Looking for a Form Ct-1 Templates? Download it for free!

Timing. Compensation is considered paid when it is

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

$65,100

actually paid or when it is constructively paid. It is

Employee: Pays 4.9% of first . . . . . . . . . . . . . . . . . . .

$65,100

constructively paid when it is set apart for the employee or

credited to an account the employee can control without any

limit or condition on how and when the payment is to be

Employer Taxes

made.

Employers must pay both Tier I and Tier II taxes. Tier I tax is

Any compensation paid during the current year that was

divided into two parts. The amount of compensation subject

earned in a prior year is taxable at the current year’s tax

to each tax is different. See the table above for the tax rates

rates; you must include the compensation with the current

and compensation bases.

year’s compensation on lines 1 through 10 of Form CT-1, as

Concurrent employment. If two or more related

appropriate.

corporations that are rail employers employ the same

Exceptions. Compensation does not include:

•

individual at the same time and pay that individual through a

Any benefit provided to or on behalf of an employee if at

common paymaster, which is one of the corporations, the

the time the benefit is provided it is reasonable to believe

corporations are considered a single employer. They have

the employee can exclude such benefit from income. For

to pay, in total, no more in railroad retirement and Medicare

information on what benefits are excludable, see Pub. 15-B.

taxes than a single employer would. See Regulations

Examples of this type of benefit include:

section 31.3121(s)-1 for more information.

1. Certain employee achievement awards under

Successor employers. Successor employers should see

section 74(c),

section 3231(e)(2)(C) and Pub. 15 (Circular E) to see if they

2. Certain scholarship and fellowship grants under

can use the predecessor’s compensation paid against the

section 117,

maximum compensation bases.

3. Certain fringe benefits under section 132, and

4. Employer payments to an Archer MSA under section

Employee Taxes

220 or Health Savings Accounts (HSA) under section 223.

•

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

Stock transferred to an individual pursuant to an exercise

taxes. See the table above for the tax rates and

of an incentive stock option (as defined in section 422(b)) or

compensation bases. See Tips below for information on the

under an employee stock purchase plan (as defined in

employee tax on tips.

section 423(b)); or the disposition of such stock by the

Withholding or payment of employee tax by employer.

individual. This provision is effective for options exercised

You must collect the employee railroad retirement tax from

after October 22, 2004.

•

each employee by deducting it from the compensation on

Payments made specifically for traveling or other bona

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

fide and necessary expenses that meet the rules in the

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

regulations under section 62.

•

much or too little tax because you cannot determine the

Payments for service performed by a nonresident alien

correct amount, correct the amount withheld by an

temporarily present in the United States as a nonimmigrant

adjustment, credit, or refund according to the regulations

under subparagraphs (F), (J), (M), or (Q) of the Immigration

relating to the RRTA.

and Nationality Act.

•

Compensation under $25 earned in any month by an

If you pay the railroad retirement tax for your employee

employee in the service of a local lodge or division of a

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

railway-labor-organization employer.

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

•

Payments made to or on behalf of an employee or

the proper amounts.

dependents under a sickness or accident disability plan or a

Tips. An employee who receives tips must report them to

medical or hospitalization plan in connection with sickness

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

or accident disability. This applies to Tier II taxes only.

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

tips for the month are less than $20.

For purposes of employee and employer Tier I

taxes, compensation does not include sickness or

An employee must furnish you with a written (or

accident disability payments made:

electronic) statement of tips, signed by the employee,

CAUTION

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

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

1. Under a workers’ compensation law,

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

2. Under section 2(a) of the Railroad Unemployment

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

Insurance Act for days of sickness due to on-the-job injury,

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

3. Under the Railroad Retirement Act, or

forms to report tips to employers, is available by calling

4. More than 6 months after the calendar month the

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

employee last worked.

Tips are considered to be paid at the time the employee

Employer and Employee Taxes

reports them to you. You must collect both income tax and

employee railroad retirement tax on tips reported to you

Tax Rates and Compensation Bases

from the employee’s compensation (after deduction of

employee railroad retirement and income tax) or from other

Tax Rates

Compensation Paid in 2004

funds the employee makes available. Apply the

compensation or other funds first to the railroad retirement

Tier I

tax and then to income tax. You do not have to pay the

employer railroad retirement taxes on tips.

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

$87,900

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

Tier I Medicare

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

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

All

employee funds available to deduct the employee tax, you

no longer have to collect it. See section 6 in Pub. 15

Tier II

(Circular E).

-2-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2004 Page 2

Related Articles

Related forms

Related Categories