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can use the predecessor’s compensation paid against the

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

maximum compensation bases.

Record of Federal Tax Liability.

Lookback Period

Employee Taxes

Before each year begins, you must determine the deposit

You must withhold the employee’s part of Tier I and Tier II

taxes. See the table on page 2 for the tax rates and

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

compensation bases. See Tips below for information on the

calendar year. This is determined from the total taxes

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

employee tax on tips.

period. The lookback period is the second calendar year

Withholding or payment of employee tax by employer.

preceding the current calendar year. For example, the

You must collect the employee railroad retirement tax from

lookback period for calendar year 2011 is calendar

each employee by deducting it from the compensation on

year 2009.

which employee tax is charged. If you do not withhold the

Use the table below to determine which deposit schedule

employee tax, you must still pay the tax. If you withhold too

much or too little tax because you cannot determine the

to follow for 2011.

correct amount, correct the amount withheld by an

IF you reported taxes

THEN for 2011 you are a...

adjustment, credit, or refund according to the applicable

for the lookback period (2009)

regulations.

of...

If you pay the railroad retirement tax for your employee

rather than withholding it, see Rev. Proc. 83-43,

$50,000 or less

Monthly schedule depositor

1983-1 C.B. 778, for information on how to figure and report

the proper amounts.

More than $50,000

Semiweekly schedule depositor

Tips. An employee who receives tips must report them to

you by the 10th of the month following the month the tips are

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

received. Tips must be reported for every month, unless the

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

tips for the month are less than $20.

Therefore, you are a monthly schedule depositor for the first

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

An employee must furnish you with a written (or

Next-Day Deposit Rule on page 4.

electronic) statement of tips, signed by the employee,

Example. Employer A reported Form CT-1 taxes as

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

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

follows:

•

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

2009 Form CT-1 — $49,000

•

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

2010 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 2011

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 at IRS.gov.

(calendar year 2009) were not more than $50,000. However,

for 2012, 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 2010).

tax and employee railroad retirement tax on tips reported to

you from the employee’s compensation (after deduction of

Adjustments and the lookback rule. To determine the

employee railroad retirement and federal income tax related

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

to the nontip compensation) or from other funds the

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

employee makes available. Apply the compensation or other

any adjustments reported on that return for prior periods.

funds first to the railroad retirement tax and then to federal

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

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

account in determining the taxes for that prior period. See

retirement taxes on tips.

the instructions for Line 12 on page 6.

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 (2009).

employee funds available to deduct the employee tax, you

B discovered in March 2011 that the tax during the lookback

no longer have to collect it. Report uncollected Tier I

period (2009) 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 2009.

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

B is a monthly schedule depositor for 2011 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

2009 taxes or 2011 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

-3-

Instructions for Form CT-1 (2010)

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2010 Page 3

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