Instructions For Form Ct-1 (2009) - Internal Revenue Service (Page 3 of 7) in pdf

An employee must furnish you with a written (or

and second years of your business. However, see $100,000

electronic) statement of tips, signed by the employee,

Next-Day Deposit Rule on page 4.

showing (a) his or her name, address, and social security

Example. Employer A reported Form CT-1 taxes as

number; (b) your name and address; (c) the month or period

follows:

for which the statement is furnished; and (d) the total

•

2008 Form CT-1 — $49,000

amount of tips. Pub. 1244, Employee’s Daily Record of Tips

•

2009 Form CT-1 — $52,000

and Report to Employer, a booklet for daily entry of tips and

Employer A is a monthly schedule depositor for 2010

forms to report tips to employers, is available by calling

because its Form CT-1 taxes for its lookback period

1-800-TAX-FORM (1-800-829-3676) or on the IRS website

(calendar year 2008) were not more than $50,000. However,

for 2011, Employer A is a semiweekly schedule depositor

Tips are considered to be paid at the time the employee

because A’s taxes exceeded $50,000 for its lookback period

reports them to you. You must collect both federal income

(calendar year 2009).

tax and employee railroad retirement tax on tips reported to

Adjustments and the lookback rule. To determine the

you from the employee’s compensation (after deduction of

amount of taxes paid for the lookback period, use only the

employee railroad retirement and federal income tax related

Form CT-1 taxes reported on your original return, including

to the nontip compensation) or from other funds the

any adjustments reported on that return for prior periods.

employee makes available. Apply the compensation or other

Adjustments to a return for a prior period are not taken into

funds first to the railroad retirement tax and then to federal

account in determining the taxes for that prior period. See

income tax. You do not have to pay the employer railroad

the instructions for Line 12 on page 5.

retirement taxes on tips.

If, by the 10th of the month after the month you received

Example. Employer B originally reported Form CT-1

an employee’s tip income report, you do not have enough

taxes of $45,000 for the lookback period (2008).

employee funds available to deduct the employee tax, you

B discovered in March 2010 that the tax during the lookback

no longer have to collect it. Report uncollected Tier I

period (2008) was understated by $10,000 and will correct

Employee tax, Tier I Employee Medicare tax, and Tier II

this error with an adjustment on Form CT-1 X filed for 2008.

Employee tax on tips on line 12. See section 6 in Pub. 15

B is a monthly schedule depositor for 2010 because the

(Circular E).

lookback period Form CT-1 taxes are based on the amount

originally reported ($45,000), which was not more than

Depositing Taxes

$50,000. The $10,000 adjustment does not affect either

For Tier I and Tier II taxes, you are either a monthly

2008 taxes or 2010 taxes. See Treasury Decision 9405 at

schedule depositor or a semiweekly schedule depositor.

Also, see the $2,500 Rule and the $100,000 Next-Day

When To Deposit

Deposit Rule under Exceptions to the Deposit Rules on

page 4. The terms “monthly schedule depositor” and

Monthly Schedule Depositor

“semiweekly schedule depositor” identify which set of rules

you must follow when a tax liability arises (for example,

If you are a monthly schedule depositor, deposit employer

when you have a payday). They do not refer to how often

and employee Tier I and Tier II taxes accumulated during a

your business pays its employees or to how often you are

calendar month by the 15th day of the following month.

required to make deposits.

Example. Employer C is a monthly schedule depositor with

If you were a monthly schedule depositor for the entire

seasonal employees. C paid wages each Friday during

year, please complete the Monthly Summary of Railroad

February but did not pay any wages during March. Under

Retirement Tax Liability in Part II of Form CT-1. If you were

the monthly schedule deposit rule, C must deposit the

a semiweekly schedule depositor during any part of the year

combined taxes for the February paydays by March 15.

or you accumulated $100,000 or more on any day during a

C does not have a deposit requirement for March

deposit period, you must complete Form 945-A, Annual

(due by April 15) because no wages were paid and,

Record of Federal Tax Liability.

therefore, C does not have a tax liability for the month.

Lookback Period

Semiweekly Schedule Depositor

Before each year begins, you must determine the deposit

If you are a semiweekly schedule depositor, use the table

schedule to follow for depositing Tier I and Tier II taxes for a

below to determine when to make deposits.

calendar year. This is determined from the total taxes

reported on your Form CT-1 for the calendar year lookback

Deposit Tier I and Tier II taxes

No later than...

period. The lookback period is the second calendar year

for payments made on...

preceding the current calendar year. For example, the

lookback period for calendar year 2010 is calendar

Wednesday, Thursday, and/or

The following Wednesday

Friday

year 2008.

Use the table below to determine which deposit schedule

Saturday, Sunday, Monday,

The following Friday

to follow for 2010.

and/or Tuesday

IF you reported taxes

THEN for 2010 you are a...

Example. Employer D, a semiweekly schedule depositor,

for the lookback period (2008)

of...

pays wages on the last Saturday of each month. Although D

is a semiweekly schedule depositor, D will deposit just once

$50,000 or less

Monthly schedule depositor

a month because D pays wages only once a month. The

deposit, however, will be made under the semiweekly

More than $50,000

Semiweekly schedule depositor

deposit schedule as follows: D’s taxes for the January 30,

2010 (Saturday), payday must be deposited by February 5,

New employer. If you are a new employer, your taxes for

2010 (Friday). Under the semiweekly deposit rule, taxes

both years of the lookback period are considered to be zero.

arising on Saturday through Tuesday must be deposited by

Therefore, you are a monthly schedule depositor for the first

the following Friday.

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Instructions for Form CT-1 (2009)

Instructions For Form Ct-1 (2009) - Internal Revenue Service Page 3

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