Employer's Annual Railroad Retirement Tax Return

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2021

Instructions for Form CT-1

Department of the Treasury
Internal Revenue Service

Employer's Annual Railroad Retirement Tax Return

DRAFT AS OF
December 21, 2021
Section references are to the Internal Revenue Code unless
otherwise noted.
Contents

Future Developments . . . . . . . . . . . . . . . . . . . .
What's New . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General Instructions . . . . . . . . . . . . . . . . . . . . .
Purpose of Form CT-1 . . . . . . . . . . . . . . . . .
Who Must File . . . . . . . . . . . . . . . . . . . . . .
Where To File . . . . . . . . . . . . . . . . . . . . . . .
When To File . . . . . . . . . . . . . . . . . . . . . . .
Definitions . . . . . . . . . . . . . . . . . . . . . . . . .
Employer and Employee Taxes . . . . . . . . . .
Depositing Taxes . . . . . . . . . . . . . . . . . . . .
Penalties and Interest . . . . . . . . . . . . . . . . .
Specific Instructions . . . . . . . . . . . . . . . . . . . . .
Third-Party Designee . . . . . . . . . . . . . . . . . . . .
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . .
Paid Preparer Use Only . . . . . . . . . . . . . . . . . . .
Worksheet 1. Credit for Qualified Sick and Family
Leave Compensation for Leave Taken Before
April 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . .
Worksheet 2. Employee Retention Credit for
Qualified Compensation Paid After December
31, 2020, and Before July 1, 2021 . . . . . . . .
Worksheet 3. Credit for Qualified Sick and Family
Leave Compensation for Leave Taken After
March 31, 2021, and Before October 1, 2021
Worksheet 4. Employee Retention Credit for
Qualified Compensation Paid After June 30,
2021, and before January 1, 2022 . . . . . . . .
Worksheet 5. COBRA Premium Assistance
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Future Developments

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For the latest information about developments related to
Form CT-1 and its instructions, such as legislation enacted
after they were published, go to IRS.gov/CT1.

What's New
Changes to tax rates and compensation bases. For the
2021 tax rates and compensation bases, see Employer and
Employee Taxes, later.
The COVID-19 related credit for qualified sick and family leave compensation has been extended and amended. The Families First Coronavirus Response Act (FFCRA)
was amended by legislation. The FFCRA requirement that
employers provide paid sick and family leave for reasons
related to COVID-19 (the employer mandate) expired on
December 31, 2020; however, the COVID-related Tax Relief
Act of 2020 extends the periods for which employers
providing leave that otherwise meets the requirements of the
Dec 21, 2021

FFCRA may continue to claim tax credits for qualified sick
and family leave compensation paid for leave taken before
April 1, 2021.
The American Rescue Plan Act of 2021 (the ARP) adds
new sections 3131, 3132, and 3133 to the Internal Revenue
Code to provide credits for qualified sick and family leave
compensation similar to the credits that were previously
enacted under the Families FFCRA and amended and
extended by the COVID-related Tax Relief Act of 2020. The
credits under sections 3131 and 3132 are available for
qualified leave compensation paid for leave taken after
March 31, 2021, and before October 1, 2021. Below are the
major changes made under the ARP.
• The ARP keeps the daily compensation thresholds that
previously existed. The aggregate cap on qualified sick leave
compensation remains at 80 hours (10 days), but the
limitation on the number of days resets with respect to leave
taken by employees beginning on April 1, 2021. The
aggregate cap on qualified family leave compensation
increases to $12,000 from the previous cap of $10,000, and
the aggregate cap resets with respect to leave taken by
employees beginning on April 1, 2021.
• The ARP also created a new category of leave under the
Emergency Paid Sick Leave Act (EPSLA) and the Expanded
Family and Medical Leave Act (Expanded FMLA) to include
the time the employee is seeking or awaiting the results of a
diagnostic test for, or a medical diagnosis of, COVID-19 (and
the employee has been exposed to COVID-19 or the
employee’s employer has requested such test or diagnosis),
or the employee is obtaining or accompanying an individual
who is obtaining immunizations related to COVID-19 or
recovering from or caring for an individual recovering from an
injury, disability, illness, or condition related to such
immunization. Additionally, employers may provide
employees with paid family leave if the employee is unable to
work due to any of the conditions for which eligible employers
may provide paid sick leave under the EPSLA.
• The credits are still increased by the qualified health plan
expenses allocable to the qualified sick and family leave
compensation, but the credits are now also increased,
subject to the qualified leave compensation limitations, by
certain amounts paid under collective bargaining agreements
that are properly allocable to the qualified leave
compensation. The collectively bargained contributions paid
by an eligible employer that are eligible for the credit are
collectively bargained defined benefit pension plan
contributions and collectively bargained apprenticeship
program contributions that are properly allocable to qualified
leave compensation.
• Under section 3133, the credits are increased by the
amount of the Tier 1 Employer tax and Tier 1 Employer
Medicare tax on the qualified sick and family leave
compensation.
• Governmental employers (except for the federal
government and its agencies and instrumentalities unless
described in section 501(c)(1)) may now claim the credits.
• Generally, the same compensation can’t be used as both
qualified sick leave compensation and qualified family leave

Cat. No. 16005H

credit that was previously enacted under the CARES Act and
amended and extended by the Taxpayer Certainty and
Disaster Tax Relief Act of 2020. Generally, the rules for the
employee retention credit for qualified compensation paid
before July 1, 2021, and qualified compensation paid after
June 30, 2021, are substantially similar. However, the
Infrastructure Investment and Jobs Act (Infrastructure Act)
amends section 3134 of the Internal Revenue Code, as
enacted under the ARP, to limit the availability of the
employee retention credit in the fourth quarter of 2021 to
employers that are recovery startup businesses, as defined
in section 3134(c)(5). Thus, for compensation paid after
September 30, 2021, and before January 1, 2022, only the
compensation paid by recovery startup businesses can be
qualified compensation as described in these instructions.
See Recovery startup business, later, for more information
about a recovery startup business.
Qualified compensation for the employee retention credit
under section 3134 doesn't include compensation taken into
account for credits under sections 41, 45A, 45P, 45S, 51,
1396, 3131, and 3132. Additionally, qualified compensation
for the employee retention credit can't include amounts used
as payroll costs for a Small Business Interruption Loan under
the PPP that is forgiven or amounts used as payroll costs for
shuttered operator grants and restaurant revitalization grants.
For compensation paid before July 1, 2021, the
nonrefundable portion of the employee retention credit is
against the Tier 1 Employer tax. However, for compensation
paid after June 30, 2021, and before January 1, 2022, the
nonrefundable portion of the employee retention credit is
against the Tier 1 Employer Medicare tax. The nonrefundable
portion of the credit is now claimed on line 17a and, if
applicable, the refundable portion of the credit is claimed on
line 24a. For more information, see the instructions for
line 17a and line 24a, later. Use Worksheet 2 to figure the
credit for compensation paid before July 1, 2021. Use
Worksheet 4 to figure the credit for compensation paid after
June 30, 2021, and before January 1, 2022.
See Notice 2021-23, 2021-16 I.R.B. 1113, available at
IRS.gov/irb/2021-16_IRB#NOT-2021-23, for guidance on the
employee retention credit provided under section 2301 of the
CARES Act, as amended by section 207 of the Taxpayer
Certainty and Disaster Tax Relief Act of 2020, for qualified
compensation paid after December 31, 2020, and before
July 1, 2021. See Notice 2021-49, 2021-34 I.R.B. 316,
available at IRS.gov/irb/2021-34_IRB#NOT-2021-49 for
guidance on the employee retention credit provided under
the ARP for compensation paid after June 30, 2021, and
before January 1, 2022. Notice 2021-49 also discusses
miscellaneous issues that apply to all of 2021. See Notice
2021-65, 2021-51 I.R.B. 880, available at IRS.gov/irb/
2021-51_IRB#NOT-2021-65, for modifications to Notice
2021-49 under the Infrastructure Act. For more information
about the employee retention credit, go to IRS.gov/ERC.

compensation. Additionally, you may not benefit from both
the credit for qualified sick and family leave compensation
and the employee retention credit with respect to the same
compensation. The credit for qualified sick leave
compensation and qualified family leave compensation
doesn't apply to compensation taken into account as payroll
costs for a Small Business Interruption Loan under the
Paycheck Protection Program (PPP) that is forgiven or in
connection with shuttered operator grants and restaurant
revitalization grants.
• The credit for qualified sick and family leave compensation
isn’t allowed if the employer provides the leave in a manner
that discriminates in favor of highly compensated employees,
full-time employees, or employees on the basis of
employment tenure. See Highly compensated employee,
later, for the definition.
How you report qualified sick and family leave
compensation and the credit for qualified sick and family
leave compensation has changed. For leave taken before
April 1, 2021, the qualified sick and family leave
compensation is subject to the Tier 1 Employer Medicare tax
(line 2), Tier 1 Employee tax (line 4), Tier 1 Employee
Medicare tax (line 5), and, if applicable, Tier 1 Employee
Additional Medicare Tax (line 6). For leave taken after March
31, 2021, and before October 1, 2021, qualified sick and
family leave compensation is subject to the Tier 1 Employer
tax (line 1), Tier 1 Employer Medicare tax (line 2), Tier 1
Employee tax (line 4), Tier 1 Employee Medicare tax (line 5),
and, if applicable, Tier 1 Employee Additional Medicare Tax
(line 6). Regardless of when the leave was taken, qualified
sick and family leave compensation is subject to Tier 2 tax for
both the employer and employee (lines 3 and 7). Qualified
sick leave compensation and qualified family leave
compensation for leave taken before April 1, 2021, are
reported on lines 30 and 32, respectively. Qualified sick
leave compensation and qualified family leave compensation
for leave taken after March 31, 2021, and before October 1,
2021, are reported on lines 36 and 39, respectively. For
leave taken before April 1, 2021, the credit for qualified sick
and family leave compensation is reported on line 16
(nonrefundable portion) and, if applicable, line 23 (refundable
portion); and the nonrefundable portion of the credit is
against the Tier 1 Employer tax. For leave taken after March
31, 2021, and before October 1, 2021, the credit for qualified
sick and family leave compensation is reported on line 17b
(nonrefundable portion) and, if applicable, line 24b
(refundable portion); and the nonrefundable portion of the
credit is against the Tier 1 Employer Medicare tax. For more
information, see the instructions for line 16, line 17b, line 23,
and line 24b, later.
Use Worksheet 1 to figure the credit for leave taken before
April 1, 2021. Use Worksheet 3 to figure the credit for leave
taken after March 31, 2021, and before October 1, 2021. For
more information about the credit for qualified sick and family
leave compensation, go to IRS.gov/PLC.

DRAFT AS OF
December 21, 2021

New credit for COBRA premium assistance payments.
Section 9501 of the ARP provides for COBRA premium
assistance in the form of a full reduction in the premium
otherwise payable by certain individuals and their families
who elect COBRA continuation coverage due to a loss of
coverage as the result of a reduction in hours or an
involuntary termination of employment (assistance eligible
individuals). This COBRA premium assistance is available for
periods of coverage beginning on or after April 1, 2021,
through periods of coverage beginning on or before
September 30, 2021. Some multiemployer plans and

The COVID-19 related employee retention credit has
been extended and amended. The Coronavirus Aid,
Relief, and Economic Security (CARES) Act was amended
by legislation. The Taxpayer Certainty and Disaster Tax
Relief Act of 2020 modifies the calculation of the employee
retention credit and extends the date through which the credit
may be claimed to qualified compensation paid before July 1,
2021.
The ARP adds new section 3134 to the Internal Revenue
Code to provide an employee retention credit similar to the
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Instructions for Form CT-1 (2021)

8. The deferred amount of the Tier 1 employer taxes was
only available for deposits due on or after March 27, 2020,
and before January 1, 2021, as well as deposits and
payments due after January 1, 2021, that are required for
compensation paid on or after March 27, 2020, and before
January 1, 2021. Therefore, the line previously used for the
employer deferral has been “Reserved for future use.” Onehalf of the Tier 1 employer taxes is due by December 31,
2021, and the remainder is due by December 31, 2022.
Because both December 31, 2021, and December 31, 2022,
are nonbusiness days, payments made on the next business
day will be considered timely. Any payments or deposits you
make before December 31, 2021, are first applied against
your payment due on December 31, 2021, and then applied
against your payment due on December 31, 2022. For more
information about the deferral of employment tax deposits,
go to IRS.gov/ETD. See Paying the deferred amount of the
Tier 1 employer taxes and How to pay the deferred amount of
Tier 1 employer and employee taxes, later, for information
about paying the deferred amount of the Tier 1 employer
taxes.

insurers don't normally file an employment tax return but will
need to file one if they want to claim the COBRA premium
assistance credit.
Section 9501(b) of the ARP adds new section 6432 to the
Internal Revenue Code that allows a credit (COBRA premium
assistance credit) against Tier 1 Employer Medicare tax in an
amount equal to the premiums not paid by assistance eligible
individuals for COBRA continuation coverage by reason of
section 9501(a)(1) of the ARP. The nonrefundable portion of
the credit is reported on line 17c and, if applicable, the
refundable portion of the credit is reported on line 24c. If you
claim this credit, you must also report the number of
individuals provided COBRA premium assistance on
line 17d. Use Worksheet 5 to figure the credit. For more
information, see the instructions for line 17c, line 17d, and
line 24c, later. For more information on COBRA premium
assistance payments and the credit, see Notice 2021-31,
2021-23 I.R.B. 1173, available at IRS.gov/irb/
2021-23_IRB#NOT-2021-31; and Notice 2021-46, 2021-33
I.R.B. 303, available at IRS.gov/irb/
2021-33_IRB#NOT-2021-46.

DRAFT AS OF
December 21, 2021
Deferral of the Tier 1 employee taxes expired. The
Presidential Memorandum on Deferring Payroll Tax
Obligations in Light of the Ongoing COVID-19 Disaster,
issued on August 8, 2020, directed the Secretary of the
Treasury to defer the withholding, deposit, and payment of
the Tier 1 employee taxes reported on lines 4 and 10 on
compensation paid during the period from September 1,
2020, through December 31, 2020. The deferral of the
withholding and payment of the Tier 1 employee taxes was
available for employees whose applicable compensation
paid for a biweekly pay period were less than $4,000, or the
equivalent threshold amount for other pay periods. The line
previously used for the employee deferral has been
“Reserved for future use.” The COVID-related Tax Relief Act
of 2020 defers the due date for the withholding and payment
of the Tier 1 employee taxes until the period beginning on
January 1, 2021, and ending on December 31, 2021. For
more information about the deferral of the Tier 1 employee
taxes, see Notice 2020-65, 2020-38 I.R.B. 567, available at
IRS.gov/irb/2020-38_IRB#NOT- 2020-65; and Notice
2021-11, 2021-06 I.R.B. 827, available at IRS.gov/irb/
2021-06_IRB#NOT-2021-11. Also see Paying the deferred
amount of the Tier 1 employee taxes and How to pay the
deferred amount of Tier 1 employer and employee taxes,
later, for information about paying the deferred amount of the
Tier 1 employee taxes.

Advance payment of COVID-19 credits extended. Based
on the extensions of the credit for qualified sick and family
leave compensation and the employee retention credit, and
the new credit for COBRA premium assistance payments,
discussed above, Form 7200, Advance Payment of Employer
Credits Due to COVID-19, may be filed to request an
advance payment. For more information, including
information on which employers are eligible to request an
advance payment, deadlines for requesting an advance, and
the amount that can be advanced, see the Instructions for
Form 7200.
The Infrastructure Act amends section 3134 of the Internal
Revenue Code, as enacted under the ARP, to limit the
availability of the employee retention credit in the fourth
quarter of 2021 to employers that are recovery startup
businesses, as defined in section 3134(c)(5). See Recovery
startup business, later, for more information about a recovery
startup business. Some employers that are no longer eligible
to claim the employee retention credit for the fourth quarter of
2021 may have already submitted Form 7200 to request an
advance payment of the employee retention credit for the
fourth quarter of 2021. If the Form 7200 hasn't been
processed, the IRS will use the employer's indication of
whether it is a recovery startup business (Form 7200, Part 1,
line H) as part of the determination regarding whether the
Form 7200 claiming the employee retention credit in the
fourth quarter of 2021 should be accepted or rejected. A
refund or credit of any portion of the employee retention
credit to a taxpayer in excess of the amount to which the
taxpayer is entitled is an erroneous refund that the employer
must repay, regardless of whether the refund or credit is
advanced. Accordingly, if an employer requested and
received an advance payment of the employee retention
credit for the fourth calendar quarter of 2021, and the
employer isn't a recovery startup business, the employer isn't
eligible for an employee retention credit and must repay the
amount of the advance. Employers who need to repay
excess advance payments of the employee retention credit
must do so by February 28, 2022, by including the advance
payment on their 2021 Form CT-1, Part I, line 26, and paying
any balance due by February 28, 2022.

Reminders
Paying the deferred amount of the Tier 1 employer taxes. One-half of the Tier 1 employer taxes is due by
December 31, 2021, and the remainder is due by December
31, 2022. Because both December 31, 2021, and December
31, 2022, are nonbusiness days, payments made on the next
business day will be considered timely. Any payments or
deposits you make before December 31, 2021, are first
applied against your payment due on December 31, 2021,
and then applied against your payment due on December 31,
2022. For example, if your Tier 1 employer taxes for 2020
were $20,000 and you deposited $5,000 of the $20,000
during 2020 and you deferred $15,000 on Form CT-1,
line 21, then you must pay $5,000 by December 31, 2021,
and $10,000 by December 31, 2022. However, if your Tier 1
employer taxes for 2020 were $20,000 and you deposited
$15,000 of the $20,000 during 2020 and you deferred $5,000

Deferral of the Tier 1 employer taxes expired. The
CARES Act allowed employers to defer the deposit and
payment of the Tier 1 employer taxes reported on lines 1 and
Instructions for Form CT-1 (2021)

-3-

on Form CT-1, line 21, then you don't need to pay any
deferred amount by December 31, 2021, because 50% of the
amount that could have been deferred ($10,000) has already
been paid and is first applied against your payment that
would be due on December 31, 2021. Accordingly, you must
pay the $5,000 deferral by December 31, 2022. Payment of
the deferral isn't reported on Form CT-1. For additional
information, go to IRS.gov/ETD.

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. Form CT-1 X is filed separately from
Form CT-1. For more information, see the Instructions for
Form CT-1 X or go to IRS.gov/CorrectingEmploymentTaxes.
Change of address. Use Form 8822-B to notify the IRS of
an address change.

DRAFT AS OF
December 21, 2021
Federal tax deposits must be made by electronic funds
transfer (EFT). You must use EFT to make all federal tax
deposits. Generally, an EFT is made using EFTPS. If you
don't 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 the 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, go to EFTPS.gov, or call 800-555-4477 or
800-733-4829 (TDD). Additional information about EFTPS is
also available in Pub. 966.

Paying the deferred amount of the Tier 1 employee taxes. The due date for the withholding and payment of the Tier
1 employee taxes is postponed until the period beginning on
January 1, 2021, and ending on December 31, 2021. The
employer must withhold and pay the total deferred Tier 1
employee taxes ratably from compensation paid to the
employee between January 1, 2021, and December 31,
2021. If necessary, the employer may make arrangements to
otherwise collect the total deferred taxes from the employee.
The employer is liable to pay the deferred taxes to the IRS
and must do so before January 1, 2022, to avoid interest,
penalties, and additions to tax on those amounts. Because
January 1, 2022, is a nonbusiness day, payments made on
January 3, 2022, will be considered timely. Payment of the
deferral isn't reported on Form CT-1. For more information
about the deferral of the Tier 1 employee taxes, see Notice
2020-65 and Notice 2021-11.

Paid preparers. If you use a paid preparer to complete
Form CT-1, the paid preparer must complete and sign the
paid preparer's section of Form CT-1.

How to pay the deferred amount of Tier 1 employer and
employee taxes. You may pay the amount you owe
electronically using the Electronic Federal Tax Payment
System (EFTPS) or by a check or money order. The
preferred method of payment is EFTPS. For more
information, go to EFTPS.gov, or call 800-555-4477 or
800-733-4829 (TDD). To pay the deferred amount using
EFTPS, select Form CT-1, calendar year 2020, and the
option to pay the deferred amount.
If you pay by check or money order, include a 2020 Form
CT-1(V), Payment Voucher. The 2020 Form CT-1(V) is on
page 3 of Form CT-1 and is available at IRS.gov/CT1 (select
the link for "All Form CT-1 Revisions" under "Other Items You
May Find Useful"). Make the check or money order payable
to "United States Treasury." Enter your EIN, "Form CT-1,"
and "2020" on your check or money order.
Payments should be sent to:

Additional information. For more information, see one of
the resources discussed next.
• Pub. 15 contains information for withholding, depositing,
reporting, and paying over employment taxes.
• Pub. 15-A contains specialized and detailed employment
tax information supplementing the basic information provided
in Pub. 15.
• Pub. 15-B contains information about the employment tax
treatment of various types of noncash compensation.
• Pub. 915 contains the federal income tax rules for social
security benefits and equivalent Tier 1 railroad retirement
benefits.
• The Railroad Retirement Board (RRB) website at RRB.gov
contains additional employer reporting information and
instructions.
How to get forms and publications. You can download or
print most of the forms and publications you may need at
IRS.gov/Forms. Otherwise, you can go to IRS.gov/
OrderForms to place an order and have forms mailed to you.
The IRS will process your order as soon as possible. Don't
resubmit requests you've already sent us. You can get forms
and publications faster online.

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0030
For more information about the deferral of Tier 1 employer
and employee taxes, go to IRS.gov/ETD and see Notice
2020-65 and Notice 2021-11.

Where can you get telephone help? You can call the IRS
Business and Specialty Tax Line at 800-829-4933 or
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. to 7:00 p.m. local time (Alaska and Hawaii follow
Pacific time) for answers to your questions about completing
Form CT-1 or tax deposit rules.

Outsourcing payroll duties. Generally, as an employer,
you’re responsible to ensure that tax returns are filed and
deposits and payments are made, even if you contract with a
third party to perform these acts. You remain responsible if
the third party fails to perform any required action. Before you
choose to outsource any of your payroll and related tax
duties (that is, withholding, reporting, and paying over
income taxes and taxes imposed by the Railroad Retirement
Tax Act) to a third-party payer, such as a payroll service
provider or reporting agent, go to IRS.gov/
OutsourcingPayrollDuties for helpful information on this topic.
For more information on the different types of third-party
payer arrangements, see section 16 of Pub. 15.

Photographs of Missing Children

The IRS is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). 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

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Instructions for Form CT-1 (2021)

party would be making the payments as an agent of the
employer. The employer is required to do the reporting and
payment of railroad retirement taxes with respect to the
qualified sick leave compensation and claim the credit for the
qualified sick leave compensation unless the employer has
an agency agreement with the third-party payer that requires
the third-party payer to do the collecting, reporting, and/or
paying or depositing railroad retirement taxes on the qualified
sick leave compensation. If the employer has an agency
agreement with the third-party payer, the third-party payer
includes the qualified sick leave compensation on the Form
CT-1 filed by the third party and claims the sick leave credit
on behalf of the employer on Form CT-1.

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.

DRAFT AS OF
December 21, 2021
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.

After you file your first Form CT-1, you must file a return for
each year, even if you didn’t pay taxable compensation
during the year, until you file a final return.

In accordance with Notice 2020-24, 2020-18 I.R.B. 1122,
available at IRS.gov/irb/2021-18_IRB#NOT-2021-24, as
modified by Notice 2021-65, you may have reduced deposits
of employment taxes otherwise required to be made that are
reported on Form 941 (generally, income tax withholding) in
anticipation of claiming the credit for qualified sick and family
leave compensation, the employee retention credit, and/or
the COBRA premium assistance credit. For more information
about qualified sick and family leave compensation, see the
line 1 instructions, later. For more information about these
credits, see the line 16, line 17a, line 17b, and line 17c
instructions, later. Because these credits are reported when
the 2021 Form CT-1 is filed in 2022, a reduction in deposits
of income tax withholding as described above may have
resulted in the issuance of a balance due notice and the
imposition of penalties and interest when the Form 941
quarterly return was processed.

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 haven’t
elected to be taxed as corporations must report and pay
employment taxes on compensation paid to their employees
using the entities' own names and employer identification
numbers (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 Center
Kansas City, MO 64999-0048

When To File

If you reduced your deposits of employment taxes
reported on Form 941 in anticipation of the credit for qualified
sick and family leave compensation, the employee retention
credit, and/or the COBRA premium assistance credit for
quarters in 2021, and this resulted in those amounts being
included as a balance due in a notice, contact us as soon as
possible by either (1) writing to the address shown on your
notice, or (2) calling the telephone number shown on your
notice. If you contact us in writing, include a copy of your
notice and the amount of employment tax deposits reported
on Form 941 that you reduced in anticipation of the credit for
qualified sick and family leave compensation, the employee
retention credit, and/or the COBRA premium assistance
credit. Whether you owe tax, penalties, and interest will
depend upon the credits properly claimed on Form CT-1.

File Form CT-1 by February 28, 2022.

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, meaning currency
issued by a recognized authority as a medium of exchange,
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 later 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 1 and Tier 2
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, or Form 1040-SR, U.S. Tax
Return for Seniors. You’re 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. You must also separately report
on Form W-2 the amount of railroad retirement taxes owed
by the former employee for coverage provided after
separation from service. For more information, see section 2

Who Must File
For purposes of these instructions, all references to

TIP "sick pay" mean ordinary sick pay, not “qualified sick
leave compensation.”

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 1 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.
If a third-party payer of sick pay is also paying qualified
sick leave compensation on behalf of an employer, the third
Instructions for Form CT-1 (2021)

-5-

of Pub. 15-B and the General Instructions for Forms W-2 and
W-3.

Employer and Employee Taxes

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 1 and Tier 2 tax in a
prior year. See the rules for nonqualified deferred
compensation plans in section 5 of Pub. 15-A.

Tax Rates and Compensation Bases
Tax Rates

Compensation
Paid in 2021

Tier 1

DRAFT AS OF
December 21, 2021
Employer and Employee: Each pay 6.2%
of first . . . . . . . . . . . . . . . . . . . . . . . . . . .

$142,800

Tier 1 Medicare

Employer and Employee: Each pay 1.45% of

. .

All

Tier 1 Employee Additional Medicare Tax
withholding

Employee: Pays 0.9% on
compensation exceeding . . . . . . . . . . . . .

Exceptions. Compensation doesn't include the following.
• 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 (HSAs) under section 223.
• Stock or stock options.
• 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.
Exceptions for sickness or accident disability
payments. For purposes of employee and employer Tier 1
taxes, compensation doesn't include sickness or accident
disability payments made to or on behalf of an employee or
dependents:
• Under a workers' compensation law,
• Under section 2(a) of the Railroad Unemployment
Insurance Act for days of sickness due to an on-the-job
injury,
• Under the Railroad Retirement Act, or
• More than 6 months after the calendar month the
employee last worked.
For purposes of Tier 2 taxes, compensation doesn't
include 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.

$200,000

Tier 2

Employer: Pays 13.1% of first . . . . . . . . . . . .

$106,200

Employee: Pays 4.9% of first

$106,200

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

Employer Taxes

Employers must pay both Tier 1 and Tier 2 taxes, except for
the Tier 1 Employer tax (line 1) on qualified sick and family
leave compensation for leave taken before April 1, 2021, and
the Tier 1 Employee Additional Medicare Tax. Tier 1 tax is
divided into two parts. The amount of compensation subject
to each tax is different. See the table above for the 2021 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 to see if they can use the
predecessor's compensation paid against the maximum
compensation bases.

Employee Taxes

You must withhold the employee's part of Tier 1 and Tier 2
taxes. See the table under Employer and Employee Taxes,
earlier, for the tax rates and compensation bases. See Tips,
later, 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 employee
compensation. If you don't withhold the employee tax, you
must still pay the tax. If you withhold too much or too little tax
because you can't 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.

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Instructions for Form CT-1 (2021)

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 2022 is calendar year
2020.

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 1 Employee tax when his or her
compensation and tips for tax year 2021 reach $142,800.
Collect the Tier 1 Employee Medicare tax for the whole year
on all compensation and tips. Collect the Tier 1 Employee
Additional Medicare Tax withholding on compensation and
tips that exceed $200,000 for the calendar year.
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/Forms.
Tips are considered to be paid at the time the employee
reports them to you. You must collect both employee railroad
retirement tax and federal income 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 don't 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 don't have enough
employee funds available to withhold the employee tax, you
may report the excess amount without withholding the
related tax. Include the tips your employees report to you on
lines 4, 5, 6, and 7, even if you were unable to withhold the
employee's share of tax. Then report the uncollected Tier 1
Employee tax, Tier 1 Employee Medicare tax, Tier 1
Employee Additional Medicare Tax withholding, and Tier 2
Employee tax on tips on line 14. See section 6 of Pub. 15.

Use the table below to determine which deposit schedule
to follow for 2022.

DRAFT AS OF
December 21, 2021
THEN for 2022 you’re a...

$50,000 or less

Monthly schedule depositor

More than $50,000

Semiweekly schedule depositor

Example. Rose Co. reported Form CT-1 taxes as follows.

• 2020 Form CT-1, line 19—$49,000.
• 2021 Form CT-1, line 19—$52,000.

Rose Co. is a monthly schedule depositor for 2022
because its Form CT-1 taxes for its lookback period
(calendar year 2020) weren't more than $50,000. However,
for 2023, Rose Co. is a semiweekly schedule depositor
because the total taxes exceeded $50,000 for its lookback
period (calendar year 2021).
New employer. If you’re a new employer, your taxes for
both years of the lookback period are considered to be zero.
Therefore, you’re a monthly schedule depositor for the first
and second years of your business. However, see $100,000
Next-Day Deposit Rule, later.
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 aren't taken into
account in determining the taxes for that prior period.
Example. Maple Co. originally reported Form CT-1 taxes
of $45,000 for the lookback period (2020). Maple Co.
discovered in March 2022 that the tax during the lookback
period (2020) was understated by $10,000 and will correct
this error with an adjustment on Form CT-1 X filed for 2020.
Maple Co. is a monthly schedule depositor for 2022
because the lookback period Form CT-1 taxes are based on
the amount originally reported ($45,000), which wasn't more
than $50,000. For purposes of the lookback rule, the $10,000
adjustment doesn't affect either 2020 taxes or 2022 taxes.
See Treasury Decision 9405, available at IRS.gov/irb/
2008-32_IRB#TD-9405.

Depositing Taxes

For Tier 1 and Tier 2 taxes, you’re 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 don't refer to how often your business pays its
employees or to how often you’re required to make deposits.

When To Deposit
Monthly Schedule Depositor
If you’re a monthly schedule depositor, deposit employer and
employee Tier 1 and Tier 2 taxes accumulated during a
calendar month by the 15th day of the following month.
Example. Spruce Co. is a monthly schedule depositor
with seasonal employees. Spruce Co. paid compensation
each Friday during May but didn't pay any compensation
during June. Under the monthly schedule deposit rule,
Spruce Co. must deposit the combined taxes for the May
paydays by June 15. Spruce Co. doesn't have a deposit
requirement for June (due by July 15) because no
compensation was paid and, therefore, Spruce Co. doesn't
have a tax liability for the month.

If you were a monthly schedule depositor for the entire
year, 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 1 and Tier 2 taxes for a
Instructions for Form CT-1 (2021)

IF you reported taxes
(Form CT-1, line 19) for the
lookback period (2020) of...

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deposit period, you must deposit the taxes by the next
business day regardless of whether you’re a monthly or
semiweekly schedule depositor. If you're a monthly schedule
depositor and accumulate a $100,000 tax liability on any day
during the deposit period, you become a semiweekly
schedule depositor on the next day and remain so for at least
the rest of the calendar year and for the following calendar
year. If you become a semiweekly schedule depositor under
this rule solely as a result of the relief provided in Notice
2021-65 regarding the early termination of the employee
retention credit for the fourth quarter of 2021, you may be
converted back to a monthly schedule depositor by
contacting the IRS. You may continue to deposit in
accordance with your status as a monthly schedule
depositor, but you may receive a system-generated
failure-to-deposit (FTD) penalty notice after you file your
Form CT-1 for 2022. Contact the IRS at the toll-free number
on your FTD penalty notice to request abatement of the FTD
penalty and to be converted back to a monthly schedule
depositor. Aside from this exception, ordinary rules for
determining deposit frequency will continue to apply. The
$100,000 tax liability threshold requiring a next-day deposit is
determined before you consider any reduction of your liability
for nonrefundable credits. For more information, including an
example, see frequently asked question 17 at IRS.gov/ETD.
If you’re a monthly schedule depositor and you
accumulate $100,000 or more on any 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.
Fir Co. is a semiweekly schedule depositor. On Monday, Fir
Co. accumulates taxes of $110,000 and must deposit this
amount by Tuesday, the next business day. On Tuesday, Fir
Co. accumulates additional taxes of $30,000. Because the
$30,000 isn't added to the previous $110,000, Fir Co. 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. Elm, Inc., started its business
on Monday, May 2, 2022. Because this was the first year of
its business, its Form CT-1 taxes for its lookback period
(2020) are considered to be zero, and Elm, Inc., is a monthly
schedule depositor. On Wednesday, May 4, it paid
compensation for the first time and accumulated taxes of
$40,000. On Friday, May 6, it paid compensation and
accumulated taxes of $60,000, bringing its total accumulated
(undeposited) taxes to $100,000. Because Elm, Inc.,
accumulated $100,000 or more on May 6 (Friday), Elm, Inc.,
must deposit the $100,000 by May 9 (Monday), the next
business day. Elm, Inc., became a semiweekly schedule
depositor on May 7. Elm, Inc., will be a semiweekly schedule
depositor for the rest of 2022 and for 2023.
Example of when $100,000 Next-Day Deposit Rule
doesn't apply. Oak Co., 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

Semiweekly Schedule Depositor
If you’re a semiweekly schedule depositor, use the table
below to determine when to make deposits.
Deposit Tier 1 and Tier 2 taxes No later than...
for payments made on...
Wednesday, Thursday, and/or
Friday

The following Wednesday

Saturday, Sunday, Monday,
and/or Tuesday

The following Friday

DRAFT AS OF
December 21, 2021
Example. Green, Inc., a semiweekly schedule depositor,
pays compensation on the last Friday of each month.
Although Green, Inc., is a semiweekly schedule depositor,
Green, Inc., will deposit just once a month because Green,
Inc., pays compensation only once a month. The deposit,
however, will be made under the semiweekly deposit
schedule as follows: Green, Inc.’s taxes for the April 29, 2022
(Friday), payday must be deposited by May 4, 2022
(Wednesday). Under the semiweekly deposit rule, taxes
arising on Wednesday through Friday must be deposited by
the following Wednesday.

!

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

CAUTION

Deposits Due on Business Days Only
If a deposit is required to be made on a day that isn't 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 section 11 of Pub. 15.
Semiweekly schedule depositors will always have at least
3 business days following the close of the semiweekly period
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).

Exceptions to the Deposit Rules
The two exceptions that apply to the deposit rules are the:
• $2,500 Rule, and
• $100,000 Next-Day Deposit Rule.
$2,500 Rule. If your total Form CT-1 taxes after adjustments
and nonrefundable credits (line 19) 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’re unsure
that you will accumulate less than $2,500, deposit under the
appropriate deposit rules so that you won't be subject to
deposit penalties.
$100,000 Next-Day Deposit Rule. If you accumulate
undeposited taxes of $100,000 or more on any day during a
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Instructions for Form CT-1 (2021)

EFTPS.gov, or call 800-555-4477 or 800-733-4829 (TDD).
Additional information about EFTPS is also available in Pub.
966.

was accumulated, the $100,000 Next-Day Deposit Rule
doesn’t apply. Thus, Oak Co. must deposit $95,000 by Friday
and $10,000 by the following Wednesday.
Reducing your deposits for COVID-19 credits.
Employers eligible to claim the credit for qualified sick and
family leave compensation, the employee retention credit,
and/or the COBRA premium assistance credit can reduce
their deposits by the amount of their anticipated credits. You
may reduce your deposits of federal employment taxes in
anticipation of the COBRA premium assistance credit with
regard to a period of coverage as of the date you are entitled
to the credit. Employers won't be subject to an FTD penalty
for reducing their deposits if certain conditions are met. See
the instructions for line 16, line 17a, line 17b, and line 17c for
more information on these credits. For more information on
reducing deposits, see Notice 2020-22, 2020-17 I.R.B. 664,
available at IRS.gov/irb/2020-17_IRB#NOT-2020-22; and
Notice 2021-24. See the instructions for Part II, later, for
instructions on how to adjust your tax liabilities reported on
Part II or Form 945-A for nonrefundable credits.
Due to the termination of the employee retention credit for
the fourth quarter of 2021 for employers that aren't recovery
startup businesses, the IRS will no longer waive FTD
penalties for employers that reduce deposits in anticipation of
the employee retention credit after December 20, 2021,
unless the employer is a recovery startup business. Some
employers that are no longer eligible to claim the employee
retention credit for the fourth quarter of 2021 may have
already reduced their employment tax deposits in
anticipation of claiming the employee retention credit for the
fourth quarter of 2021. For deposits due on or before
December 20, 2021, with respect to compensation paid on or
after October 1, 2021, an employer that isn't a recovery
startup business won't be subject to an FTD penalty for the
fourth quarter of 2021 if the employer:
• Reduced its deposits in anticipation of the employee
retention credit, consistent with the rules provided by section
3.b. of Notice 2021-24;
• Deposits the amounts initially retained in anticipation of the
employee retention credit on or before the due date of the
deposit for compensation paid on December 31, 2021
(regardless of whether compensation is actually paid on that
date); and
• Reports the tax liability associated with the termination of
the employer’s employee retention credit on their 2021 Form
CT-1, Part II (for December), or, if a semiweekly schedule
depositor, on Form 945-A for the applicable day or days in
December. For more information, see the Part II instructions,
later.

!

CAUTION

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

Same-day wire payment option. If you fail to submit 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 Collection Service
(FTCS) to make a same-day wire payment. 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 give your
financial institution to make a same-day wire payment, go to
IRS.gov/SameDayWire.

DRAFT AS OF
December 21, 2021
Accuracy of Deposits Rule. You’re required to deposit
100% of your railroad retirement taxes on or before the
deposit due date. However, penalties won't be applied for
depositing less than 100% if both of the following conditions
are met.
1. Any deposit shortfall doesn't exceed the greater of
$100 or 2% of the amount of taxes otherwise required to be
deposited.
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 May 2022, the shortfall makeup
date is June 15, 2022 (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 filing and/or paying late is due to
reasonable cause and not due to willful neglect. Interest is
charged on taxes paid late at the rate set by law. For more
information, see Pub. 15. Deposit or pay your taxes when
they are due, unless you meet the requirements discussed in
Notice 2020-22 and Notice 2021-24. See Notice 2021-65 for
modifications to Notice 2021-24 under the Infrastructure Act.

Example. Reducing deposits for COBRA premium
assistance. Maple Co. has a semimonthly payroll period.
Sophie Rose elected COBRA premium assistance on May
17, 2021. Maple Co. became entitled to a COBRA premium
assistance credit as of May 17, 2021, for the premiums not
paid by Sophie (an assistance eligible individual) for the
periods of coverage of April 1, 2021, through April 30, 2021,
and May 1, 2021, through May 31, 2021. Maple Co. could
have reduced its federal employment tax deposits as of May
17, 2021, in anticipation of the credit to which Maple Co.
became entitled.

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. Don't attach
an explanation when you file your return.
Use Form 843 to request abatement of assessed
penalties or interest. Don't request abatement of assessed
penalties or interest on Form CT-1 or Form CT-1 X.

Electronic Deposit Requirement

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 an FTD penalty notice, you may designate how your
payment is to be applied in order to minimize the amount of

You must use EFT to make all federal tax deposits.
Generally, an EFT is made using EFTPS. To get more
information about EFTPS or to enroll in EFTPS, go to

Instructions for Form CT-1 (2021)

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FFCRA and amended for purposes of the ARP. See the
instructions for line 16 for information about the credit for
qualified sick and family leave compensation for leave taken
before April 1, 2021, and the instructions for line 17b for
information about the credit for qualified sick and family leave
compensation for leave taken after March 31, 2021, and
before October 1, 2021.

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 IRS.gov/pub/irs-irbs/irb01-50.pdf.
Trust fund recovery penalty. If taxes that must be withheld
(that is, trust fund taxes) aren't withheld or aren't deposited or
paid to the United States Treasury, the trust fund recovery
penalty may apply. The penalty is 100% of the unpaid trust
fund tax. If these unpaid taxes can't 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, or
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. The trust fund recovery penalty
won't apply to any amount of trust fund taxes an employer
holds back in anticipation of any credits they are entitled to. It
also won't apply to applicable taxes properly deferred under
Notice 2020-65 and Notice 2021-11 if paid by the due date.

Although qualified sick leave compensation and
qualified family leave compensation are defined as
CAUTION compensation determined without regard to the
exclusions under section 3231(e)(1) for proposes of the
credit for qualified sick and family leave compensation, don't
include any compensation otherwise excluded under section
3231(e)(1) when reporting qualified sick leave compensation
and qualified family leave compensation on lines 1, 2, 3, 4, 5,
6, and 7.

DRAFT AS OF
December 21, 2021
!

EPSLA. Employers with fewer than 500 employees and,
for leave taken after March 31, 2021, and before October 1,
2021, certain governmental employers without regard to
number of employees (except for the federal government and
its agencies and instrumentalities unless described in section
501(c)(1)) are entitled to a credit if they provide paid sick
leave to employees that otherwise meets the requirements of
the EPSLA. Under the EPSLA, as amended for purposes of
the ARP, compensation is qualified sick leave compensation
if paid to employees that are unable to work or telework
before October 1, 2021, because the employee:
1. Is subject to a federal, state, or local quarantine or
isolation order related to COVID-19;
2. Has been advised by a health care provider to
self-quarantine due to concerns related to COVID-19;
3. Is experiencing symptoms of COVID-19 and seeking a
medical diagnosis; or, for leave taken after March 31, 2021,
and before October 1, 2021, is seeking or awaiting the
results of a diagnostic test for, or a medical diagnosis of,
COVID-19 (and the employee has been exposed to
COVID-19 or the employee's employer has requested such
test or diagnosis), or the employee is obtaining
immunizations related to COVID-19 or recovering from an
injury, disability, illness, or condition related to such
immunization;
4. Is caring for an individual subject to an order described
in (1) or who has been advised as described in (2);
5. Is caring for son or daughter because the school or
place of care for that child has been closed, or the childcare
provider for that child is unavailable, due to COVID-19
precautions; or
6. Is experiencing any other substantially similar
condition specified by the U.S. Department of Health and
Human Services, which for leave taken after March 31, 2021,
and before October 1, 2021, includes to accompany an
individual to obtain immunization related to COVID-19, or to
care for an individual who is recovering from any injury,
disability, illness, or condition related to the immunization.

Specific Instructions
Final Return

If you stop paying taxable compensation and won't 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
“2021.” The final return should be accompanied by a
statement providing the last date on which you paid
compensation that you reported on Form CT-1, 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 wasn't transferred or the
transferee isn't known, the statement should so state.

!

CAUTION

Processing of your return may be delayed if you don't
provide the required amounts in the Compensation
and Tax columns.

Line 1—Tier 1 Employer Tax

Enter the compensation (other than tips and sick pay),
including qualified sick leave compensation and qualified
family leave compensation for leave taken after March 31,
2021, and before October 1, 2021; and qualified
compensation (other than qualified health plan expenses) for
the employee retention credit, subject to Tier 1 Employer tax
in the Compensation column. Don't include qualified sick
leave compensation or qualified family leave compensation
for leave taken before April 1, 2021. 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 $142,800 per employee. For more
information on qualified compensation for the employee
retention credit, see the instructions for line 17a, later.

Son or daughter. A son or daughter must generally have
been under 18 years of age or incapable of self-care
because of a mental or physical disability. A son or daughter
includes a biological child, adopted child, stepchild, foster
child, legal ward, or child for whom the employee assumes
parental status and carries out the obligations of a parent.
Limits on qualified sick leave compensation. The
EPSLA, as amended for purposes of the ARP, provides
different limitations for different circumstances under which

Qualified Sick Leave Compensation and
Qualified Family Leave Compensation
Qualified sick leave compensation. For purposes of the
credit for qualified sick and family leave compensation,
qualified sick leave compensation is compensation
(determined without regard to the exclusions under section
3231(e)(1)) paid under the EPSLA as enacted under the
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Instructions for Form CT-1 (2021)

other paid time off. After an employee takes leave for 10
days, the employer provides the employee paid leave (that
is, qualified family leave compensation) for up to 10 weeks.
For leave taken after March 31, 2021, and before October 1,
2021, the 10-day rule discussed above doesn't apply and the
paid leave can be provided for up to 12 weeks.
Rate of pay and limit on compensation. The rate of pay
must be at least two-thirds of the employee's regular rate of
pay (as determined under the Fair Labor Standards Act of
1938), multiplied by the number of hours the employee
otherwise would have been scheduled to work. For leave
taken after March 31, 2020, and before April 1, 2021, the
qualified family leave compensation can't exceed $200 per
day or $10,000 in the aggregate per employee. For leave
taken after March 31, 2021, and before October 1, 2021, the
limit resets and the total qualified leave compensation can't
exceed $200 per day or $12,000 in the aggregate per
employee.
For more information about qualified family leave
compensation, go to IRS.gov/PLC.

qualified sick leave compensation is paid. For paid sick leave
qualifying under (1), (2), or (3) above, the amount of qualified
sick leave compensation is determined at the employee's
regular rate of pay, but the compensation may not exceed
$511 for any day (or portion of a day) for which the individual
is paid sick leave. For paid sick leave qualifying under (4),
(5), or (6) above, the amount of qualified sick leave
compensation is determined at two-thirds the employee's
regular rate of pay, but the compensation may not exceed
$200 for any day (or portion of a day) for which the individual
is paid sick leave. The EPSLA also limits each individual to a
maximum of up to 80 hours of paid sick leave in total for
leave taken after March 31, 2020, and before April, 1, 2021.
The ARP resets this limit at 80 hours of paid sick leave for
leave taken after March 31, 2021, and before October 1,
2021. Therefore, for leave taken after March 31, 2020, and
before April 1, 2021, the maximum amount of paid sick leave
compensation can't exceed $5,110 for an employee for leave
under (1), (2), or (3), and it can't exceed $2,000 for an
employee for leave under (4), (5), or (6). These maximum
amounts also reset and apply to leave taken after March 31,
2021, and before October 1, 2021.
For more information about qualified sick leave
compensation, go to IRS.gov/PLC.

DRAFT AS OF
December 21, 2021
Line 2—Tier 1 Employer Medicare Tax
Enter the compensation (other than tips and sick pay),
including qualified sick leave compensation, qualified family
leave compensation, and qualified compensation (other than
qualified health plan expenses) for the employee retention
credit, subject to Tier 1 Employer Medicare tax in the
Compensation column. Multiply by 1.45% and enter the
result in the Tax column.

Qualified family leave compensation. For purposes of
the credit for qualified sick and family leave compensation,
qualified family leave compensation is compensation
(determined without regard to the exclusions under section
3231(e)(1)) paid under the Expanded FMLA as enacted
under the FFCRA and amended for purposes of the ARP.
However, some compensation eligible for the credit should
not be reported as taxable compensation on lines 1, 2, 3, 4,
5, 6, and 7. See the Caution, earlier, for more information.
See the instructions for line 16 for information about the
credit for qualified sick and family leave compensation for
leave taken before April 1, 2021, and the instructions for
line 17b for information about the credit for qualified sick and
family leave compensation for leave taken after March 31,
2021, and before October 1, 2021.
Expanded FMLA. Employers with fewer than 500
employees and, for leave taken after March 31, 2021, and
before October 1, 2021, certain governmental employers
without regard to number of employees (except for the
federal government and its agencies and instrumentalities
unless described in section 501(c)(1)) are entitled to a credit
under the FFCRA, as amended for purposes of the ARP, if
they provide paid family leave to employees that otherwise
meets the requirements of the Expanded FMLA. For leave
taken before April 1, 2021, compensation is qualified family
leave compensation if paid to an employee who has been
employed for at least 30 calendar days when an employee is
unable to work due to the need to care for a son or daughter
under 18 years of age or incapable of self-care because of a
mental or physical disability because the school or place of
care for that child has been closed, or the childcare provider
for that child is unavailable, due to a public health
emergency. See Son or daughter, earlier, for more
information. For leave taken after March 31, 2021, and
before October 1, 2021, the leave can be granted for any
other reason provided by the EPSLA, as amended for
purposes of the ARP.
For leave taken before April 1, 2021, the first 10 days for
which an employee takes leave may be unpaid. During this
period, employees may use other forms of paid leave, such
as qualified sick leave, accrued sick leave, annual leave, or
Instructions for Form CT-1 (2021)

Line 3—Tier 2 Employer Tax

Enter the compensation (other than tips), including qualified
sick leave compensation, qualified family leave
compensation, and qualified compensation (other than
qualified health plan expenses) for the employee retention
credit, subject to Tier 2 Employer tax in the Compensation
column. Don't enter more than $106,200 per employee.
Multiply by 13.1% and enter the result in the Tax column.

Line 4—Tier 1 Employee Tax

Enter the compensation, including tips reported (but
excluding sick pay), qualified sick leave compensation,
qualified family leave compensation, and qualified
compensation (other than qualified health plan expenses) for
the employee retention credit, subject to Tier 1 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 $142,800 per employee.
Stop collecting the 6.2% Tier 1 Employee tax when the
employee's compensation (including sick pay), tips, qualified
sick leave compensation, qualified family leave
compensation, and qualified compensation (other than
qualified health plan expenses) for the employee retention
credit reach the maximum for the year ($142,800 for 2021).
However, your liability for Tier 1 Employer tax on
compensation continues until the compensation (including
sick pay), and qualified compensation (other than qualified
health plan expenses) for the employee retention credit, but
not including tips, totals $142,800 for the year.

Line 5—Tier 1 Employee Medicare
Tax
Enter the compensation, including tips reported (but
excluding sick pay), qualified sick leave compensation,

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column for lines 1 and 8 combined may not be more than
$142,800 per employee. For Tier 1 Employee taxes, the total
amount listed in the Compensation column for lines 4 and 10
combined may not be more than $142,800 per employee.
Tier 1 Medicare taxes aren't subject to a dollar limitation.

qualified family leave compensation, and qualified
compensation (other than qualified health plan expenses) for
the employee retention credit subject to Tier 1 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.

All compensation (including sick pay) that is subject to
Tier 1 Medicare tax is subject to Tier 1 Employee Additional
Medicare Tax if paid in excess of the $200,000 withholding
threshold.

Line 6—Tier 1 Employee Additional
Medicare Tax Withholding

DRAFT AS OF
December 21, 2021
Enter the compensation, including tips reported (but
excluding sick pay), qualified sick leave compensation,
qualified family leave compensation, and qualified
compensation (other than qualified health plan expenses) for
the employee retention credit, that is subject to Tier 1
Employee Additional Medicare Tax withholding. You’re
required to begin withholding Tier 1 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 1 Employee Additional Medicare Tax is
only imposed on the employee. There is no employer share
of Tier 1 Additional Medicare Tax. All compensation
(including sick pay) that is subject to Tier 1 Medicare tax is
subject to Tier 1 Employee Additional Medicare Tax if paid in
excess of the $200,000 withholding threshold.

If you’re a railroad employer paying your employees sick
pay, or a third-party payer who didn't notify the employer of
the payments (thereby subject to the employee and employer
tax), make entries on lines 8–12. If you’re 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 13—Total Tax Based on
Compensation

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

Line 14—Adjustments to Taxes Based
on Compensation

Go to IRS.gov/ADMT for more information on Tier 1
Employee Additional Medicare Tax.

!

Don't use line 14 for prior period adjustments. Make
all prior period adjustments on Form CT-1 X.

CAUTION

Line 7—Tier 2 Employee Tax

Enter on line 14:

• A fractions-of-cents adjustment (see Adjustment for

Enter the compensation, including tips reported, qualified
sick leave compensation, qualified family leave
compensation, and qualified compensation (other than
qualified health plan expenses) for the employee retention
credit, subject to Tier 2 Employee tax in the Compensation
column. Only the first $106,200 of the employee's
compensation (including tips, qualified sick leave
compensation, qualified family leave compensation, and
qualified compensation (other than qualified health plan
expenses) for the employee retention credit) for 2021 is
subject to this tax. Multiply by 4.9% and enter the result in the
Tax column. For information on reporting tips, see Tips,
earlier.

fractions of cents, later);
• Credits for overpayments of penalty or interest paid on tax
for earlier years; and
• Any uncollected Tier 1 Employee tax, Tier 1 Employee
Medicare tax, Tier 1 Employee Additional Medicare Tax, and
Tier 2 Employee tax on tips.
Enter the total of these adjustments in the Tax column. If
you’re 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 doesn't
allow the use of minus signs, you may use parentheses.

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 Pub.15-A.
Include such compensation with current year compensation
on lines 1–7, as appropriate.

Don't include on line 14 any 2020 overpayment that is
applied to this year's return (this is included on line 20).

!

Required statement. Except for adjustments for fractions of
cents, explain amounts entered on line 14 in a separate
statement. Include your name, 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 1 and Tier
2 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.

Lines 8—12—Tier 1 Taxes on Sick
Pay
Don't include qualified sick leave compensation,
qualified family leave compensation, or qualified
CAUTION compensation for the employee retention credit on
lines 8 through 12.

!

Adjustment for fractions of cents. If there is a small
difference between the total employee tax (lines 4–7 and 10–
12) and the total actually withheld from employee
compensation including tips, it may be caused by rounding to
the nearest cent each time you figured payroll. The
difference, positive or negative, is your fractions-of-cents
adjustment to be reported on line 14. If the actual amount

Enter any sick pay payments during the year that are
subject to Tier 1 taxes, Tier 1 Medicare taxes, and Tier 1
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 1
Employer taxes, the total amount listed in the Compensation
-12-

Instructions for Form CT-1 (2021)

paid for with after-tax contributions. For more information, go
to IRS.gov/PLC.

withheld is less, report a negative adjustment in the entry
space. If the actual amount is more, report a positive
adjustment.

You must include the full amount (both the

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

TIP nonrefundable and refundable portions) of the credit

for qualified sick and family leave compensation in
your gross income for the tax year that includes the last day
of any calendar quarter in which a credit is allowed. You can't
use the same compensation for the employee retention credit
and the credits for paid sick and family leave.

Line 15—Total Taxes After
Adjustments

DRAFT AS OF
December 21, 2021
Combine the amounts shown on lines 13 and 14 and enter
the result on line 15.

Line 17a—Nonrefundable Portion of
Employee Retention Credit

Form CT-1 and these instructions use the terms
TIP “nonrefundable” and “refundable” when discussing
credits. The term “nonrefundable” means the portion
of the credit which is limited by law to the amount of certain
taxes. The term “refundable” means the portion of the credit
which is in excess of those taxes.

Certain government entities are entitled to the credit

TIP for 2021, including (1) federal instrumentalities

described in section 501(c)(1) and exempt from tax
under section 501(a); and (2) any government, agency, or
instrumentality that is a college or university or the principal
purpose or function of the entity is providing medical or
hospital care.

Line 16—Nonrefundable Portion of
Credit for Qualified Sick and Family
Leave Compensation for Leave Taken
Before April 1, 2021

Instructions for Qualified Compensation Paid
After December 31, 2020, and Before July 1,
2021

Certain private employers with fewer than 500 employees
that provide paid sick leave under the EPSLA and/or provide
paid family leave under the Expanded FMLA are eligible to
claim the credit for qualified sick and family leave
compensation for leave taken before April 1, 2021. For
purposes of this credit, qualified sick leave compensation
and qualified family leave compensation are compensation
(determined without regard to the exclusions under section
3231(e)(1)) paid under the EPSLA and Expanded FMLA.
Enter the nonrefundable portion of the credit for qualified sick
and family leave compensation from Worksheet 1, Step 2,
line 2j. The credit for qualified sick and family leave
compensation consists of the qualified sick leave
compensation, the qualified family leave compensation, the
qualified health plan expenses allocable to that
compensation, and the Tier 1 Employer Medicare tax
allocable to that compensation. The nonrefundable portion of
the credit is limited to the Tier 1 Employer tax (line 1) and Tier
1 Employer tax—Sick Pay (line 8).

Enter the nonrefundable portion of the employee retention
credit from Worksheet 2, Step 2, line 2h. The employee
retention credit is 70% of the qualified compensation you
paid to your employees after December 31, 2020, and before
July 1, 2021. Qualified compensation includes qualified
health plan expenses for the employee retention credit. The
nonrefundable portion of the credit is limited to the Tier 1
Employer tax (line 1) and Tier 1 Employer tax—Sick pay
(line 8) after that share is first reduced by any credit claimed
for the nonrefundable portion of the credit for qualified sick
and family leave compensation for leave taken before April 1,
2021. Any credit in excess of the remaining amount of the
Tier 1 Employer tax (line 1) and Tier 1 Employer tax—Sick
pay (line 8) is refundable and reported on Form CT-1,
line 24a. For more information on the employee retention
credit for qualified compensation paid after December 31,
2020, and before July 1, 2021, see Notice 2021-23.
Qualified compensation for the employee retention
credit paid after December 31, 2020, and before July 1,
2021. The tax credit is equal to 70% of qualified
compensation paid to employees after December 31, 2020,
and before July 1, 2021. Qualified compensation, including
qualified health plan expenses, is limited to a maximum of
$10,000 in each of the first quarter and the second quarter of
2021 ($20,000 in total). Qualified compensation is
compensation paid to certain employees during any period in
a quarter in which your operations are fully or partially
suspended due to a governmental order or during a quarter
in which your gross receipts (within the meaning of section
448(c) or, if you're a tax-exempt organization, section 6033)
are less than 80% of the gross receipts for the same calendar
quarter in calendar year 2019.
The compensation and qualified health plan expenses
considered in calculating your credit depend on the size of
your workforce. Eligible employers that had an average
number of 500 or fewer full-time employees during 2019
count compensation paid to all their employees and the
qualified health plan expenses paid or incurred for all
employees during any period in the first and second quarters
of 2021, in which busines operations are fully or partially

Any credit in excess of the remaining amount of the Tier 1
Employer tax (line 1) and Tier 1 Employer tax—Sick Pay
(line 8) is refundable and reported on Form CT-1, line 23. For
more information on the credit for qualified sick and family
leave compensation, go to IRS.gov/PLC.
Qualified health plan expenses allocable to qualified
sick and family leave compensation. The credit for
qualified sick leave compensation and qualified family leave
compensation is increased to cover the qualified health plan
expenses that are properly allocable to the qualified leave
compensation for which the credit is allowed. These qualified
health plan expenses are amounts paid or incurred by the
employer to provide and maintain a group health plan but
only to the extent such amounts are excluded from the
employees’ income as coverage under an accident or health
plan. The amount of qualified health plan expenses generally
includes both the portion of the cost paid by the employer
and the portion of the cost paid by the employee with pre-tax
salary reduction contributions. However, the qualified health
plan expenses shouldn't include amounts that the employee
Instructions for Form CT-1 (2021)

-13-

Enter the nonrefundable portion of the employee retention
credit from Worksheet 4, Step 2, line 2h. The employee
retention credit is 70% of the qualified compensation you
paid to your employees after June 30, 2021, and before
January 1, 2022. Qualified compensation includes qualified
health plan expenses for the employee retention credit. The
nonrefundable portion of the credit is limited to the Tier 1
Employer Medicare tax (line 2) and Tier 1 Employer
Medicare tax—Sick pay (line 9), after that share is first
reduced by any credit claimed for the nonrefundable portion
of the credit for qualified sick and family leave compensation
for leave taken after March 31, 2021. Any credit in excess of
the remaining amount of the Tier 1 Employer Medicare tax
(line 2) and Tier 1 Employer Medicare tax—Sick pay (line 9)
is refundable and reported on Form CT-1, line 24a. For more
information about the employee retention credit for qualified
compensation paid after June 30, 2021, and before January
1, 2022, see Notice 2021-49.

suspended due to a governmental order or during a quarter
in which gross receipts are less than 80% of the gross
receipts for the same calendar quarter in calendar year 2019.
Eligible employers that had an average number of more than
500 full-time employees in 2019 may count only
compensation paid to employees for time that the employees
weren't providing services, and qualified health plan
expenses paid or incurred by the employer allocable to the
time those employees weren't providing services, due to the
suspension or decline in gross receipts.
Qualified compensation doesn't include compensation for
which the employer receives a credit for qualified sick and
family leave, and any compensation taken into account in
determining the employee retention credit can't be taken into
account as compensation for purposes of the credits under
sections 41, 45A, 45P, 45S, 51, and 1396. Employers can
receive both a Small Business Interruption Loan under the
PPP and the employee retention credit; however, employers
can't receive both loan forgiveness and a credit for the same
compensation.

DRAFT AS OF
December 21, 2021
Qualified compensation for the employee retention
credit paid after June 30, 2021, and before January 1,
2022. The tax credit is equal to 70% of qualified
compensation paid to employees after June 30, 2021, and
before January 1, 2022. Qualified compensation, including
qualified health plan expenses, are limited to a maximum of
$10,000 for each employee in each of the third quarter and
the fourth quarter of 2021 ($20,000 in total). Qualified
compensation is compensation paid to certain employees
during any period in a quarter in which your operations are
fully or partially suspended due to due to a governmental
order or during a quarter in which your gross receipts (within
the meaning of section 448(c) or, if you're a tax-exempt
organization, section 6033) are less than 80% of the gross
receipts for the same calendar quarter in calendar year 2019;
or compensation paid by a recovery startup business. See
Recovery startup business, later, for more information about
a recovery startup business. A recovery startup business
must enter the total of any amounts included in lines 17a and
24a on lines 42 and 43, as applicable, for compensation paid
after June 30, 2021, and before January 1, 2022. The
recovery startup business is limited to a $50,000 employee
retention credit in each of the third quarter and fourth quarter
of 2021 ($100,000 in total for the year). For more information,
see the instructions for line 42 and line 43, later.
Unless you're a severely financially distressed employer,
the compensation and qualified health plan expenses
considered in calculating your credit depend on the size of
your workforce. Eligible employers that had an average
number of 500 or fewer full-time employees during 2019
count compensation paid to all their employees and the
qualified health plan expenses paid or incurred for all
employees during any period in the third and fourth quarters
of 2021, in which business operations are fully or partially
suspended due to a governmental order or during a quarter
in which gross receipts are less than 80% of the gross
receipts for the same calendar quarter in calendar year 2019.
Eligible employers that had an average number of more than
500 full-time employees in 2019 may count only
compensation paid to employees for time that the employees
weren't providing services, and qualified health plan
expenses paid or incurred by the employer allocable to the
time those employees weren't providing services, due to the
suspension or decline in gross receipts.
Qualified compensation under section 3134 for the
employee retention credit doesn't include compensation
taken into account for credits under sections 41, 45A, 45P,

Qualified health plan expenses for the employee retention credit. Qualified compensation for the employee
retention credit includes qualified health plan expenses.
Qualified health plan expenses are amounts paid or incurred
by the employer to provide and maintain a group health plan
but only to the extent such amounts are excluded from the
employees' income as coverage under an accident or health
plan. The amount of qualified health plan expenses taken
into account in determining the amount of qualified
compensation generally includes both the portion of the cost
paid by the employer and the portion of the cost paid by the
employee with pre-tax salary reduction contributions.
However, the qualified health plan expenses shouldn't
include amounts that the employee paid for with after-tax
contributions. Generally, qualified health plan expenses are
those which are allocable to an employee (and to a period) in
which your business operations are fully or partially
suspended due to a governmental order or experience a
decline in gross receipts. The allocation will be treated as
proper if made on the basis of being pro rata among periods
of coverage.
If you complete Worksheet 2 because you paid

TIP qualified compensation for the employee retention

credit after December 31, 2020, and before July 1,
2021, and you also complete Worksheet 4 because you paid
qualified compensation for the employee retention credit
after June 30, 2021, and before January 1, 2022, you must
add the amounts from Worksheet 2, Step 2, line 2h, and
Worksheet 4, Step 2, line 2h, together and report the total on
Form CT-1, line 17a.

Instructions for Qualified Compensation Paid
After June 30, 2021, and Before January 1, 2022
The Infrastructure Act amends section 3134 of the
Internal Revenue Code, as enacted under the ARP,
CAUTION to limit the availability of the employee retention
credit in the fourth quarter of 2021 to employers that are
recovery startup businesses, as defined in section 3134(c)
(5). Thus, for compensation paid after September 30, 2021,
and before January 1, 2022, only the compensation paid by
recovery startup businesses can be qualified compensation
as described in these instructions. See Recovery startup
business, later, for more information about a recovery startup
business.

!

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Instructions for Form CT-1 (2021)

• Qualified sick leave compensation and/or qualified family
leave compensation;
• Qualified health plan expenses allocable to qualified sick
and family leave compensation;
• Collectively bargained defined benefit pension plan
contributions, subject to the qualified leave compensation
limitations, allocable to the qualified sick and family leave
compensation;
• Collectively bargained apprenticeship program
contributions, subject to the qualified leave compensation
limitations, allocable to the qualified sick and family leave
compensation; and
• Tier 1 Employer tax and Tier 1 Employer Medicare tax
allocable to the qualified sick and family leave compensation.

45S, 51, 1396, 3131 (qualified sick leave compensation for
leave taken after March 31, 2021, and before October 1,
2021), and 3132 (qualified family leave compensation for
leave taken after March 31, 2021, and before October 1,
2021). Qualified compensation also doesn't include
compensation that was used as payroll costs in connection
with a Shuttered Venue Operator Grant under section 324 of
the Economic Aid to Hard-Hit Small Businesses, Nonprofits,
and Venues Act. Employers can receive both a Small
Business Interruption Loan under the PPP and the employee
retention credit; however, employers can't receive both loan
forgiveness and a credit for the same compensation.
Severely financially distressed employer. Severely
financially distressed employers are eligible employers
during the third quarter of 2021 whose gross receipts are less
than 10% of the gross receipts for the same calendar quarter
in calendar year 2019.
Recovery startup business. A recovery startup business
is an employer that:
• Began carrying on a trade or business after February 15,
2020;
• Had average annual gross receipts of $1 million or less for
the 3 tax years ending with the tax year before the calendar
quarter in which the employee retention credit is claimed;
and
• Only for credit claimed in the third quarter of 2021, isn’t
otherwise eligible for the employee retention credit because
business operations weren’t fully or partially suspended due
to a governmental order or because gross receipts (within the
meaning of section 448(c) or, if you're a tax-exempt
organization, section 6033) weren’t less than 80% of the
gross receipts for the same calendar quarter in calendar year
2019.

DRAFT AS OF
December 21, 2021
The nonrefundable portion of the credit is limited to the
Tier 1 Employer Medicare tax (line 2) and Tier 1 Employer
Medicare tax—Sick pay (line 9). You can't claim the credit if
you provide the leave in a manner that discriminates in favor
of highly compensated employees, full-time employees, or
employees on the basis of employment tenure when making
qualified sick and/or family leave available to employees.
See Highly compensated employee, later, for the definition.

For qualified sick and family leave compensation paid
before July 1, 2021, for leave taken after March 31, 2021,
and before July 1, 2021, the credit for qualified sick and
family leave compensation is reduced by the amount of the
credit allowed under section 2301 of the CARES Act (for the
employee retention credit) or under section 41 (for the credit
for increasing research activities) with respect to
compensation taken into account for determining the credit
under section 2301 of the CARES Act or section 41 and the
credit for qualified sick and family leave compensation; and
any compensation taken into account in determining the
credit for qualified sick and family leave compensation can't
be taken into account as compensation for purposes of the
credits under sections 45A, 45P, 45S, and 51. For leave
taken after June 30, 2021, the credit for qualified sick and
family leave compensation is reduced by the amount of the
credit allowed under section 41 (for the credit for increasing
research activities) with respect to compensation taken into
account for determining the credit for qualified sick and family
leave compensation; and any compensation taken into
account in determining the credit for qualified sick and family
leave compensation can't be taken into account as
compensation for purposes of the credits under sections
45A, 45P, 45S, 51, and 3134. For leave taken after March
31, 2021, and before October 1, 2021, qualified
compensation also doesn't include compensation that was
used as payroll costs in connection with a Shuttered Venue
Operator Grant under section 324 of the Economic Aid to
Hard-Hit Small Businesses, Nonprofits, and Venues Act.
Employers can receive both a Small Business Interruption
Loan under the PPP and the credit for qualified sick and
family leave compensation; however, employers can't
receive both loan forgiveness and a credit for the same
compensation. The same compensation can't be treated as
both qualified sick leave compensation and qualified family
leave compensation.

Line 17b—Nonrefundable Portion of
Credit for Qualified Sick and Family
Leave Compensation for Leave Taken
After March 31, 2021, and Before
October 1, 2021

Employers with fewer than 500 employees and certain
governmental employers without regard to number of
employees (except for the federal government and its
agencies and instrumentalities unless described in section
501(c)(1)) are entitled to a credit if they provide paid sick
leave to employees that otherwise meets the requirements of
the EPSLA, as amended for purposes of the ARP, and/or
provide paid family leave to employees that otherwise meets
the requirements under the Expanded FMLA, as amended
for purposes of the ARP, for qualified sick and family leave
compensation for leave taken after March 31, 2021, and
before October 1, 2021. For purposes of this credit, qualified
sick leave compensation and qualified family leave
compensation are compensation determined without regard
to the exclusions from the definition of employment under
section 3231(e)(1), that an employer pays that otherwise
meet the requirements of the EPSLA or Expanded FMLA, as
enacted under the FFCRA and amended for purposes of the
ARP. Enter the nonrefundable portion of the credit for
qualified sick and family leave compensation from Worksheet
3, Step 2, line 2r.

Any credit in excess of the remaining amount of the Tier 1
Employer Medicare tax (line 2) and Tier 1 Employer
Medicare tax—Sick pay (line 9) is refundable and reported
on Form CT-1, line 24b. For more information on the credit
for qualified sick and family leave compensation, go to
IRS.gov/PLC.

The credit for qualified sick and family leave
compensation consists of the:

Instructions for Form CT-1 (2021)

-15-

contribution base units, as defined by section 4001(a)(11) of
ERISA.
Allocation rules. The amount of collectively bargained
apprenticeship program contributions allocated to qualified
sick leave compensation and/or qualified family leave
compensation during the quarter for which you’re claiming
the credit is the apprenticeship program contribution rate
(expressed as an hourly rate) multiplied by the number of
hours qualified sick leave compensation and/or qualified
family leave compensation was provided to employees
covered under the collective bargaining agreement during
the quarter for which you’re claiming the credit.

Qualified health plan expenses allocable to qualified
sick and family leave compensation. The credit for
qualified sick leave compensation and qualified family leave
compensation is increased to cover the qualified health plan
expenses that are properly allocable to the qualified leave
compensation for which the credit is allowed. These qualified
health plan expenses are amounts paid or incurred by the
employer to provide and maintain a group health plan but
only to the extent such amounts are excluded from the
employees' income as coverage under an accident or health
plan. The amount of qualified health plan expenses generally
includes both the portion of the cost paid by the employer
and the portion of the cost paid by the employee with pre-tax
salary reduction contributions. However, qualified health plan
expenses don't include amounts that the employee paid for
with after-tax contributions. For more information, go to
IRS.gov/PLC.

DRAFT AS OF
December 21, 2021
Highly compensated employee. A highly compensated
employee is an employee who meets either of the following
tests.
1. The employee was a 5% owner at any time during the
year or the preceding year.
2. The employee received more than $130,000 in pay for
the preceding year.

Collectively bargained defined benefit pension plan
contributions. For purposes of qualified sick and family
leave compensation, collectively bargained defined benefit
pension plan contributions are contributions during the
quarter for which you’re claiming the credit that are:
• Paid or incurred by an employer on behalf of its employees
to a defined benefit plan, as defined in section 414(j), which
meets the requirements of section 401(a);
• Made based on a pension contribution rate; and
• Required to be made under the terms of a collective
bargaining agreement in effect during the quarter for which
you’re claiming the credit.
Pension contribution rate. The pension contribution rate
is the contribution rate that the employer is obligated to pay
under the terms of a collective bargaining agreement to a
defined benefit plan, as the rate is applied to contribution
base units, as defined by section 4001(a)(11) of the
Employee Retirement Income Security Act of 1974 (ERISA).
Allocation rules. The amount of collectively bargained
defined benefit pension plan contributions allocated to
qualified sick leave compensation and/or qualified family
leave compensation during the quarter for which you’re
claiming the credit is the pension contribution rate
(expressed as an hourly rate) multiplied by the number of
hours qualified sick leave compensation and/or qualified
family leave compensation was provided to employees
covered under the collective bargaining agreement during
the quarter for which you’re claiming the credit.

You can choose to ignore test (2) if the employee wasn't
also in the top 20% of employees when ranked by pay for the
preceding year.

Line 17c—Nonrefundable Portion of
COBRA Premium Assistance Credit

Enter the COBRA premium assistance that you provided for
periods of coverage beginning on or after April 1, 2021,
through periods of coverage beginning on or before
September 30, 2021. You can claim the credit for a period of
coverage once the individual elects COBRA continuation
coverage, and for any period of coverage beginning after the
election, as of the beginning of such period of coverage for
which the individual doesn't pay the premiums for the
coverage. Don't include any amount that was included as
qualified compensation for the employee retention credit or
included as qualified health plan expenses allocable to
qualified sick and family leave compensation. Enter the
nonrefundable portion of the COBRA premium assistance
credit from Worksheet 5, Step 2, line 2g. See COBRA
background next for more information about COBRA.
COBRA background. The Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) provides certain former
employees, retirees, spouses, former spouses, and
dependent children the right to temporary continuation of
health coverage at group rates. COBRA generally covers
multiemployer health plans and health plans maintained by
private-sector employers (other than churches) with 20 or
more full- and part-time employees. Parallel requirements
apply to these plans under ERISA. Under the Public Health
Service Act, COBRA requirements also apply to health plans
covering state or local government employees. Similar
requirements apply under some state laws.

Collectively bargained apprenticeship program contributions. For purposes of qualified sick and family leave
compensation, collectively bargained apprenticeship
program contributions are contributions during the quarter for
which you’re claiming the credit that are:
• Paid or incurred by an employer on behalf of its employees
to a registered apprenticeship program, which is an
apprenticeship registered under the National Apprenticeship
Act of August 16, 1937, and meets the standards of Federal
Regulations under subpart A of Part 29 and Part 30 of title 29;
• Made based on an apprenticeship program contribution
rate; and
• Required to be made under the terms of a collective
bargaining agreement in effect during the quarter for which
you’re claiming the credit.
Apprenticeship program contribution rate. The
apprenticeship program contribution rate is the contribution
rate that the employer is obligated to pay under the terms of a
collective bargaining agreement for benefits under a
registered apprenticeship program, as the rate is applied to

Line 17d—Number of Individuals
Provided COBRA Premium
Assistance

Enter the number of individuals provided COBRA premium
assistance for periods of coverage beginning on or after April
1, 2021, through periods of coverage beginning on or before
September 30, 2021. Count each assistance eligible
individual that received assistance as one individual, whether
or not the COBRA coverage was for insurance that covered

-16-

Instructions for Form CT-1 (2021)

The Infrastructure Act amends section 3134 of the
Internal Revenue Code, as enacted under the ARP,
CAUTION to limit the availability of the employee retention
credit in the fourth quarter of 2021 to employers that are
recovery startup businesses, as defined in section 3134(c)
(5). Thus, for compensation paid after September 30, 2021,
and before January 1, 2022, only the compensation paid by
recovery startup businesses can be qualified compensation
as described in these instructions. See Recovery startup
business, earlier, for more information about a recovery
startup business.

more than one assistance eligible individual. For example, if
the coverage was for a former employee, spouse, and two
children, you would include one individual on line 17d.
Further, each individual is reported only once per year. For
example, an assistance eligible individual that received
assistance monthly is only reported as one individual.

!

Line 18—Total Nonrefundable Credits

DRAFT AS OF
December 21, 2021
Add lines 16, 17a, 17b, and 17c. Enter the total on line 18.

Line 19—Total Taxes After
Adjustments and Nonrefundable
Credits

Credit for qualified compensation paid after June 30,
2021, and before January 1, 2022. Enter the refundable
portion of the employee retention credit from Worksheet 4,
Step 2, line 2i. The employee retention credit is 70% of
qualified compensation for the employee retention credit paid
after June 30, 2021, and before January 1, 2022. The
refundable portion of the credit is allowed after the Tier 1
employer Medicare taxes from lines 2 and 9 are reduced to
zero by nonrefundable credits.

Subtract line 18 from line 15 and enter the result on line 19.

Line 20—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 2020 return.

Line 23—Refundable Portion of Credit
for Qualified Sick and Family Leave
Compensation for Leave Taken
Before April 1, 2021

Line 24b—Refundable Portion of
Credit for Qualified Sick and Family
Leave Compensation for Leave Taken
After March 31, 2021, and Before
October 1, 2021

Certain private employers with fewer than 500 employees
that provide paid sick leave under the EPSLA and/or provide
paid family leave under the Expanded FMLA are eligible to
claim the credit for qualified sick and family leave
compensation. Enter the refundable portion of the credit for
qualified sick and family leave compensation from Worksheet
1, Step 2, line 2k. The credit for qualified sick and family
leave compensation consists of the qualified sick leave
compensation, the qualified family leave compensation, the
qualified health plan expenses allocable to that
compensation, and the Tier 1 Employer Medicare tax
allocable to that compensation. The refundable portion of the
credit is allowed after the Tier 1 employer taxes from lines 1
and 8 are reduced to zero by nonrefundable credits.

Employers with fewer than 500 employees and certain
governmental employers without regard to number of
employees (except for the federal government and its
agencies and instrumentalities unless described in section
501(c)(1)) are entitled to a credit if they provide paid sick
leave to employees that otherwise meets the requirements of
the EPSLA, as amended for purposes of the ARP, and/or
provide paid family leave to employees that otherwise meets
the requirements under the Expanded FMLA, as amended
for purposes of the ARP, for leave taken after March 31,
2021, and before October 1, 2021. Enter the refundable
portion of the credit for qualified sick and family leave
compensation from Worksheet 3, Step 2, line 2s. The
refundable portion of the credit is allowed after the Tier 1
employer Medicare taxes from lines 2 and 9 are reduced to
zero by nonrefundable credits.

Line 24a—Refundable Portion of
Employee Retention Credit
If you complete Worksheet 2 because you paid

Line 24c—Refundable Portion of
COBRA Premium Assistance Credit

TIP qualified compensation for the employee retention

credit after December 31, 2020, and before July 1,
2021, and you also complete Worksheet 4 because you paid
qualified compensation for the employee retention credit
after June 30, 2021, and before January 1, 2022, you must
add the amounts from Worksheet 2, Step 2, line 2i, and
Worksheet 4, Step 2, line 2i, together and report the total on
Form CT-1, line 24a.

Enter the refundable portion of the COBRA premium
assistance credit from Worksheet 5, Step 2, line 2h. The
refundable portion of the credit is allowed after the Tier 1
employer Medicare taxes from lines 2 and 9 are reduced to
zero by nonrefundable credits.

Line 25—Total Deposits and
Refundable Credits

Credit for qualified compensation paid after December
31, 2020, and before July 1, 2021. Enter the refundable
portion of the employee retention credit from Worksheet 2,
Step 2, line 2i. The employee retention credit is 70% of the
qualified compensation for the employee retention credit paid
after December 31, 2020, and before July 1, 2021. The
refundable portion of the credit is allowed after the Tier 1
employer taxes from lines 1 and 8 are reduced to zero by
nonrefundable credits.

Instructions for Form CT-1 (2021)

Add lines 20, 23, 24a, 24b, and 24c. Enter the total on
line 25.

Line 26—Total Advances Received
from Filing Form(s) 7200 for the Year

Enter the total advances received from filing Form(s) 7200 for
the year. If you filed Form 7200 but you haven’t received the
advance before filing Form CT-1, don’t include that amount.
-17-

Lines 30 Through 43

Employers were eligible to file Form 7200 if they paid
qualified sick leave compensation, qualified family leave
compensation, or qualified compensation for the employee
retention credit, and/or provide COBRA premium assistance
and the amount of deposits they retained wasn’t sufficient to
cover their anticipated credits. Include on line 26 any
advance payment of the employee retention credit that you
received for the fourth quarter of 2021 even if you’re no
longer eligible for the employee retention credit because
you’re not a recovery startup business. See Advance
payment of COVID-19 credits extended, earlier, for more
information.

The amounts entered on lines 30 through 41 are
amounts that you use on the worksheets at the end
CAUTION of these instructions to figure certain credits. If you’re
claiming these credits, you must enter the applicable
amounts. Lines 42 and 43 apply only if you're eligible for the
employee retention credit in the third or fourth quarter of 2021
solely because your business is a recovery startup business.

!

DRAFT AS OF
December 21, 2021
Line 30—Qualified Sick Leave
Compensation for Leave Taken
Before April 1, 2021

Form 7200 may be filed up to the earlier of January
TIP 31, 2022, or the filing of Form CT-1 for the year.
However, if you file Form 7200 after the end of the
year, it's possible that it may not be processed prior to the
processing of the filed Form CT-1. Advance payment
requests on Form 7200 won't be paid after your Form CT-1 is
processed. When the IRS processes Form CT-1, we will
correct the amount reported on line 26 to match the amount
of advance payments issued or contact you to reconcile the
difference before we finish processing Form CT-1.

Enter the qualified sick leave compensation you paid to your
employees for leave taken before April 1, 2021, including any
qualified sick leave compensation that was above the Tier 1
compensation base and any qualified sick leave
compensation excluded from the definition of employment
under section 3231(e)(1). This amount is also entered on
Worksheet 1, Step 2 , line 2a. See the instructions for line 16
for information about the credit for qualified sick and family
leave compensation for leave taken before April 1, 2021. For
more information about qualified sick leave compensation,
go to IRS.gov/PLC.

Line 27—Total Deposits and
Refundable Credits Less Advances

Line 31—Qualified Health Plan
Expenses Allocable to Compensation
Reported on Line 30

Subtract line 26 from line 25 and enter the result on line 27.

Line 28—Balance Due

If line 19 is more than line 27, enter the difference on line 28.
Otherwise, see Line 29—Overpayment, later. You don't have
to pay if line 28 is under $1. Generally, you should have a
balance due only if your total railroad retirement taxes based
on compensation (line 19) are less than $2,500. However,
see Accuracy of Deposits Rule, earlier, regarding payments
made under the accuracy of deposits rule.

Enter the qualified health plan expenses allocable to qualified
sick leave compensation for leave taken before April 1, 2021.
This amount is also entered on Worksheet 1, Step 2, line 2b.

Line 32—Qualified Family Leave
Compensation for Leave Taken
Before April 1, 2021

If you were required to make federal tax deposits, pay the
amount shown on line 28 by EFT. If you weren't required to
make federal tax deposits or you're a monthly schedule
depositor making a payment under the accuracy of deposits
rule, you may pay the amount shown on line 28 by EFT,
check, or money order. For more information on electronic
payment options, go to IRS.gov/Payments.

Enter the qualified family leave compensation you paid to
your employees for leave taken before April 1, 2021,
including any qualified family leave compensation that was
above the Tier 1 compensation base and any qualified family
leave compensation excluded from the definition of
employment under section 3231(e)(1). This amount is also
entered on Worksheet 1, Step 2, line 2e. See the instructions
for line 16 for information about the credit for qualified sick
and family leave compensation for leave taken before April 1,
2021. For more information about qualified family leave
compensation, go to IRS.gov/PLC.

If you pay by EFT, file your return using the address under
Where To File, earlier. Don't 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 “2021” on your check or money order. Complete
Form CT-1(V) and enclose with Form CT-1.

Line 33—Qualified Health Plan
Expenses Allocable to Compensation
Reported on Line 32

Line 29—Overpayment

If line 27 is more than line 19, enter the difference on line 29.
Never make an entry on both lines 29 and 28. If line 29 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.

Enter the qualified health plan expenses allocable to qualified
family leave compensation for leave taken before April 1,
2021. This amount is also entered on Worksheet 1, Step 2,
line 2f.

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 29.
Check only one box on line 29. If you don't check either box
or if you check both boxes, generally we will apply the
overpayment to your next return. Regardless of any boxes
you check or don't check on line 29, we may apply your
overpayment to any past due tax account that is shown in our
records under your EIN.

!

CAUTION

-18-

The total amount reported on lines 34 and 35,
discussed next, can't exceed $10,000 per employee
each quarter.

Instructions for Form CT-1 (2021)

Line 34—Qualified Compensation for
the Employee Retention Credit

Line 38—Amounts Under Certain
Collectively Bargained Agreements
Allocable to Qualified Sick Leave
Compensation Reported on Line 36

Enter the qualified compensation for the employee retention
credit (excluding the amount of any qualified health plan
expenses). For qualified compensation paid after December
31, 2020, and before July 1, 2021, the applicable qualified
compensation from the total on line 34 is entered on
Worksheet 2, Step 2, line 2a. For qualified compensation
paid after June 30, 2021, and before January 1, 2022, the
applicable qualified compensation from the total on line 34 is
entered on Worksheet 4, Step 2, line 2a.

Enter the collectively bargained defined benefit pension plan
contributions and collectively bargained apprenticeship
program contributions allocable to qualified sick leave
compensation for leave taken after March 31, 2021, and
before October 1, 2021. This amount is also entered on
Worksheet 3, Step 2, line 2c.

DRAFT AS OF
December 21, 2021
Line 35—Qualified Health Plan
Expenses for the Employee Retention
Credit

Line 39—Qualified Family Leave
Compensation for Leave Taken After
March 31, 2021, and Before October
1, 2021

Enter the qualified health plan expenses for the employee
retention credit. These expenses are generally those which
are allocable to an employee (and to a period) in which your
business operations are fully or partially suspended due to a
governmental order or experience a decline in gross receipts.
The allocation will be treated as proper if made on the basis
of being pro rata among periods of coverage. For more
information, go to IRS.gov/ERC. For qualified health plan
expenses allocable to qualified compensation paid after
December 31, 2020, and before July 1, 2021, the applicable
qualified expenses from the total entered on line 35 are
entered on Worksheet 2, Step 2, line 2b. For qualified health
plan expenses allocable to qualified compensation paid after
June 30, 2021, and before January 1, 2022, the applicable
qualified expenses from the total entered on line 35 are
entered on Worksheet 4, Step 2, line 2b.

Enter the qualified family leave compensation you paid to
your employees for leave taken after March 31, 2021, and
before October 1, 2021, including any qualified family leave
compensation that was above the Tier 1 compensation base
and any qualified family leave compensation excluded from
the definition of employment under section 3231(e)(1). See
the instructions for line 17b, earlier, for more information
about qualified family leave compensation for leave taken
after March 31, 2021, and before October 1, 2021. This
amount is also entered on Worksheet 3, Step 2, line 2g.

Line 40—Qualified Health Plan
Expenses Allocable to Qualified
Family Leave Compensation
Reported on Line 39

Line 36—Qualified Sick Leave
Compensation for Leave Taken After
March 31, 2021, and Before October
1, 2021

Enter the qualified health plan expenses allocable to qualified
family leave compensation for leave taken after March 31,
2021, and before October 1, 2021. This amount is also
entered on Worksheet 3, Step 2, line 2h.

Enter the qualified sick leave compensation you paid to your
employees for leave taken after March 31, 2021, and before
October 1, 2021, including any qualified sick leave
compensation that was above the Tier 1 compensation base
and any qualified sick leave compensation excluded from the
definition of employment under section 3231(e)(1). See the
instructions for line 17b, earlier, for more information about
qualified sick leave compensation for leave taken after March
31, 2021, and before October 1, 2021. This amount is also
entered on Worksheet 3, Step 2, line 2a.

Line 41—Amounts Under Certain
Collectively Bargained Agreements
Allocable to Qualified Family Leave
Compensation Reported on Line 39

Enter the collectively bargained defined benefit pension plan
contributions and collectively bargained apprenticeship
program contributions allocable to qualified family leave
compensation for leave taken after March 31, 2021, and
before October 1, 2021. This amount is also entered on
Worksheet 3, Step 2, line 2i.

Line 37—Qualified Health Plan
Expenses Allocable to Qualified Sick
Leave Compensation Reported on
Line 36

Line 42—If You're Eligible for the
Employee Retention Credit in the
Third Quarter Solely Because Your
Business Is a Recovery Startup
Business...

Enter the qualified health plan expenses allocable to qualified
sick leave compensation for leave taken after March 31,
2021, and before October 1, 2021. This amount is also
entered on Worksheet 3, Step 2, line 2b.

Instructions for Form CT-1 (2021)

If you're eligible for the employee retention credit in the third
quarter of 2021 solely because your business is a recovery
startup business, enter the total of any amounts included on
lines 17a and 24a that are attributable to qualified

-19-

Example. Maple Co. is a monthly schedule depositor that
pays employees every Friday. In 2021, Maple Co. had pay
dates every Friday of 2021 starting January 1, 2021. Maple
Co. paid qualified sick and family leave compensation on
March 12 and March 19. The nonrefundable portion of the
credit for qualified sick and family leave compensation for the
year is $3,000. On Part II, Maple Co. will use the $3,000 to
reduce the liability for the January 1 pay date, but not below
zero. If any nonrefundable portion of the credit remains,
Maple Co. applies it to the liability for the January 8 pay date,
then the January 15 pay date, and so forth until the entire
$3,000 is used.
Nonrefundable portion of employee retention credit
for compensation paid after December 31, 2020, and
before July 1, 2021 (line 17a). The nonrefundable portion
of the employee retention credit is limited to the Tier 1
employer taxes reported on Form CT-1, lines 1 and 8, on
compensation paid during the year that is remaining after that
share is first reduced by any credit claimed on Form CT-1,
line 16, for the nonrefundable portion of the credit for
qualified sick and family leave compensation for leave taken
before April 1, 2021. In completing Part II or Form 945-A, you
take into account the nonrefundable portion of the employee
retention credit against the liability for the first payroll
payment of the year, but not below zero. Then reduce the
liability for each successive payroll payment of the year until
the nonrefundable portion of the credit is used. Any
employee retention credit that is remaining at the end of the
year because it exceeds the Tier 1 employer taxes reported
on Form CT-1, lines 1 and 8, is claimed on line 24a as a
refundable credit. The refundable portion of the credit doesn’t
reduce the liability reported on Part II or Form 945-A.

compensation paid after June 30, 2021, and before October
1, 2021.

Line 43—If You're Eligible for the
Employee Retention Credit in the
Fourth Quarter Solely Because Your
Business Is a Recovery Startup
Business...

DRAFT AS OF
December 21, 2021
Under the Infrastructure Act , you must be a recovery startup
business to claim the employee retention credit for qualified
compensation paid after September 30, 2021, and before
January 1, 2022 (fourth quarter 2021). If you're eligible for the
employee retention credit in the fourth quarter of 2021 solely
because your business is a recovery startup business, enter
the total of any amounts included on lines 17a and 24a that
are attributable to qualified compensation paid after
September 30, 2021, and before January 1, 2022.

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 19 is less than $2,500, don't
complete Part II or Form 945-A.

If you’re a monthly schedule depositor, enter your tax
liability for each month and figure the total liability for the
year. If you don't enter your tax liability for each month, the
IRS won't know when you should have made deposits and
may assess an “averaged” FTD penalty. See section 11 of
Pub. 15. If your tax liability for any month is negative, don't
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.

Example. Maple Co. is a monthly schedule depositor that
pays employees every Friday. In 2021, Maple Co. had pay
dates every Friday of 2021 starting January 1, 2021. Maple
Co. paid qualified compensation for the employee retention
credit on May 7 and May 14. The nonrefundable portion of
the employee retention credit for the year is $3,000. On Part
II, Maple Co. will use the $3,000 to reduce the liability for the
January 1 pay date, but not below zero. If any nonrefundable
portion of the credit remains, Maple Co. applies it to the
liability for the January 8 pay date, then the January 15 pay
date, and so forth until the entire $3,000 is used.

Adjusting tax liability for nonrefundable credits claimed
on lines 16, 17a, 17b, and 17c. Monthly schedule
depositors and semiweekly schedule depositors must
account for nonrefundable credits claimed on lines 16, 17a,
17b, and 17c when reporting their tax liabilities on Part II or
Form 945-A. The total tax liability for the year must equal the
amount reported on line 19. Failure to account for the
nonrefundable credits on Part II or Form 945-A may cause
Part II or Form 945-A to report more than the total tax liability
reported on line 19. Don't reduce your monthly tax liability
reported on Part II or your daily tax liability reported on Form
945-A below zero.
Nonrefundable portion of credit for qualified sick and
family leave compensation for leave taken before April
1, 2021 (line 16). The nonrefundable portion of the credit for
qualified sick and family leave compensation for leave taken
before April 1, 2021, is limited to the Tier 1 employer taxes
reported on Form CT-1, lines 1 and 8, on compensation paid
in the year. In completing Part II or Form 945-A, you take into
account the nonrefundable portion of the credit for qualified
sick and family leave compensation against the liability for
the first payroll payment of the year, but not below zero. Then
reduce the liability for each successive payroll payment of the
year until the nonrefundable portion of the credit is used. Any
credit for qualified sick and family leave compensation for
leave taken before April 1, 2021, that is remaining at the end
of the year because it exceeds the Tier 1 employer taxes
reported on Form CT-1, lines 1 and 8, is claimed on line 23
as a refundable credit. The refundable portion of the credit
doesn’t reduce the liability reported on Part II or Form 945-A.

The Infrastructure Act amends section 3134 of the
Internal Revenue Code, as enacted under the ARP,
CAUTION to limit the availability of the employee retention
credit in the fourth quarter of 2021 to employers that are
recovery startup businesses, as defined in section 3134(c)
(5). Thus, for compensation paid after September 30, 2021,
and before January 1, 2022, only the compensation paid by
recovery startup businesses can be qualified compensation
as described in these instructions. See Recovery startup
business, earlier, for more information about a recovery
startup business.

!

If you're no longer eligible to claim the employee retention
credit for the fourth quarter of 2021, but you already reduced
your employment tax deposits in anticipation of claiming the
employee retention credit for the fourth quarter of 2021, you
must deposit the amounts initially retained in anticipation of
the employee retention credit on or before the due date of the
deposit for compensation paid on December 31, 2021
(regardless of whether compensation is actually paid on that
date), based on how you choose to report the tax liability
resulting from the termination of the employee retention
credit on Form 945-A or, if a monthly schedule depositor, on
-20-

Instructions for Form CT-1 (2021)

assistance credit against the liability for the first payroll
payment but not below zero. Then reduce the liability for
each successive payroll payment of the year until the
nonrefundable portion of the credit is used. Any COBRA
premium assistance credit that is remaining at the end of the
year because it exceeds the Tier 1 employer Medicare tax
reported on Form CT-1, lines 2 and 9, is claimed on line 24c
as a refundable credit. The refundable portion of the credit
doesn't reduce the liability reported on Part II or Form 945-A.

Form CT-1, Part II. In order to obtain the relief under Notice
2021-65 and avoid an FTD penalty, employers must deposit
the amounts in accordance with the due date or dates of the
applicable day or days the tax liabilities resulting from the
termination of the employee retention credit are reported on
Form 945-A or Form CT-1, Part II, as applicable. However,
this relief doesn't apply to deposit payments that were
untimely due to any circumstance other than the change in
eligibility for the employee retention credit or to employers
who reduced deposits after December 20, 2021. See Notice
2021-65 for more information.
Nonrefundable portion of employee retention credit
for compensation paid after June 30, 2021, and before
January 1, 2022 (line 17a). The nonrefundable portion of
the employee retention credit is limited to the Tier 1 employer
Medicare tax reported on Form CT-1, lines 2 and 9, on
compensation paid during the year that is remaining after that
share is first reduced by any credit claimed on Form CT-1,
line 17b, for the nonrefundable portion of the credit for
qualified sick and family leave compensation for leave taken
after March 31, 2021. In completing Part II or Form 945-A,
you take into account the nonrefundable portion of the
employee retention credit against the liability for the first
payroll payment of the year, but not below zero. Then reduce
the liability for each successive payroll payment of the year
until the nonrefundable portion of the credit is used. Any
employee retention credit that is remaining at the end of the
year because it exceeds the Tier 1 employer Medicare tax
reported on Form CT-1, lines 2 and 9, is claimed on line 24a
as a refundable credit. The refundable portion of the credit
doesn't reduce the liability reported on Part II or Form 945-A.
Nonrefundable portion of credit for qualified sick and
family leave compensation for leave taken after March
31, 2021, and before October 1, 2021 (line 17b). The
nonrefundable portion of the credit for qualified sick and
family leave compensation for leave taken after March 31,
2021, and before October 1, 2021, is limited to the Tier 1
employer Medicare tax reported on Form CT-1, lines 2 and 9,
on compensation paid during the year. In completing Part II
or Form 945-A, you take into account the nonrefundable
portion of the credit for qualified sick and family leave
compensation against the liability for the first payroll payment
of the year, but not below zero. Then reduce the liability for
each successive payroll payment of the year until the
nonrefundable portion of the credit is used. Any credit for
qualified sick and family leave compensation for leave taken
after March 31, 2021, and before October 1, 2021, that is
remaining at the end of the year because it exceeds the Tier
1 employer Medicare tax reported on Form CT-1, lines 2 and
9, is claimed on line 24b as a refundable credit. The
refundable portion of the credit doesn't reduce the liability
reported on Part II or Form 945-A.
Nonrefundable portion of COBRA premium
assistance credit (line 17c). The nonrefundable portion of
the COBRA premium assistance credit is limited to the Tier 1
employer Medicare tax reported on Form CT-1, lines 2 and 9,
on compensation paid during the year that is remaining after
that share is first reduced by any credit claimed on Form
CT-1, line 17b, for the nonrefundable portion of the credit for
qualified sick and family leave compensation for leave taken
after March 31, 2021, and before October 1, 2021; and/or
any credit claimed on Form CT-1, line 17a, for the
nonrefundable portion of the employee retention credit for
compensation paid after June 30, 2021, and before January
1, 2022. In completing Part II or Form 945-A, you take into
account the nonrefundable portion of the COBRA premium

DRAFT AS OF
December 21, 2021

Instructions for Form CT-1 (2021)

You may reduce your deposits by the amount of the

TIP nonrefundable and refundable portions of the credit

for qualified sick and family leave compensation, the
nonrefundable and refundable portions of the employee
retention credit, and the nonrefundable and refundable
portions of the COBRA premium assistance credit, as
discussed earlier under Reducing your deposits for
COVID-19 credits.

!

The amount shown on line V must equal the amount
shown on line 19.

CAUTION

If you’re 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. Don't complete lines I–V if you file Form 945-A.
The $100,000 tax liability threshold requiring a next-day
deposit is determined before you consider any reduction of
your liability for nonrefundable credits. For more information,
including an example, see frequently asked question 17 at
IRS.gov/ETD.

Third-Party Designee

If you want to allow an employee of your business, a return
preparer, or another third party to discuss your 2021 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 “Yes” you authorize the IRS to talk to the
person you named (your designee) about any questions we
may have while we process your return. You also authorize
your designee to do all of the following.
• Give us any information that is missing from your return.
• Call us 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 won't send notices to your designee.
You’re 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.
The authorization will automatically expire 1 year from the
due date (without regard to extensions) for filing your 2021
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.

Who Must Sign

The following persons are authorized to sign the return for
each type of business entity.
• 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 sign.
-21-

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

the preparer was paid to prepare Form CT-1 and isn't 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're a paid preparer, enter your Preparer Tax
Identification Number (PTIN) in the space provided. Include
your complete address. If you work for a firm, enter the firm's
name and the EIN of the firm. You can apply for a PTIN
online or by filing Form W-12. For more information about
applying for a PTIN online, go to IRS.gov/PTIN. You can't use
your PTIN in place of the EIN of the tax preparation firm.

DRAFT AS OF
December 21, 2021
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,
2005-28 I.R.B. 82, available at IRS.gov/irb/
2005-28_IRB#RP-2005-39.

Generally, you’re not required to complete this section if
you’re filing the return as a reporting agent and have a valid
Form 8655 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.

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

-22-

Instructions for Form CT-1 (2021)

Worksheet 1. Credit for Qualified Sick and Family Leave
Compensation for Leave Taken Before April 1, 2021

Keep for Your Records

Determine how you will complete this worksheet
If you paid qualified sick leave compensation and/or qualified family leave compensation for leave taken before April 1, 2021, complete Step 1
and Step 2. Caution: Use Worksheet 3 to figure the credit for qualified sick and family leave compensation for leave taken after March 31, 2021,
and before October 1, 2021.

DRAFT AS OF
December 21, 2021
Step 1.

1b

Figure the Tier 1 Employer Tax
Enter the amount from Form CT-1, line 1 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . 1a
Enter the amount from Form CT-1, line 8 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . 1b

1c

Tier 1 Employer tax. Add lines 1a and 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1a

Step 2.

2a

2a(i)

2a(ii)
2b
2c
2d
2e
2e(i)

2e(ii)
2f
2g
2h
2i
2j

2k

1c

Figure the credit for qualified sick and family leave compensation
Qualified sick leave compensation reported on Form CT-1, line 30 . . . . . . . . . . . . . . 2a
Enter the amount, if any, included on line 2a that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 2a(i)
Subtract line 2a(i) from line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(ii)

Qualified health plan expenses allocable to qualified sick leave compensation
reported on Form CT-1, line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
Tier 1 Employer Medicare tax on qualified sick leave compensation. Multiply line 2a(ii)
by 1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
Credit for qualified sick leave compensation. Add lines 2a, 2b, and 2c . . . . . . . .

2d

Qualified family leave compensation reported on Form CT-1, line 32 . . . . . . . . . . . . . 2e
Enter the amount, if any, included on line 2e that is compensation excluded from the
2e(i)
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2e(i) from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e(ii)
Qualified health plan expenses allocable to qualified family leave compensation
reported on Form CT-1, line 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
Tier 1 Employer Medicare tax on qualified family leave compensation. Multiply
line 2e(ii) by 1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
Credit for qualified family leave compensation. Add lines 2e, 2f, and 2g . . . . . . .
Credit for qualified sick and family leave compensation. Add lines 2d
and 2h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonrefundable portion of credit for qualified sick and family leave
compensation for leave taken before April 1, 2021. Enter the smaller of line 1c or
line 2i. Enter this amount on Form CT-1, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable portion of credit for qualified sick and family leave compensation
for leave taken before April 1, 2021. Subtract line 2j from line 2i and enter this
amount on Form CT-1, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Instructions for Form CT-1 (2021)

-23-

2h
2i

2j

2k

Worksheet 2. Employee Retention Credit for Qualified
Compensation Paid After December 31, 2020, and Before July 1,
2021

Keep for Your Records

Determine how you will complete this worksheet.
If you paid qualified compensation after December 31, 2020, and before July 1, 2021, for purposes of the employee retention credit, complete Step 1
and Step 2. If you're claiming a credit for qualified sick and family leave compensation for leave taken before April 1, 2021, complete Worksheet 1
before starting this worksheet. Caution: Use Worksheet 4 to figure the employee retention credit for qualified compensation paid after June 30, 2021,
and before January 1, 2022.

DRAFT AS OF
December 21, 2021
Step 1.

1a

1b
1c
1d

Step 2.

2a

2b

2c
2d
2e
2f
2g
2h
2i

Figure the Tier 1 Employer Tax
If you completed Worksheet 1 to claim a credit for qualified sick and family leave
compensation for leave taken before April 1, 2021, enter the amount from Worksheet 1,
Step 1, line 1c, and go to Step 2. If you’re not claiming a credit for qualified sick and family
leave compensation for leave taken before April 1, 2021, continue by completing lines 1b–
1d below and then go to Step 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount from Form CT-1, line 1 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
Enter the amount from Form CT-1, line 8 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c
Tier 1 Employer tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1a

1d

Figure the employee retention credit for qualified compensation paid after December 31, 2020, and before July 1, 2021
Caution: The total amount included on lines 2a and 2b is limited to a maximum of $10,000
per employee in each of the first quarter and the second quarter of 2021 ($20,000 in total
for purposes of this worksheet)
Qualified compensation (excluding qualified health plan expenses) for the employee
retention credit for qualified compensation paid after December 31, 2020, and before July
1, 2021 (this qualified compensation is included in the total reported on Form CT-1,
line 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
Qualified health plan expenses allocable to qualified compensation for the employee
retention credit for qualified compensation paid after December 31, 2020, and before July
1, 2021 (these qualified health plan expenses are included in the total reported on Form
CT-1, line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
Add lines 2a and 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
Retention credit. Multiply line 2c by 70% (0.70) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2d
Enter the amount of the employer share of social security tax from Step 1, line 1a, or, if
applicable, Step 1, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
Enter the nonrefundable portion of the credit for qualified sick and family leave
compensation for leave taken before April 1, 2021, from Worksheet 1, Step 2,
line 2j . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
Subtract line 2f from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
Nonrefundable portion of employee retention credit. Enter the smaller of line 2d or
line 2g. Enter this amount on Form CT-1, line 17a . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h
Refundable portion of employee retention credit. Subtract line 2h from line 2d and
enter this amount on Form CT-1, line 24a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2i

-24-

Instructions for Form CT-1 (2021)

Worksheet 3. Credit for Qualified Sick and Family Leave
Compensation for Leave Taken After March 31, 2021, and Before
October 1, 2021

Keep for Your Records

Determine how you will complete this worksheet.
If you paid qualified sick leave compensation and/or qualified family leave compensation for leave taken after March 31, 2021, and before October 1,
2021, complete Step 1 and Step 2. Caution: Use Worksheet 1 to figure the credit for qualified sick and family leave compensation for leave taken
before April 1, 2021.

DRAFT AS OF
December 21, 2021
Step 1.

Step 2.

1a
1b
1c
2a

2a(i)

2a(ii)
2a(iii)

2a(iv)
2b
2c
2d
2e
2f
2g
2g(i)
2g(ii)
2g(iii)

2g(iv)
2h
2i
2j
2k
2l
2m
2n

2o
2p
2q
2r
2s

Figure the Tier 1 Employer Medicare Tax
Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1a
Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
Tier 1 Employer Medicare tax. Add lines 1a and 1b . . . . . . . . . . . . . . . . . . . . . . . . . .

Figure the credit for qualified sick and family leave compensation
Qualified sick leave compensation for leave taken after March 31, 2021, and before
October 1, 2021 (Form CT-1, line 36) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount, if any, included on line 2a that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2a(i) from line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount, if any, included on line 2a that was not included as compensation on
Form CT-1, lines 1, 4, 8, and 10, because the qualified sick leave compensation was
limited by the Tier 1 compensation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2a(iii) from line 2a(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified health plan expenses allocable to qualified sick leave compensation taken after
March 31, 2021, and before October 1, 2021 (Form CT-1, line 37) . . . . . . . . . . . . . . . . .
Amounts under certain collectively bargained agreements allocable to qualified sick leave
compensation for leave taken after March 31, 2021, and before October 1, 2021 (Form
CT-1, line 38) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 Employer tax on qualified sick leave compensation. Multiply line 2a(iv) by 6.2%
(0.062) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 Employer Medicare tax on qualified sick leave compensation. Multiply line 2a(ii) by
1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit for qualified sick leave compensation. Add lines 2a, 2b, 2c, 2d and 2e . . . . . .
Qualified family leave compensation for leave taken after March 31, 2021, and before
October 1, 2021 (Form CT-1, line 39) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount, if any, included on line 2g that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2g(i) from line 2g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount, if any, included on line 2g that was not included as compensation on
Form CT-1, lines 1, 4, 8, and 10, because the qualified family leave compensation was
limited by the Tier 1 compensation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2g(iii) from line 2g(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified health plan expenses allocable to qualified family leave compensation taken after
March 31, 2021, and before October 1, 2021 (Form CT-1, line 40) . . . . . . . . . . . . . . . . .
Amounts under certain collectively bargained agreements allocable to qualified family
leave compensation for leave taken after March 31, 2021, and before October 1, 2021
(Form CT-1, line 41) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 Employer tax on qualified family leave compensation. Multiply line 2g(iv) by 6.2%
(0.062) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier 1 Employer Medicare tax on qualified family leave compensation. Multiply line 2g(ii) by
1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit for qualified family leave compensation. Add lines 2g, 2h, 2i, 2j, and 2k . . . . .
Credit for qualified sick and family leave compensation. Add lines 2f and 2l . . . . . . .
Enter any employee retention credit claimed under section 2301 of the CARES Act (from
Worksheet 2, line 2d) with respect to qualified compensation paid after March 31, 2021,
and before July 1, 2021, that was also taken into account for the credit for qualified sick
and family leave compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter any credit claimed under section 41 for increasing research activities with respect to
any compensation taken into account for the credit for qualified sick and family leave
compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add lines 2n and 2o . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit for qualified sick and family leave compensation after adjusting for other
credits. Subtract line 2p from line 2m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonrefundable portion of credit for qualified sick and family leave compensation
for leave taken after March 31, 2021, and before October 1, 2021. Enter the smaller of
line 1c or line 2q. Enter this amount on Form CT-1, line 17b . . . . . . . . . . . . . . . . . . . . . .
Refundable portion of credit for qualified sick and family leave compensation for
leave taken after March 31, 2021, and before October 1, 2021. Subtract line 2r from
line 2q and enter this amount on Form CT-1, line 24b . . . . . . . . . . . . . . . . . . . . . . . . . .

Instructions for Form CT-1 (2021)

-25-

1c

2a

2a(i)
2a(ii)

2a(iii)
2a(iv)
2b
2c
2d
2e

2f
2g
2g(i)
2g(ii)
2g(iii)
2g(iv)
2h
2i
2j
2k
2l
2m

2n
2o
2p
2q
2r
2s

Worksheet 4. Employee Retention Credit for Qualified
Compensation Paid After June 30, 2021, and before January 1,
2022

Keep for Your Records

Determine how you will complete this worksheet.
If you paid qualified compensation after June 30, 2021, and before January 1, 2022, for purposes of the employee retention credit, complete Step 1 and
Step 2. If you're claiming a credit for qualified sick and family leave compensation for leave taken after March 31, 2021, complete Worksheet 3 before
starting this worksheet. Caution: Use Worksheet 2 to figure the employee retention credit for qualified compensation paid after December 31, 2020,
and before July 1, 2021.

DRAFT AS OF
December 21, 2021
Step 1.

1a

1b
1c
1d

Step 2.

2a

2b

2c
2d

2e
2f
2g
2h
2i

Figure the Tier 1 Employer Medicare Tax
If you completed Worksheet 3 to claim a credit for qualified sick and family leave
compensation for leave taken after March 31, 2021, enter the amount from Worksheet 3,
Step 1, line 1c, and go to Step 2. If you’re not claiming a credit for qualified sick and family
leave compensation for leave taken after March 31, 2021, continue by completing lines 1b–
1d below and then go to Step 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c
Tier 1 Employer Medicare tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . .

1a

1d

Figure the employee retention credit for qualified compensation paid after June 30, 2021, and before January 1, 2022
Caution: Under the Infrastructure Act, you must be a recovery startup business to claim
the employee retention credit for qualified compensation paid after September 30, 2021,
and before January 1, 2022 (fourth quarter 2021). The total amount included on lines 2a
and 2b is limited to a maximum of $10,000 per employee in each of the third quarter and
the fourth quarter of 2021 ($20,000 in total for purposes of this worksheet).
Qualified compensation (excluding qualified health plan expenses) for the employee
retention credit for qualified compensation paid after June 30, 2021, and before January 1,
2022 (this qualified compensation is included in the total reported on Form CT-1,
line 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
Qualified health plan expenses allocable to qualified compensation for the employee
retention credit for qualified compensation paid after June 30, 2021, and before January 1,
2022 (these qualified health plan expenses are included in the total reported on Form
CT-1, line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
Add lines 2a and 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
Retention credit. Multiply line 2c by 70% (0.70). If you qualify for the employee retention
credit solely because your business is a recovery startup business, don't enter more than
$50,000 for each of the third quarter and the fourth quarter of 2021 ($100,000 in total for
the year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2d
Enter the amount of the Tier 1 Employer Medicare tax from Step 1, line 1a, or, if applicable,
Step 1, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
Enter the amount of the nonrefundable portion of the credit for qualified sick and family
leave compensation for leave taken after March 31, 2021, from Worksheet 3, Step 2,
line 2r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
Subtract line 2f from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
Nonrefundable portion of employee retention credit. Enter the smaller of line 2d or
line 2g. Enter this amount on Form CT-1, line 17a . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2h
Refundable portion of employee retention credit. Subtract line 2h from line 2d and
enter this amount on Form CT-1, line 24a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2i

-26-

Instructions for Form CT-1 (2021)

Keep for Your Records

Worksheet 5. COBRA Premium Assistance Credit

Determine how you will complete this worksheet.
If you provided COBRA premium assistance, complete Step 1 and Step 2. If you’re claiming the credit for qualified sick and family leave compensation
for leave taken after March 31, 2021, complete Worksheet 3 before starting this worksheet. If you’re also claiming an employee retention credit for
qualified compensation paid after June 30, 2021, and before January 1, 2022, complete Worksheet 4 before starting this worksheet.
Step 1.

1c

Figure the Tier 1 Employer Medicare Tax
If you completed Worksheet 3 or Worksheet 4, enter the amount from Worksheet 3, Step
1, line 1c, or Worksheet 4, line 1a or 1d (as applicable). If you’re not claiming either of
these credits this year, continue by completing lines 1b–1d below and then go to Step
2 ................................................................
Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c

1d

Tier 1 Employer Medicare tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . .

DRAFT AS OF
December 21, 2021
1a

1b

Step 2.

2a

2b
2c

2d
2e
2f
2g
2h

Figure the COBRA premium assistance credit
Enter the COBRA premium assistance that you provided for periods of coverage beginning
on or after April 1, 2021, through periods of coverage beginning on or before September
30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount of the Tier 1 Employer Medicare tax from Step 1, line 1a, or, if applicable,
Step 1, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount of the nonrefundable portion of the credit for qualified sick and family
leave compensation for leave taken after March 31, 2021, from Worksheet 3, Step 2,
line 2r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the amount of the nonrefundable portion of the employee retention credit from
Worksheet 4, Step 2, line 2h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other nonrefundable credits used against the Tier 1 Employer Medicare tax. Add
lines 2c and 2d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2e from line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonrefundable portion of the COBRA premium assistance credit. Enter the smaller
of line 2a or line 2f. Enter this amount on Form CT-1, line 17c . . . . . . . . . . . . . . . . . . . . .
Refundable portion of the COBRA premium assistance credit. Subtract line 2g from
line 2a and enter this amount on Form CT-1, line 24c . . . . . . . . . . . . . . . . . . . . . . . . . . .

Instructions for Form CT-1 (2021)

-27-

1a

1d

2a

2b

2c
2d
2e
2f
2g
2h