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Compensation column. If you are a railroad employer paying

Specific Instructions

your employees sick pay, or a third-party payer who did not

notify the employer of the payments (thereby subject to the

Final return. If you stop paying taxable compensation and

employee and employer tax), make entries on lines 7

will not have to file Form CT-1 in the future, you must file a

through 10. If you are subject to only the employer or

final return and check the Final return box at the top of Form

employee tax, complete only the applicable lines. Multiply by

CT-1 under “2004.”

the appropriate rates and enter the results in the Tax

column.

Processing of your return may be delayed if you do

not provide the required amounts in the

Line 12. Adjustments to Taxes Based

Compensation and Tax columns.

CAUTION

on Compensation

Line 1. Tier I Employer Tax

Enter on line 12:

•

Enter the compensation (other than tips and sick pay)

A sick pay adjustment,

•

subject to Tier I employer tax in the Compensation column.

A fractions of cents adjustment (see Fractions of cents

Do not enter more than $87,900 per employee. Multiply by

below),

•

6.2% and enter the result in the Tax column.

Corrections of underpayments or overpayments of taxes

reported on prior year returns, including any adjustments

Line 2. Tier I Employer Medicare Tax

resulting from an audit by the RRB, and

•

Credits for overpayments of penalty or interest paid on tax

Enter the compensation (other than tips and sick pay)

for earlier years.

subject to Tier I employer Medicare tax in the Compensation

column. Multiply by 1.45% and enter the result in the Tax

Enter the total of these adjustments in the Tax column. If

column.

you are reporting both an addition and a subtraction, enter

only the difference between the two on line 12. If the net

Line 3. Tier II Employer Tax

adjustment is a subtraction, enclose the amount on line 12

in parentheses, if possible.

Enter the compensation (other than tips) subject to Tier II

employer tax in the Compensation column. Do not enter

Do not include on line 12 the 2003 overpayment that is

more than $65,100 per employee. Multiply by 13.1% and

applied to this year’s return (this is included on line 14).

enter the result in the Tax column.

Required statement. Except for adjustments for fractions

Line 4. Tier I Employee Tax

of cents, explain amounts entered on line 12 in a separate

statement. Include your name, employer identification

Enter the compensation, including tips reported, subject to

number, calendar year of the return, and “Form CT-1” on

Tier I employee tax in the Compensation column. Do not

each page you attach. Include in the statement the following

enter more than $87,900 per employee. Multiply by 6.2%

information:

and enter the result in the Tax column.

•

An explanation of the item the adjustment is intended to

Stop collecting the 6.2% Tier I employee tax when the

correct showing the compensation subject to Tier I and

employee’s wages and tips reach the maximum for the year

Tier II taxes and their respective tax rates.

•

($87,900 for 2004). However, your liability for Tier I

The year(s) to which the adjustment relates.

•

employer tax on compensation continues until the

The amount of the adjustment for each year.

•

compensation, not including tips, totals $87,900 for the

The name and account number of any employee from

year.

whom employee tax was undercollected or overcollected.

•

How you and the employee have settled any

Line 5. Tier I Employee Medicare Tax

undercollection or overcollection of employee tax.

Enter the compensation, including tips reported, subject to

A timely filed return is considered to be filed on the

Tier I employee Medicare tax in the Compensation column.

TIP

last day of February of the year after the close of the

Multiply by 1.45% and enter the result in the Tax column.

tax year. Generally, adjustments for prior year

For information on reporting tips, see Tips on page 2.

returns may be made only within 3 years of that date.

Line 6. Tier II Employee Tax

Fractions of cents. If there is a difference between the

total employee tax (lines 4, 5, 6, 9, and 10) and the total

Enter the compensation, including tips reported, subject to

actually deducted (employee compensation including tips

Tier II employee tax in the Compensation column. Only the

plus the employer’s contribution) due to rounding fractions of

first $65,100 of the employee’s compensation for 2004 is

cents when collecting the tax, report the deduction or

subject to this tax. Multiply by 4.9% and enter the result in

addition on line 12.

the Tax column. For information on reporting tips, see Tips

on page 2.

If this is the only entry on line 12, you are not

TIP

required to attach a statement explaining the

Any compensation paid during the current year that

adjustment.

was earned in prior years (reported to the Railroad

Retirement Board on Form BA-4, Report of

CAUTION

Creditable Compensation Adjustments) is taxable at the

Line 13. Total Railroad Retirement

current year tax rates. Include such compensation with

Taxes Based on Compensation

current year compensation on lines 1 through 6, as

appropriate.

Combine the amounts shown on lines 11 and 12 and enter

the result on line 13.

Lines 7 Through 10. Tier I Taxes on

Sick Pay

Line 14. Total Deposits for the Year

Enter any sick pay payments during the year that are

Enter the total Form CT-1 taxes you deposited. Also, include

subject to Tier I taxes and Tier I Medicare taxes in the

any overpayment applied from your 2003 Form CT-1.

-5-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2004 Page 5

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