defined in section 422(b)) or
under an employee stock purchase plan (as defined in
section 423(b)); or the disposition of such stock by the
individual.
• Payments made specifically for traveling or other bona
fide and necessary expenses that meet the rules in the
regulations under section 62.
• Payments for services performed by a nonresident alien
temporarily present in the United States as a nonimmigrant
under subparagraphs (F), (J), (M), or (Q) of the Immigration
and Nationality Act.
• Compensation under $25 earned in any month by an
employee in the service of a local lodge or division of a
railway-labor-organization employer.
• Payments made to or on behalf of an employee or
dependents under a sickness or accident disability plan or a
medical or hospitalization plan in connection with sickness
or accident disability. This applies to Tier II taxes only.

Where To File
Send Form CT-1 to:
Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999-0007

When To File
File Form CT-1 by February 28, 2011.

Definitions
The terms “employer” and “employee” used in these
instructions are defined in section 3231 and in its
regulations.

Compensation

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CAUTION

Compensation means payment in money, or in something
that may be used instead of money, for services performed
as an employee of one or more employers. It includes
payment for time lost as an employee.
Group-term life insurance. Include in compensation the
cost of group-term life insurance over $50,000 you provide
to an employee. This amount is subject to Tier I and Tier II
taxes, but not to federal income tax withholding. Include this
amount on your employee’s Form W-2, Wage and Tax
Statement.
Former employees for whom you paid the cost of
group-term life insurance over $50,000 must pay the
employee’s share of these taxes with their Form 1040. You
are not required to collect those taxes. For former
employees, you must include on Form W-2 the part of
compensation that consists of the cost of group-term life
insurance over $50,000 and the amount of railroad
retirement taxes owed by the former employee for coverage
provided after separation from service. For more
information, see section 2 of Pub. 15-B.
Timing. Compensation is considered paid when it is
actually paid or when it is constructively paid. It is
constructively paid when it is set apart for the employee or
credited to an account the employee can control without any
limit or condition on how and when the payment is to be
made.
Any compensation paid during the current year that was
earned in a prior year is taxable at the current year’s tax
rates; you must include the compensation with the current
year’s compensation on lines 1 through 10 of Form CT-1, as
appropriate. An exception applies to nonqualified deferred
compensation that was subject to Tier I and Tier II tax in a
prior year. See the rules for social security, Medicare, and
FUTA taxes in Nonqualified Deferred Compensation Plans
in Pub. 15-A.
Exceptions. Compensation does not include:
• Any benefit provided to or on behalf of an employee if at
the time the benefit is provided it is reasonable to believe
the employee can exclude such benefit from income. For
information on what benefits are excludable, see Pub. 15-B.
Examples of this type of benefit include:

For purposes of employee and employer Tier I
taxes, compensation does not include sickness or
accident disability payments made:

1. Under a workers’ compensation law,
2. Under section 2(a) of the Railroad Unemployment
Insurance Act for days of sickness due to on-the-job injury,
3. Under the Railroad Retirement Act, or
4. More than 6 months after the calendar month the
employee last worked.

Employer and Employee Taxes
Tax Rates and Compensation Bases
Tax Rates

Compensation Paid in 2010

Tier I
Employer and Employee: Each pay 6.2% of first . . . . . . .

$106,800

Tier I Medicare
Employer and Employee: Each pay 1.45% of . . . . . . . . .

All

Tier II
Employer: Pays 12.1% of first . . . . . . . . . . . . . . . . . . .

$79,200

Employee: Pays 3.9% of first . . . . . . . . . . . . . . . . . . .

$79,200

Employer Taxes
Employers must pay both Tier I and Tier II taxes. Tier I tax is
divided into two parts. The amount of compensation subject
to each tax is different. See the table above for the 2010 tax
rates and compensation bases.
Concurrent employment. If two or more related
corporations that are rail employers employ the same
individual at the same time and pay that individual through a
common paymaster that is one of the corporations, the
corporations are considered a single employer. They have
to pay, in total, no more in railroad retirement taxes than a
single employer would. See Regulations section
31.3121(s)-1 for more information.
Successor employers. Successor employers should see
section 3231(e)(2)(C) and Pub. 15 (Circular E) to see if they

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Instructions for Form CT-1 (2010)

can use the predecessor’s compensation paid against the
maximum compensation bases.

deposit period, you must complete Form 945-A, Annual
Record of Federal Tax Liability.

Employee Taxes

Lookback Period

You must withhold the employee’s part of Tier I and Tier II
taxes. See the table on page 2 for the tax rates and
compensation bases. See Tips below for information on the
employee tax on tips.
Withholding or payment of employee tax by employer.
You must collect the employee railroad retirement tax from
each employee by deducting it from the compensation on
which employee tax is charged. If you do not withhold the
employee tax, you must still pay the tax. If you withhold too
much or too little tax because you cannot determine the
correct amount, correct the amount withheld by an
adjustment, credit, or refund according to the applicable
regulations.
If you pay the railroad retirement tax for your employee
rather than withholding it, see Rev. Proc. 83-43,
1983-1 C.B. 778, for information on how to figure and report
the proper amounts.
Tips. An employee who receives tips must report them to
you by the 10th of the month following the month the tips are
received. Tips must be reported for every month, unless the
tips for the month are less than $20.
An employee must furnish you with a written (or
electronic) statement of tips, signed by the employee,
showing (a) his or her name, address, and social security
number; (b) your name and address; (c) the month or period
for which the statement is furnished; and (d) the total
amount of tips. Pub. 1244, Employee’s Daily Record of Tips
and Report to Employer, a booklet for daily entry of tips and
forms to report tips to employers, is available by calling
1-800-TAX-FORM (1-800-829-3676) or at IRS.gov.
Tips are considered to be paid at the time the employee
reports them to you. You must collect both federal income
tax and employee railroad retirement tax on tips reported to
you from the employee’s compensation (after deduction of
employee railroad retirement and federal income tax related
to the nontip compensation) or from other funds the
employee makes available. Apply the compensation or other
funds first to the railroad retirement tax and then to federal
income tax. You do not have to pay the employer railroad
retirement taxes on tips.
If, by the 10th of the month after the month you received
an employee’s tip income report, you do not have enough
employee funds available to deduct the employee tax, you
no longer have to collect it. Report uncollected Tier I
Employee tax, Tier I Employee Medicare tax, and Tier II
Employee tax on tips on line 12. See section 6 in Pub. 15
(Circular E).

Before each year begins, you must determine the deposit
schedule to follow for depositing Tier I and Tier II taxes for a
calendar year. This is determined from the total taxes
reported on your Form CT-1 for the calendar year lookback
period. The lookback period is the second calendar year
preceding the current calendar year. For example, the
lookback period for calendar year 2011 is calendar
year 2009.
Use the table below to determine which deposit schedule
to follow for 2011.
THEN for 2011 you are a...

$50,000 or less

Monthly schedule depositor

More than $50,000

Semiweekly schedule depositor

New employer. If you are a new employer, your taxes for
both years of the lookback period are considered to be zero.
Therefore, you are a monthly schedule depositor for the first
and second years of your business. However, see $100,000
Next-Day Deposit Rule on page 4.
Example. Employer A reported Form CT-1 taxes as
follows:
• 2009 Form CT-1 — $49,000
• 2010 Form CT-1 — $52,000
Employer A is a monthly schedule depositor for 2011
because its Form CT-1 taxes for its lookback period
(calendar year 2009) were not more than $50,000. However,
for 2012, Employer A is a semiweekly schedule depositor
because A’s taxes exceeded $50,000 for its lookback period
(calendar year 2010).
Adjustments and the lookback rule. To determine the
amount of taxes paid for the lookback period, use only the
Form CT-1 taxes reported on your original return, including
any adjustments reported on that return for prior periods.
Adjustments to a return for a prior period are not taken into
account in determining the taxes for that prior period. See
the instructions for Line 12 on page 6.
Example. Employer B originally reported Form CT-1
taxes of $45,000 for the lookback period (2009).
B discovered in March 2011 that the tax during the lookback
period (2009) was understated by $10,000 and will correct
this error with an adjustment on Form CT-1 X filed for 2009.
B is a monthly schedule depositor for 2011 because the
lookback period Form CT-1 taxes are based on the amount
originally reported ($45,000), which was not more than
$50,000. The $10,000 adjustment does not affect either
2009 taxes or 2011 taxes. See Treasury Decision 9405 at
www.irs.gov/irb/2008-32_irb/ar13.html.

Depositing Taxes
For Tier I and Tier II taxes, you are either a monthly
schedule depositor or a semiweekly schedule depositor.
Also, see the $2,500 Rule and the $100,000 Next-Day
Deposit Rule under Exceptions to the Deposit Rules on
page 4. The terms “monthly schedule depositor” and
“semiweekly schedule depositor” identify which set of rules
you must follow when a tax liability arises (for example,
when you have a payday). They do not refer to how often
your business pays its employees or to how often you are
required to make deposits.
If you were a monthly schedule depositor for the entire
year, please complete the Monthly Summary of Railroad
Retirement Tax Liability in Part II of Form CT-1. If you were
a semiweekly schedule depositor during any part of the year
or you accumulated $100,000 or more on any day during a
Instructions for Form CT-1 (2010)

IF you reported taxes
for the lookback period (2009)
of...

When To Deposit
Monthly Schedule Depositor
If you are a monthly schedule depositor, deposit employer
and employee Tier I and Tier II taxes accumulated during a
calendar month by the 15th day of the following month.
Example. Employer C is a monthly schedule depositor with
seasonal employees. C paid wages each Friday during
February but did not pay any wages during March. Under
the monthly schedule deposit rule, C must deposit the
combined taxes for the February paydays by March 15.
C does not have a deposit requirement for March

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(due by April 15) because no wages were paid and,
therefore, C does not have a tax liability for the month.

Once a semiweekly schedule depositor accumulates
$100,000 or more in a deposit period, it must stop
accumulating at the end of that day and begin to accumulate
anew on the next day. The following example explains this
rule.
Example of $100,000 Next-Day Deposit Rule.
Employer E is a semiweekly schedule depositor. On
Monday, E accumulates taxes of $110,000 and must deposit
this amount by Tuesday, the next business day. On
Tuesday, E accumulates additional taxes of $30,000.
Because the $30,000 is not added to the previous $110,000,
E must deposit the $30,000 by Friday using the semiweekly
deposit schedule.
Example of $100,000 Next-Day Deposit Rule during
the first year of business. Employer F started its business
on January 28, 2011. Because this was the first year of its
business, its Form CT-1 taxes for its lookback period (2009)
are considered to be zero, and F is a monthly schedule
depositor. On February 1, F paid compensation for the first
time and accumulated taxes of $40,000. On February 4, F
paid compensation and accumulated taxes of $60,000,
bringing its total accumulated (undeposited) taxes to
$100,000. Because F accumulated $100,000 or more on
February 4 (Friday), F must deposit the $100,000 by
February 7 (Monday), the next business day. F became a
semiweekly schedule depositor on February 5. F will be a
semiweekly schedule depositor for the rest of 2011 and
for 2012.
Example of when $100,000 Next-Day Deposit Rule
does not apply. Employer G, a semiweekly schedule
depositor, accumulated taxes of $95,000 on a Tuesday (of a
Saturday-through-Tuesday deposit period) and accumulated
$10,000 on Wednesday (of a Wednesday-through-Friday
deposit period). Because the $10,000 was accumulated in a
deposit period different from the one in which the $95,000
was accumulated, the $100,000 Next-Day Deposit Rule
does not apply. Thus, G must deposit $95,000 by Friday
and $10,000 by the following Wednesday.

Semiweekly Schedule Depositor
If you are a semiweekly schedule depositor, use the table
below to determine when to make deposits.
Deposit Tier I and Tier II taxes
for payments made on...

No later than...

Wednesday, Thursday, and/or
Friday

The following Wednesday

Saturday, Sunday, Monday,
and/or Tuesday

The following Friday

Example. Employer D, a semiweekly schedule depositor,
pays wages on the last Saturday of each month. Although D
is a semiweekly schedule depositor, D will deposit just once
a month because D pays wages only once a month. The
deposit, however, will be made under the semiweekly
deposit schedule as follows: D’s taxes for the January 29,
2011 (Saturday), payday must be deposited by February 4,
2011 (Friday). Under the semiweekly deposit rule, taxes
arising on Saturday through Tuesday must be deposited by
the following Friday.

!

The last day of the calendar year ends the
semiweekly deposit period and begins a new one.

CAUTION

Deposits on Business Days Only
If a deposit is required to be made on a day that is a
Saturday, Sunday or legal holiday, it is considered timely if it
is made by the close of the next business day. Business
days include every day other than Saturday, Sunday, or
legal holidays under section 7503. For example, if a deposit
is required to be made on Friday and Friday is a legal
holiday, the deposit will be considered timely if it is made by
the following Monday (if Monday is a business day).

Electronic Deposit Requirement

Semiweekly schedule depositors will always have at least
3 business days to make a deposit. If any of the 3 weekdays
after the end of a semiweekly period is a legal holiday, you
have 1 additional day to deposit. For example, if you have
Form CT-1 taxes accumulated for payments made on Friday
and the following Monday is a legal holiday, the deposit
normally due on Wednesday may be made on Thursday
(allowing 3 business days to make the deposit).

The IRS has issued proposed regulations under section
6302 which provide that beginning January 1, 2011, you
must deposit all depository taxes (such as employment tax,
excise tax, and corporate income tax) electronically using
the Electronic Federal Tax Payment Systems (EFTPS).
Under these proposed regulations, which are expected to be
finalized by December 31, 2010, Forms 8109 and 8109-B,
Federal Tax Deposit Coupon, cannot be used after
December 31, 2010. For more information about EFTPS or
to enroll in EFTPS, visit the EFTPS website at www.eftps.
gov or call 1-800-555-4477. You can also get Pub. 966, The
Secure Way to Pay Your Federal Taxes.
Depositing on time. For deposits made by EFTPS to be
on time, you must initiate the deposit by 8 PM Eastern time
the day before the date the deposit is due. If you use a third
party to make deposits on your behalf, they may have
different cutoff times.
Accuracy of Deposits Rule. You are required to deposit
100% of your railroad retirement taxes on or before the
deposit due date. However, penalties will not be applied for
depositing less than 100% if both of the following conditions
are met:
1. Any deposit shortfall does not exceed the greater of
$100 or 2% of the amount of taxes otherwise required to be
deposited, and
2. The deposit shortfall is paid or deposited by the
shortfall makeup date for each type of depositor as
described below.
• Monthly schedule depositor. Deposit the shortfall or
pay it with your return by the due date of Form CT-1. You

Exceptions to the Deposit Rules
The two exceptions that apply to the above deposit rules are
the:
• $2,500 Rule, and
• $100,000 Next-Day Deposit Rule.
$2,500 Rule. If your total Form CT-1 taxes for the year are
less than $2,500 and the taxes are fully paid with a timely
filed Form CT-1, no deposits are required. However, if you
are unsure that you will accumulate less than $2,500,
deposit under the appropriate deposit rules so that you will
not be subject to deposit penalties.
$100,000 Next-Day Deposit Rule. If you accumulate taxes
of $100,000 or more on any day during a deposit period, you
must deposit the taxes by the next business day regardless
of whether you are a monthly or semiweekly schedule
depositor.
If you are a monthly schedule depositor and you
accumulate $100,000 or more on any one day during the
month, you become a semiweekly schedule depositor on the
next day for the remainder of the calendar year and for the
following year.

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Instructions for Form CT-1 (2010)

may pay the shortfall with Form CT-1 even if the amount is
$2,500 or more.
• Semiweekly schedule depositor. Deposit the shortfall
by the earlier of the first Wednesday or Friday that comes on
or after the 15th of the month following the month in which
the shortfall occurred or the due date of Form CT-1. For
example, if a semiweekly schedule depositor has a deposit
shortfall during January 2011, the shortfall makeup date is
February 16, 2011 (Wednesday).

is made by not including that employee or that employee’s
compensation on lines 1c through 1d and line 7c.
For more information about the employer’s Tier I tax
exemption, visit IRS.gov and enter the keywords “HIRE Act”
in the search box.
1c. Enter on line 1c the number of qualified employees paid
exempt compensation (including sick pay) after March 31.
A qualified employee is an employee who:
• Begins employment with you after February 3, 2010, and
before January 1, 2011;
• Certifies by signed affidavit (Form W-11, Hiring Incentives
to Restore Employment (HIRE) Act Employee Affidavit, or
similar statement under penalties of perjury), that he or she
has not been employed for more than 40 hours during the
60-day period (including 2009) ending on the date the
employee begins employment with you;
• Is not employed by you to replace another employee
unless the other employee separated from employment
voluntarily or was terminated for cause; and
• Is not related to you. An employee is related to you if he
or she is your child or a descendant of your child, your
sibling or stepsibling, your parent or ancestor of your parent,
your stepparent, your niece or nephew, your aunt or uncle,
or your in-law. An employee is also related to you if he or
she is related to anyone who owns more than 50% of your
outstanding stock or capital and profits interest or is your
dependent or a dependent of anyone who owns more than
50% of your outstanding stock or capital and profits interest.
Exempt compensation is the compensation paid that
requires Tier I tax withholding.
1d. Enter the tax-exempt compensation (other than tips
and sick pay) paid to qualified employees after March 31,
2010. Multiply by 6.2% and enter the result on line 1e.
1f. Subtract line 1e from 1b and enter the result on line 1f.

Penalties and Interest
The law provides penalties for failure to file a return, late
filing of a return, late payment of taxes, failure to make
deposits, or late deposits unless reasonable cause is
shown. Interest is charged on taxes paid late at the rate set
by law. For more information, see Pub. 15 (Circular E).
Order in which deposits are applied. Generally, tax
deposits are applied first to the most recent tax liability
within the specified tax period to which the deposit relates. If
you receive a failure to deposit penalty notice, you may
designate how your payment is to be applied in order to
minimize the amount of the penalty. You must respond
within 90 days of the date of the notice. Follow the
instructions on the notice you received. See Rev. Proc.
2001-58 for more information. You can find Rev. Proc.
2001-58 on page 579 of Internal Revenue Bulletin 2001-50
at www.irs.gov/pub/irs-irbs/irb01-50.pdf.
Trust fund recovery penalty. If taxes that must be
withheld are not withheld or are not deposited or paid to the
United States Treasury, the trust fund recovery penalty may
apply. The penalty is 100% of the unpaid taxes. This penalty
may apply to you if these unpaid taxes cannot be
immediately collected from the employer or business. The
trust fund recovery penalty may be imposed on all persons
who are determined by the IRS to be responsible for
collecting, accounting for, and paying over these taxes, and
who acted willfully in not doing so. For more information, see
Pub. 15 (Circular E).

Line 2—Tier I Employer Medicare Tax
Enter the compensation (other than tips and sick pay)
subject to Tier I employer Medicare tax in the Compensation
column. Multiply by 1.45% and enter the result in the
Tax column.

Specific Instructions

Line 3—Tier II Employer Tax
Enter the compensation (other than tips) subject to Tier II
employer tax in the Compensation column. Do not enter
more than $79,200 per employee. Multiply by 12.1% and
enter the result in the Tax column.

Final return. If you stop paying taxable compensation and
will not have to file Form CT-1 in the future, you must file a
final return and check the Final return box at the top of Form
CT-1 under “2010.”

!

CAUTION

Line 4—Tier I Employee Tax

Processing of your return may be delayed if you do
not provide the required amounts in the
Compensation and Tax columns.

Enter the compensation, including tips reported, subject to
Tier I employee tax in the Compensation column. Do not
enter more than $106,800 per employee. Multiply by 6.2%
and enter the result in the Tax column.
Stop collecting the 6.2% Tier I employee tax when the
employee’s wages and tips reach the maximum for the year
($106,800 for 2010). However, your liability for Tier I
employer tax on compensation continues until the
compensation, not including tips, totals $106,800 for the
year.

Line 1a Through 1f—Tier I Employer
Tax
1a. Enter the compensation (other than tips and sick pay)
subject to Tier I employer tax for all employees in the
Compensation column. Do not enter more than $106,800
per employee. Multiply by 6.2% and enter the result on line
1b.

Line 5—Tier I Employee Medicare Tax

Complete lines 1c through 1e to figure the payroll tax
exemption for the employer’s share (6.2%) of Tier I
employer tax on compensation (other than tips and sick pay)
to one or more qualified employees. An employer must be a
qualified employer to be eligible for the employer’s Tier I tax
exemption. A qualified employer is any employer other
than Federal, State, and any related government entities.

Enter the compensation, including tips reported, subject to
Tier I employee Medicare tax in the Compensation column.
Multiply by 1.45% and enter the result in the Tax column.
For information on reporting tips, see Tips on page 3.

Line 6—Tier II Employee Tax

An employer may elect not to apply the Tier I tax
exemption with respect to a qualified employee. The election
Instructions for Form CT-1 (2010)

Enter the compensation, including tips reported, subject to
Tier II employee tax in the Compensation column. Only the

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Fractions of cents. If there is a difference between the
total employee tax (lines 4, 5, 6, 9, and 10) and the total
actually deducted (employee compensation including tips
plus the employer’s contribution) due to rounding fractions of
cents when collecting the tax, report the deduction or
addition on line 12.

first $79,200 of the employee’s compensation for 2010 is
subject to this tax. Multiply by 3.9% and enter the result in
the Tax column. For information on reporting tips, see Tips
on page 3.
Any compensation paid during the current year that
was earned in prior years (reported to the Railroad
CAUTION
Retirement Board on Form BA-4, Report of
Creditable Compensation Adjustments) is taxable at the
current year tax rates, unless special timing rules for
nonqualified deferred compensation apply. See Publication
15-A. Include such compensation with current year
compensation on lines 1a through 6, as appropriate.

!

TIP

Line 13—Total Railroad Retirement
Taxes Based on Compensation

Lines 7a Through 10—Tier I Taxes on
Sick Pay

Combine the amounts shown on lines 11 and 12 and enter
the result on line 13.

Line 14—Total Deposits for the Year

7a. Enter any sick pay payments during the year that are
subject to Tier I taxes and Tier I Medicare taxes in the
Compensation column.
7c. Enter the amount of exempt sick pay subject to Tier I
employer tax paid to qualified employees after March 31,
2010. Multiply by 6.2% and enter on the result on line 7d.
7e. Subtract line 7b from line 7d and enter the result on line
7e.
If you are a railroad employer paying your employees
sick pay, or a third-party payer who did not notify the
employer of the payments (thereby subject to the employee
and employer tax), make entries on lines 7a through 10. If
you are subject to only the employer or employee tax,
complete only the applicable lines. Multiply by the
appropriate rates and enter the results in the
Tax column.

Enter the total Form CT-1 taxes you deposited. Also, include
any overpayment applied from your 2009 Form CT-1 and
from Form CT-1 X.

Line 15—Credit for Exempt Taxes
Paid First Quarter
15a. Enter the number of qualified employees paid exempt
compensation (including sick pay) from March 19 through
31. See line 1c for definitions of qualified employees and
exempt compensation.
15b. Enter the exempt compensation (other than tips) paid
to qualified employees from March 19 through 31 in the
Compensation column. Multiply exempt compensation by
6.2% and enter the result on line 15c.

Line 12—Adjustments to Taxes
Based on Compensation

!

If this is the only entry on line 12, you are not
required to attach a statement explaining the
adjustment.

Line 16—Total Taxes
Add lines 14 and 15c and enter the result on line 16.

Do not use line 12 for prior period adjustments. Make
all prior period adjustments on Form CT-1 X.

Line 17— Balance Due
Subtract line 16 from line 13. You should have a balance
due only if line 13 is less than $2,500, unless the balance
due is a shortfall amount for monthly schedule depositors as
explained under the Accuracy of Deposits Rule on page 4.

CAUTION

Enter on line 12:
• A fractions of cents adjustment (see Fractions of cents
below);
• Credits for overpayments of penalty or interest paid on tax
for earlier years; and
• Any uncollected Tier I Employee tax, Tier I Employee
Medicare tax, and Tier II Employee tax on tips.
Enter the total of these adjustments in the Tax column. If
you are reporting both an addition and a subtraction, enter
only the difference between the two on line 12. If the net
adjustment is negative, report the amount on line 12 using a
minus sign, if possible. If your computer software does not
allow the use of minus signs, you may use parentheses.
Do not include on line 12 the 2009 overpayment that is
applied to this year’s return (this is included on line 14).
Required statement. Except for adjustments for fractions
of cents, explain amounts entered on line 12 in a separate
statement. Include your name, employer identification
number (EIN), calendar year of the return, and “Form CT-1”
on each page you attach. Include in the statement the
following information.
• An explanation of the item the adjustment is intended to
correct showing the compensation subject to Tier I and
Tier II taxes and their respective tax rates.
• The amount of the adjustment.
• The name and account number of any employee from
whom employee tax was undercollected or overcollected.
• How you and the employee have settled any
undercollection or overcollection of employee tax.

Form CT-1(V), Payment Voucher, has instructions for
making a payment with Form CT-1. You do not have to pay
if line 17 is less than $1.

Line 18— Overpayment
Enter the overpayment on the designated entry line. Then
check the appropriate box to have the overpayment applied
to your 2011 Form CT-1 or refunded to you. If line 18 is less
than $1, we will send you a refund or apply it to your next
return only on written request.

Third-Party Designee
If you want to allow an employee of your business, a return
preparer, or another third party to discuss your 2010
Form CT-1 with the IRS, check the “Yes” box in the
Third-Party Designee section of Form CT-1. Also, enter the
designee’s name, phone number, and any five digits that
person chooses as his or her personal identification number
(PIN).
By checking the “Yes” box, you are authorizing the IRS to
speak with the designee to answer any questions relating to
the processing of or the information reported on Form CT-1.
You are also authorizing the designee to:
• Exchange information concerning Form CT-1 with the
IRS, and

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Instructions for Form CT-1 (2010)

• Respond to certain IRS notices that you have shared with

Alternative Signature Method

your designee relating to Form CT-1. The IRS will not send
notices to your designee.
You are not authorizing the designee to receive any
refund check, bind you to anything (including additional tax
liability), or otherwise represent you before the IRS. If you
want to expand the designee’s authority, see Pub. 947,
Practice Before the IRS and Power of Attorney.
The authorization will automatically expire 1 year from the
due date (without regard to extensions) for filing your 2010
Form CT-1. If you or your designee wants to revoke this
authorization, send a written statement of revocation to:
Department of the Treasury; Internal Revenue Service
Center; Cincinnati, OH 45999. See Pub. 947 for more
information.

Corporate officers or duly authorized agents may sign Form
CT-1 by rubber stamp, mechanical device, or computer
software program. For details and required documentation,
see Rev. Proc. 2005-39 at www.irs.gov/irb/2005-28_IRB/
ar16.html.

Paid Preparers
A paid preparer must sign Form CT-1 and provide the
information in the Paid Preparer Use Only section of Part I if
the preparer was paid to prepare Form CT-1 and is not an
employee of the filing entity. The preparer must give you a
copy of the return in addition to the copy to be filed with the
IRS.
If you are a paid preparer, write your preparer tax
identification number (PTIN) in the space provided. Include
your complete address. If you work for a firm, write the firm’s
name and the EIN of the firm. You can apply for a PTIN at
www.irs.gov/taxpros, or by filing Form W-12, IRS Paid
Preparer Tax Identification Number (PTIN) Application. You
cannot use your PTIN in place of the EIN of the tax
preparation firm.
Generally, you are not required to complete this section if
you are filing the return as a reporting agent and have a
valid Form 8655, Reporting Agent Authorization, on file with
the IRS. However, a reporting agent must complete this
section if the reporting agent offered legal advice, for
example, by advising the client on determining whether its
workers are employees or independent contractors for
federal tax purposes.

Who Must Sign
Form CT-1 must be signed as follows:
• Sole proprietorship — The individual who owns the
business.
• Corporation (including a limited liability company (LLC)
treated as a corporation) — The president, vice-president, or
other principal officer duly authorized to act.
• Partnership (including an LLC treated as a partnership)
or unincorporated organization — A responsible and duly
authorized member or officer having knowledge of its affairs.
• Single member LLC treated as a disregarded entity
for federal income tax purposes — The owner of the LLC
or a principal officer duly authorized to act.
• Trust or estate — The fiduciary.
Form CT-1 also may be signed by a duly authorized
agent of the taxpayer if a valid power of attorney has been
filed.

Instructions for Form CT-1 (2010)

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