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Example. Employer C is a monthly schedule depositor with

Depositing Taxes

seasonal employees. C paid wages each Friday during

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

February but did not pay any wages during March. Under

schedule depositor or a semiweekly schedule depositor.

the monthly schedule deposit rule, C must deposit the

Also, see the $2,500 rule and the $100,000 next-day deposit

combined taxes for the February paydays by March 15.

rule below. The terms “monthly schedule depositor” and

C does not have a deposit requirement for March

“semiweekly schedule depositor” identify which set of rules

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

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

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

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

Semiweekly Schedule Depositor

your business pays its employees or to how often you are

If you are a semiweekly schedule depositor, use the table

required to make deposits.

below to determine when to make deposits.

Lookback Period

Deposit Tier I and Tier II taxes

No later than...

Before each year begins, you must determine the deposit

for payments made on...

schedule you must follow for depositing Tier I and Tier II

taxes for a calendar year. This is determined from the total

Wednesday, Thursday, and/or

The following Wednesday

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

Friday

lookback period. The lookback period is the second

calendar year preceding the current calendar year. For

Saturday, Sunday, Monday,

The following Friday

example, the lookback period for calendar year 2005 is

and/or Tuesday

calendar year 2003.

Use the table below to determine which deposit schedule

The last day of the calendar year ends the

to follow for the current year.

semiweekly deposit period and begins a new one.

See Semiweekly Deposit Schedule in section 11 of

CAUTION

IF you reported taxes

THEN for 2005 you are a...

Pub. 15 (Circular E).

for the lookback period (2003)

of...

Example. Employer D, a semiweekly schedule depositor,

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

$50,000 or less

Monthly schedule depositor

is a semiweekly schedule depositor, D will deposit just once

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

More than $50,000

Semiweekly schedule depositor

deposit, however, will be made under the semiweekly

deposit schedule as follows: D’s taxes for the January 29,

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

2005 (Saturday) payday must be deposited by February 4,

the lookback period are considered to be zero for the first

2005 (Friday). Under the semiweekly deposit rule, taxes

calendar year of your business. Therefore, you are a

arising on Saturday through Tuesday must be deposited by

monthly schedule depositor for the first year of your

the following Friday.

business. However, see $100,000 next-day deposit rule

Deposits on Banking Days Only

below.

If a deposit is required to be made on a day that is a

Example. Employer A reported Form CT-1 taxes as

nonbanking day, it is considered timely if it is made by the

follows:

•

close of the next banking day. In addition to federal and

2003 Form CT-1 — $49,000

•

state bank holidays, Saturdays and Sundays are treated as

2004 Form CT-1 — $52,000

nonbanking days. For example, if a deposit is required to be

Employer A is a monthly schedule depositor for 2005

made on Friday and Friday is a nonbanking day, the deposit

because its Form CT-1 taxes for its lookback period

will be considered timely if it is made by the following

(calendar year 2003) were not more than $50,000. However,

Monday (if Monday is a banking day).

for 2006, Employer A is a semiweekly schedule depositor

Semiweekly schedule depositors will always have at least

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

3 banking days to make a deposit. If any of the 3 weekdays

(calendar year 2004).

after the end of a semiweekly period is a nonbanking day,

Adjustments and the lookback rule. To determine the

you have 1 additional day to deposit. For example, if you

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

have Form CT-1 taxes accumulated for payments made on

Form CT-1 taxes reported on your original return.

Friday and the following Monday is a nonbanking day, the

Adjustments are not used for purposes of the lookback rule.

deposit normally due on Wednesday may be made on

See the instructions for Line 12 on page 5.

Thursday (allowing 3 banking days to make the deposit).

Example. Employer B originally reported Form CT-1

Exceptions to the Deposit Rules

taxes of $45,000 for the lookback period (2003). B

The two exceptions that apply to the above deposit rules are

discovered in March 2005 that the tax during the lookback

the:

period was understated by $10,000 and will correct this error

•

$2,500 rule and

with an adjustment on the 2005 Form CT-1.

•

$100,000 next-day deposit rule.

B is a monthly schedule depositor for 2005 because the

$2,500 rule. If your total Form CT-1 taxes for the year are

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

less than $2,500 and the taxes are fully paid with a timely

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

filed Form CT-1, no deposits are required. However, if you

$50,000. The $10,000 adjustment is treated as part of the

are unsure that you will accumulate less than $2,500,

2005 Form CT-1 taxes.

deposit under the appropriate deposit rules so that you will

When To Deposit

not be subject to deposit penalties.

$100,000 next-day deposit rule. If you accumulate taxes

Monthly Schedule Depositor

of $100,000 or more on any day during a deposit period, you

If you are a monthly schedule depositor, deposit employer

must deposit the taxes by the next banking day regardless

and employee Tier I and Tier II taxes accumulated during a

of whether you are a monthly or semiweekly schedule

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

depositor.

-3-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2004 Page 3

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