Employer's Annual Railroad Retirement Tax Return

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Page 1 of 7 Instructions for Form CT-1 (2011)

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PF 09/14/2011

2011

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.

What’s New

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Tier I Employee tax rate has been lowered for 2011. The
Tier I Employee tax rate has been lowered to 4.2% for 2011
only. For 2011 tax rates and compensation bases, see
Employer and Employee Taxes — Tax Rates and
Compensation Bases on page 2.
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 details, see Depositing Taxes on page 3 below. For
exceptions, see Electronic Deposit Requirement on page 4
below.

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CAUTION

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

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.
Special rate for certain individuals hired in 2010 has
expired. The special Tier I tax exemption and credit rate on
compensation paid to qualified employees hired in 2010 has
ended.

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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.

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.”
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).
Sep 06, 2011

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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
and other compensation.

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 7 through 10 of
Form CT-1. Follow the reporting procedures for sick pay
reporting in section 6 of Pub. 15-A.
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).

Cat. No. 16005H

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Where To File

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.

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, 2012.

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

Compensation
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. A few exceptions are
described below under Exceptions.
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 substantial 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:
• Certain benefits provided to or on behalf of an employee if
at the time the benefits are provided it is reasonable to
believe the employee can exclude such benefits from
income. For information on what benefits are excludable,
see Pub. 15-B. Examples of this type of benefit include:
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

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CAUTION

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.

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Employer and Employee Taxes
Tax Rates and Compensation Bases
Tax Rates

Compensation Paid in 2011

Tier I

Employer: Pays 6.2% of first . . . . . . . . . . . . . . . . . . . .

$106,800

Employee: Pays 4.2% of first . . . . . . . . . . . . . . . . . . .

$106,800

Tier I Medicare

Employer and Employee: Each pay 1.45% of . . . . . . . . .

All

D

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 2011 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
can use the predecessor’s compensation paid against the
maximum compensation bases.

Employee Taxes

under Employer and Employee Taxes, later,

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.

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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.

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 2012 is calendar
year 2010.
Use the table below to determine which deposit schedule
to follow for 2012.

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. The reporting requirement for tips only applies to
cash tips. An employee who receives cash tips must report
them to you by the 10th of the month following the month
the tips are received. Cash tips must be reported for every
month, unless the cash tips for the month are less than $20.

$50,000 or less

Monthly schedule depositor

More than $50,000

Semiweekly schedule depositor

Employer A is a monthly schedule depositor for 2012
because its Form CT-1 taxes for its lookback period
(calendar year 2010) were not more than $50,000. However,
for 2013, Employer A is a semiweekly schedule depositor
because A’s taxes exceeded $50,000 for its lookback period
(calendar year 2011).

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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.

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).

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Example. Employer B originally reported Form CT-1
taxes of $45,000 for the lookback period (2010).
B discovered in March 2012 that the tax during the lookback
period (2010) was understated by $10,000 and will correct
this error with an adjustment on Form CT-1 X filed for 2010.

B is a monthly schedule depositor for 2012 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
2010 taxes or 2012 taxes. See Treasury Decision 9405 at
www.irs.gov/irb/2008-32_IRB/ar13.html.

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.

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.

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

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

Lookback Period

Semiweekly Schedule Depositor

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
Instructions for Form CT-1 (2011)

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Example. Employer A reported Form CT-1 taxes as
follows:
• 2010 Form CT-1 — $49,000
• 2011 Form CT-1 — $52,000

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 cash 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
employer railroad retirement taxes on tips.

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THEN for 2012 you are a...

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.

An employee must furnish you with a written (or
electronic) statement of cash 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 cash 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.

Depositing Taxes

IF you reported taxes
for the lookback period (2010)
of...

If you are a semiweekly schedule depositor, use the table
below to determine when to make deposits.

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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

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 27, 2012. Because this was the first year of its
business, its Form CT-1 taxes for its lookback period (2010)
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 3, 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 3 (Friday), F must deposit the $100,000 by
February 6 (Monday), the next business day. F became a
semiweekly schedule depositor on February 4. F will be a
semiweekly schedule depositor for the rest of 2012 and
for 2013.
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.

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 28,
2012 (Saturday), payday must be deposited by February 3,
2012 (Friday). Under the semiweekly deposit rule, taxes
arising on Saturday through Tuesday must be deposited by
the following Friday.

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

CAUTION

Deposits on Business Days Only

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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).
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).

Electronic Deposit Requirement

The IRS has issued 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 System (EFTPS). Under these
regulations, 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
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 2012, the shortfall makeup date is
February 16, 2012 (Thursday).

Exceptions to the Deposit Rules

D

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.
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 examples explain 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

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more than $79,200 per employee. Multiply by 12.1% and
enter the result in the Tax column.

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 4—Tier I Employee Tax
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 on lines 4 and 9
combined. Multiply by 4.2% and enter the result in the Tax
column.
Stop collecting the 4.2% Tier I employee tax when the
employee’s wages (including sick pay) and tips reach the
maximum for the year ($106,800 for 2011). However, your
liability for Tier I employer tax on compensation continues
until the compensation, not including tips, totals $106,800
for the year.

Line 5—Tier I Employee Medicare Tax
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.
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Line 6—Tier II Employee Tax

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 1 through 6, as appropriate.

!

Specific Instructions

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 “2011.” This final return should furnish
information showing the last date on which you paid
compensation you reported on Form CT-1.
The final return should be accompanied by a statement
providing the address at which the records for your Forms
CT-1 are kept and the name of the person keeping the
records. If the business has been transferred to another
person, the statement should include the name and address
of the transferee and the date of the transfer. If the business
was not transferred or the transferee is not known, the
statement should so state. The statement should be
furnished in duplicate.

Lines 7 Through 10—Tier I Taxes on
Sick Pay

D

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CAUTION

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Enter the compensation, including tips reported, subject to
Tier II employee tax in the Compensation column. Only the
first $79,200 of the employee’s compensation for 2011 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.

Enter any sick pay payments during the year that are
subject to Tier I taxes and Tier I Medicare taxes in the
Compensation column. Multiply by the rate for the line and
enter the result in the Tax column for that line. For Tier 1
Employer taxes, do not enter more than $106,800 per
employee on lines 1 and 7 combined. For Tier 1 Employee
taxes, do not enter more than $106,800 per employee on
lines 4 and 9 combined. Tier I Medicare taxes are not
subject to this limitation.
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 7 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.

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

Line 1—Tier I Employer Tax
Enter the compensation (other than tips and sick pay)
subject to Tier I employer tax in the Compensation column.
Do not enter more than $106,800 per employee on lines 1
and 7 combined. Multiply by 6.2% and enter the result in the
Tax column.

Line 12—Adjustments to Taxes
Based on Compensation

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.

!

CAUTION

Line 3—Tier II Employer Tax

Enter on line 12:

• A fractions of cents adjustment (see Fractions of cents on

Enter the compensation (other than tips) subject to Tier II
employer tax in the Compensation column. Do not enter
Instructions for Form CT-1 (2011)

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

page 6);

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• 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 2010 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.
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.

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 partner, 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.

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TIP

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
• Respond to certain IRS notices that you have shared with
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 2011
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.

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

Line 13—Total Railroad Retirement
Taxes Based on Compensation

D

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

Line 14—Total Deposits for the Year

Enter the total Form CT-1 taxes you deposited. Also, include
any overpayment applied from your 2010 Form CT-1 and
from Form CT-1 X.

Alternative Signature Method

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.

Line 15— Balance Due

Subtract line 14 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
, earlier explained under the Accuracy of Deposits Rule on page 4.
Form CT-1(V), Payment Voucher, has instructions for
making a payment with Form CT-1. You do not have to pay
if line 15 is less than $1.

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/ptin, 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

Line 16— Overpayment
Enter the overpayment on the designated entry line. Then
check the appropriate box to have the overpayment applied
to your 2012 Form CT-1 or refunded to you. If line 16 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 2011
Form CT-1 with the IRS, check the “Yes” box in the
Third-Party Designee section of Form CT-1. Also, enter the

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workers are employees or independent contractors for
federal tax purposes.

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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

Instructions for Form CT-1 (2011)

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