Employer's Annual Railroad Retirement Tax Return

2013

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.

Future Developments

For the latest information about developments related to
Form CT-1 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/ct1.

What's New
Changes to tax rates and compensation bases. For the
2013 tax rates and compensation bases, see Employer and
Employee Taxes, later.
Tier I Employee Additional Medicare Tax withholding. In
addition to withholding Tier I Employee Medicare tax at
1.45%, you must withhold a 0.9% Tier I Employee Additional
Medicare Tax from compensation you pay to an employee in
excess of $200,000 in a calendar year. You are required to
begin withholding Tier I Employee Additional Medicare Tax in
the pay period in which you pay compensation in excess of
$200,000 to an employee and continue to withhold it each
pay period until the end of the calendar year. Tier I Employee
Additional Medicare Tax is only imposed on the employee.
There is no employer share of Tier I Additional Medicare Tax.
All compensation that is subject to Tier I Medicare tax is
subject to Tier I Employee Additional Medicare Tax
withholding if paid in excess of the $200,000 withholding
threshold.
Visit IRS.gov and enter “Additional Medicare Tax” in the
search box for more information on Tier I Employee
Additional Medicare Tax.
Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. The
work opportunity tax credit is now available for eligible
unemployed veterans who begin work before January 1,
2014. Previously, the credit was available for unemployed
veterans who began work on or after November 22, 2011,
and before January 1, 2013. Qualified tax-exempt
organizations that hire eligible unemployed veterans can
claim the work opportunity tax credit against their payroll tax
liability using Form 5884-C, Work Opportunity Credit for
Qualified Tax-Exempt Organizations Hiring Qualified
Veterans. For more information, visit IRS.gov and enter “work
opportunity tax credit” in the search box.

Reminders
Change of address. Use Form 8822-B, Change of Address
or Responsible Party— Business, to notify the IRS of an
address change.
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. Form CT-1 X is
filed separately from Form CT-1. For more information, see
the Instructions for Form CT-1 X or visit IRS.gov and enter
the words “correcting employment taxes” in the search box.

Nov 25, 2013

Federal tax deposits must be made by electronic funds
transfer. You must use electronic funds transfer to make all
federal tax deposits. Generally, electronic funds transfers are
made using the Electronic Federal Tax Payment 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 electronic deposits on
your behalf. Also, you may arrange for your financial
institution to initiate a same-day 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.
To get more information about EFTPS or to enroll in
EFTPS, visit the EFTPS website at www.eftps.gov, or call
1-800-555-4477 or 1-800-733-4829 (TDD). Additional
information about EFTPS is also available in Pub. 966,
Electronic Federal Tax Payment System: A Guide To Getting
Started.
Outsourcing payroll duties. Employers are responsible to
ensure that tax returns are filed and deposits and payments
are made, even if the employer contracts with a third party to
perform these acts. The employer remains responsible if the
third party fails to perform any required action. If you choose
to outsource any of your payroll and related tax duties (that
is, withholding, reporting, and paying over taxes imposed by
the Railroad Retirement Tax Act, FUTA, and income taxes)
to a third-party payer such as a payroll service provider or
reporting agent, visit IRS.gov and enter “outsourcing payroll”
duties in the search box for helpful information on this topic.
Paid preparers must sign Form CT-1. Paid preparers
must complete and sign the paid preparer's section of Form
CT-1.
Where can you get telephone help? You can call the IRS
Business and Specialty Tax Line toll free at 1-800-829-4933
or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard
of hearing, or have a speech disability) Monday–Friday from
7:00 a.m.–7:00 p.m. 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
over 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.

Cat. No. 16005H

Compensation

The Railroad Retirement Board (RRB) website at
www.rrb.gov contains additional employer reporting
information and instructions.
You can order forms and publications by visiting
www.irs.gov/formspubs or calling 1-800-TAX-FORM
(1-800-829-3676).

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.

Photographs of Missing Children

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, U.S.
Individual Income Tax Return. 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 and the General
Instructions for Forms W-2 and W-3.

The IRS 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 CT-1

These instructions give you some background information
about Form CT-1. They tell you who must file Form CT-1,
how to complete it line by line, and when and where to file it.
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.

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 Form CT-1, lines 1–12, 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 under Nonqualified Deferred Compensation
Plans in Pub. 15-A.

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 8–11 and, if the
withholding threshold is met, line 12 of Form CT-1. Follow the
reporting procedures for sick pay reporting in section 6 of
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.

Disregarded entities and qualified subchapter S subsidiaries (QSubs). Eligible single-owner disregarded entities
and QSubs are treated as separate entities for employment
tax purposes. Eligible single-member entities that have not
elected to be taxed as corporations must report and pay
employment taxes on compensation paid to their employees
using the entities' own names and EINs. See Regulations
sections 1.1361-4(a)(7) and 301.7701-2(c)(2)(iv).

Where To File
Send Form CT-1 to:

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0007

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

When To File

File Form CT-1 by February 28, 2014.

Definitions

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

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Instructions for Form CT-1 (2013)

Employee Taxes

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.

!

CAUTION

You must withhold the employee's part of Tier I and Tier II
taxes. See the table under Employer and Employee Taxes,
earlier, 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 withholding it from the compensation on
which the employee tax is computed. 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, the amount of the employee's
compensation is increased by the amount of that tax. See
Rev. Proc. 83-43,1983-1 C.B. 778, for information on how to
figure and report the proper amounts.

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 an on-the-job
injury,
3. Under the Railroad Retirement Act, or
4. More than 6 months after the calendar month the
employee last worked.

Tips. Your employee must report cash tips to you by the
10th day of the month following the month the tips are
received. The report should include charged tips you paid
over to the employee for charge customers, tips the
employee received directly from customers, and tips
received from other employees under any tip-sharing
arrangement. Both directly and indirectly tipped employees
must report tips to you. Cash tips must be reported for every
month, unless the cash tips for the month are less than $20.
Stop collecting the Tier I Employee tax when his or her
compensation and tips for tax year 2013 reach $113,700.
Collect the Tier I Employee Medicare tax for the whole year
on all compensation and tips. Collect the Tier I Employee
Additional Medicare Tax withholding on compensation and
tips that exceed $200,000 for the calendar year. Include all
tips your employees reported to you even if you were unable
to withhold the employee's share of tax.
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 at IRS.gov or by calling
1-800-TAX-FORM (1-800-829-3676).
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 withholding
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.
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 withhold the employee tax, you
may report the excess amount without withholding the
related tax. Report uncollected Tier I Employee tax, Tier I
Employee Medicare tax, Tier I Employee Additional Medicare
Tax withholding, and Tier II Employee tax on tips on line 14.
See section 6 in Pub. 15 (Circular E).

Employer and Employee Taxes
Tax Rates and Compensation Bases
Tax Rates

Compensation
Paid in 2013

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

$113,700

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

. .

All

Tier I Employee Additional Medicare Tax withholding
Employee: Pays 0.9% on compensation
exceeding . . . . . . . . . . . . . . . . . . . . . .

$200,000

Tier II
Employer: Pays 12.6% of first . . . . . . . . . . . .

$84,300

Employee: Pays 4.4% of first

$84,300

. . . . . . . . . . . .

Employer Taxes

Employers must pay both Tier I and Tier II taxes, except for
Tier I Employee Additional Medicare Tax. Tier I tax is divided
into two parts. The amount of compensation subject to each
tax is different. See the table above for the 2013 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.

Instructions for Form CT-1 (2013)

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Depositing Taxes

B is a monthly schedule depositor for 2014 because the
lookback period Form CT-1 taxes are based on the amount
originally reported ($45,000), which was not more than
$50,000. For purposes of the lookback rule, the $10,000
adjustment does not affect either 2012 taxes or 2014 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. However, see
the $2,500 Rule and the $100,000 Next-Day Deposit Rule
under Exceptions to the Deposit Rules, later. 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.
Example. Employer C is a monthly schedule depositor
with seasonal employees. C paid compensation each Friday
during March but did not pay any compensation during April.
Under the monthly schedule deposit rule, C must deposit the
combined taxes for the March paydays by April 15. C does
not have a deposit requirement for April (due by May 15)
because no compensation was paid and, therefore, C does
not have a tax liability for the 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.

Lookback Period

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 2014 is calendar year
2012.

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

Use the table below to determine which deposit schedule
to follow for 2014.
IF you reported taxes
for the lookback period (2012)
of...

THEN for 2014 you are a...

$50,000 or less

Monthly schedule depositor

More than $50,000

Semiweekly schedule depositor

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 compensation on the last Saturday of each month.
Although D is a semiweekly schedule depositor, D will
deposit just once a month because D pays compensation
only once a month. The deposit, however, will be made
under the semiweekly deposit schedule as follows: D's taxes
for the May 31, 2014 (Saturday), payday must be deposited
by June 6, 2014 (Friday). Under the semiweekly deposit rule,
taxes arising on Saturday through Tuesday must be
deposited by the following Friday.

Example. Employer A reported Form CT-1 taxes as
follows:
2012 Form CT-1—$49,000
2013 Form CT-1—$52,000
Employer A is a monthly schedule depositor for 2014
because its Form CT-1 taxes for its lookback period
(calendar year 2012) were not more than $50,000. However,
for 2015, Employer A is a semiweekly schedule depositor
because A's taxes exceeded $50,000 for its lookback period
(calendar year 2013).

!

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

CAUTION

Deposits on Business Days Only

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, later.

If a deposit is required to be made on a day that is not a
business day, the deposit is considered to have been made
timely if it is made by the close of the next business day. A
business day is any day other than a Saturday, Sunday, or
legal holiday. For example, if a deposit is due on a Friday and
Friday is a legal holiday, the deposit will be considered timely
if it is made by the following Monday (if that Monday is a
business day). The term “legal holiday” for deposit purposes
includes only those legal holidays in the District of Columbia.
For a list of legal holidays, see Pub. 15 (Circular E), or visit
IRS.gov and enter “legal holidays” in the search box.

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.
Adjustments to a return for a prior period are not taken into
account in determining the taxes for that prior period.
Example. Employer B originally reported Form CT-1 taxes
of $45,000 for the lookback period (2012). B discovered in
March 2014 that the tax during the lookback period (2012)
was understated by $10,000 and will correct this error with an
adjustment on Form CT-1 X filed for 2012.

Semiweekly schedule depositors will always have at least
3 business days to make a deposit. If any of the 3 weekdays
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Instructions for Form CT-1 (2013)

not apply. Thus, G must deposit $95,000 by Friday and
$10,000 by the following Wednesday.

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

You must use electronic funds transfer to make all federal tax
deposits. Generally, electronic funds transfers are made
using the Electronic Federal Tax Payment System (EFTPS).
To get more information about EFTPS or to enroll in EFTPS,
visit the EFTPS website at www.eftps.gov or call
1-800-555-4477 or 1-800-733-4829 (TDD). Additional
information about EFTPS is also available in Pub. 966.

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.

CAUTION

Same-day wire payment option. If you fail to initiate a
deposit transaction on EFTPS by 8 p.m. Eastern time the day
before the date a deposit is due, you can still make your
deposit on time by using the Federal Tax Application (FTA).
To use the same-day wire payment method, you will need to
make arrangements with your financial institution ahead of
time. Please check with your financial institution regarding
availability, deadlines, and costs. Your financial institution
may charge you a fee for payments made this way. To learn
more about the information you will need to provide your
financial institution to make a same-day wire payment, visit
www.eftps.gov to download the Same-Day Payment
Worksheet.

$100,000 Next-Day Deposit Rule. If you accumulate
undeposited 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 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 May 1, 2014. Because this was the first year of its
business, its Form CT-1 taxes for its lookback period (2012)
are considered to be zero, and F is a monthly schedule
depositor. On May 2, F paid compensation for the first time
and accumulated taxes of $40,000. On May 9, 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 May 9
(Friday), F must deposit the $100,000 by May 12 (Monday),
the next business day. F became a semiweekly schedule
depositor on May 10. F will be a semiweekly schedule
depositor for the rest of 2014 and for 2015.
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
Instructions for Form CT-1 (2013)

For an EFTPS deposit to be on time, you must
initiate the deposit by 8 p.m. Eastern time the day
before the date the deposit is due.

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 on or after the
15th of the month following the month in which the shortfall
occurred. For example, if a semiweekly schedule depositor
has a deposit shortfall during January 2014, the shortfall
makeup date is February 19, 2014 (Wednesday).

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,
and 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).
If you receive a notice about a penalty after you file this
return, reply to the notice with an explanation and we will
determine if you meet reasonable-cause criteria. Do not
attach an explanation when you file your return.
Use Form 843, Claim for Refund and Request for
Abatement, to request abatement of assessed penalties or
interest. Do not request abatement of assessed penalties or
interest on Form CT-1 or Form CT-1 X.
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Line 4—Tier I Employee Tax

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/irsirbs/irb01-50.pdf.

Enter the compensation, including tips reported (but
excluding sick pay), subject to Tier I Employee tax in the
Compensation column. Multiply by 6.2% and enter the result
in the Tax column. The total amount listed in the
Compensation column for lines 4 and 10 combined may not
be more than $113,700 per employee.
Stop collecting the 6.2% Tier I Employee tax when the
employee's compensation (including sick pay) and tips
reach the maximum for the year ($113,700 for 2013).
However, your liability for Tier I Employer tax on
compensation continues until the compensation (including
sick pay), but not including tips, totals $113,700 for the
year.

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. 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 Trust fund recovery penalty in section 11 of Pub. 15
(Circular E).

Line 5—Tier I Employee Medicare Tax

Enter the compensation, including tips reported (but
excluding sick pay), 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, earlier.

Line 6—Tier I Employee Additional
Medicare Tax Withholding

Specific Instructions
Final Return

Enter the compensation, including tips reported (but
excluding sick pay) that is subject to Tier I Employee
Additional Medicare Tax withholding. You are required to
begin withholding Tier I Employee Additional Medicare Tax in
the pay period in which you pay compensation in excess of
$200,000 to an employee and continue to withhold it each
pay period until the end of the calendar year. Tier I Employee
Additional Medicare Tax is only imposed on the employee.
There is no employer share of Tier I Additional Medicare Tax.
All compensation (including sick pay) that is subject to Tier I
Medicare tax is subject to Tier I Employee Additional
Medicare Tax if paid in excess of the $200,000 withholding
threshold.

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
“2013.” 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 will be 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.

Visit IRS.gov and enter “Additional Medicare Tax” in the
search box for more information on Tier I Employee
Additional Medicare Tax.

Line 7—Tier II Employee Tax

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, including tips reported, subject to
Tier II Employee tax in the Compensation column. Only the
first $84,300 of the employee's compensation (including tips)
for 2013 is subject to this tax. Multiply by 4.4% and enter the
result in the Tax column. For information on reporting tips,
see Tips, earlier.

Line 2—Tier I Employer Medicare 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 1–7, as appropriate.

!

CAUTION

Enter the compensation (other than tips and sick pay) subject
to Tier I Employer tax in the Compensation column. Multiply
by 6.2% and enter the result in the Tax column. The total
amount listed in the Compensation column for lines 1 and 8
combined may not be more than $113,700 per employee.

!

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.

Line 3—Tier II Employer Tax

Lines 8–12—Tier I Taxes on Sick Pay

Enter the compensation (other than tips) subject to Tier II
Employer tax in the Compensation column. Do not enter
more than $84,300 per employee. Multiply by 12.6% and
enter the result in the Tax column.

Enter any sick pay payments during the year that are subject
to Tier I taxes, Tier I Medicare taxes, and Tier I Employee
Additional Medicare Tax withholding in the Compensation
column. Multiply by the rate for the line and enter the result in
the Tax column for that line. For Tier I Employer taxes, the

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Instructions for Form CT-1 (2013)

fractions of cents when collecting the tax, report the
deduction or addition on line 14.

total amount listed in the Compensation column for lines 1
and 8 combined may not be more than $113,700 per
employee. For Tier I Employee taxes, the total amount listed
in the Compensation column for lines 4 and 10 combined
may not be more than $113,700 per employee. Tier I
Medicare taxes are not subject to a dollar limitation.

TIP

Line 15—Total Railroad Retirement
Taxes Based on Compensation

All compensation (including sick pay) that is subject to
Tier I Medicare tax is subject to Tier I Employee Additional
Medicare Tax if paid in excess of the $200,000 withholding
threshold.

Combine the amounts shown on lines 13 and 14 and enter
the result on line 15.

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 8–12. 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.

Line 16—Total Deposits for the Year

Enter the total Form CT-1 deposits for the year, including any
overpayment that you applied from filing Form CT-1 X and
any overpayment that you applied from your 2012 return.

Line 17— Balance Due

Line 13—Total Tax Based on
Compensation

If line 15 is more than line 16, enter the difference on line 17.
Otherwise, see Overpayment below. You do not have to pay
if line 17 is under $1. Generally, you should show a balance
due on line 17 only if your total railroad retirement taxes
based on compensation for the year (line 15) is less than
$2,500. However, see Accuracy of Deposits Rule, earlier,
regarding payments made under the accuracy of deposits
rule.

Add lines 1 through 12 and enter the result on line 13.

Line 14—Adjustments to Taxes Based
on Compensation

!

Do not use line 14 for prior period adjustments.
Make all prior period adjustments on Form CT-1 X.

You may pay the amount shown on line 17 using EFTPS
or a check or money order. For more information on
electronic payment options, visit the IRS website at
www.irs.gov/e-pay.

CAUTION

Enter on line 14:
A fractions of cents adjustment (see Adjustment for
fractions of cents, later);
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, Tier I Employee Additional Medicare Tax, and
Tier II Employee tax on tips.

If you pay by EFTPS, file your return using the address
under Where To File, earlier. Do not file Form CT-1(V),
Payment Voucher. If you pay by check or money order, make
it payable to “United States Treasury.” Enter your EIN, Form
CT-1, and the tax period on your check or money order.
Complete Form CT-1(V) and enclose with Form CT-1.

Line 18— Overpayment

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 14. If the net
adjustment is negative, report the amount on line 14 using a
minus sign, if possible. If your computer software does not
allow the use of minus signs, you may use parentheses.

If line 16 is more than line 15, enter the difference on line 18.
Never make an entry on both lines 18 and 17. If line 18 is
less than $1, we will send you a refund or apply it to your next
return only if you ask us in writing to do so.
If you deposited more than the correct amount for the
year, you can have the overpayment refunded or applied to
your next return by checking the appropriate box on line 18.
Check only one box on line 18. If you do not check either box
or if you check both boxes, generally we will apply the
overpayment to your account. We may apply your
overpayment to any past due tax account that is shown in our
records under your EIN.

Do not include on line 14 any 2012 overpayment that is
applied to this year's return (this is included on line 16).
Required statement. Except for adjustments for fractions of
cents, explain amounts entered on line 14 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.

Part II. Record of Railroad Retirement
Tax Liability

This is a summary of your yearly tax liability, not a summary
of deposits made. If line 15 is less than $2,500, do not
complete Part II or Form 945-A.

If you are a monthly schedule depositor, enter your tax
liability for each month and figure the total liability for the
year. If you do not enter your tax liability for each month, the
IRS will not know when you should have made deposits and
may assess an “averaged” failure-to-deposit penalty. See
section 11 of Pub. 15 (Circular E). If your tax liability for any
month is negative (for example, if you are adjusting an

Adjustment for fractions of cents. If there is a difference
between the total employee tax (lines 4–7 and 10–12) and
the total actually withheld (employee compensation including
tips plus the employer's contribution) due to rounding
Instructions for Form CT-1 (2013)

If this is the only entry on line 14, you are not
required to attach a statement explaining the
adjustment.

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overreported liability in a prior month), do not enter a
negative amount for the month. Instead, enter zero for the
month and subtract that negative amount from your tax
liability for the next month.

Corporation (including a limited liability company
(LLC) treated as a corporation)—The president,
vice-president, or other principal officer duly authorized to
sign.
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 sign.
Trust or estate—The fiduciary.

Note. The amount shown on line V must equal the amount
shown on line 15.
If you are a semiweekly schedule depositor or if you
accumulate $100,000 or more in tax liability on any day in a
deposit period, you must complete Form 945-A and file it with
Form CT-1. Do not complete lines I–V if you file Form 945-A.

Third-Party Designee

Form CT-1 also may be signed by a duly authorized agent
of the taxpayer if a valid power of attorney has been filed.

If you want to allow an employee of your business, a return
preparer, or another third party to discuss your 2013 Form
CT-1 with the IRS, check the “Yes” box in the “Third-Party
Designee” section. 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 do all of the
following.
Give the IRS any information that is missing from your
return.
Call the IRS for information about processing your return.
Respond to certain IRS notices that you have shared with
the designee about math errors and return preparation. 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 2013
Form CT-1. If you or your designee wants to revoke this
authorization, send the revocation or withdrawal to the IRS
office at which you file your Form CT-1. See Pub. 947 for
more information.

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.

Paid Preparer Use Only

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 and Renewal.
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.

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Instructions for Form CT-1 (2013)