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Use the table below to determine which deposit schedule to

semiweekly schedule depositor, D will deposit just once a

follow for the current year.

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

however, will be made under the semiweekly deposit schedule

IF you reported taxes

THEN for 2004 you are a...

as follows: D’s taxes for the January 31, 2004 (Saturday)

for the lookback period (2002)

payday must be deposited by February 6, 2004 (Friday). Under

of...

the semiweekly deposit rule, taxes arising on Saturday through

Tuesday must be deposited by the following Friday.

$50,000 or less

Monthly schedule depositor

Deposits on Banking Days Only

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

More than $50,000

Semiweekly schedule depositor

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

of the next banking day. In addition to Federal and state bank

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

holidays, Saturdays and Sundays are treated as nonbanking

lookback period are considered to be zero for the first calendar

days. For example, if a deposit is required to be made on Friday

year of your business. Therefore, you are a monthly schedule

and Friday is a nonbanking day, the deposit will be considered

depositor for the first year of your business.

timely if it is made by the following Monday (if Monday is a

Example. Employer A reported Form CT-1 taxes as follows:

banking day).

•

2002 Form CT-1 — $49,000

Semiweekly schedule depositors will always have at least 3

•

2003 Form CT-1 — $52,000

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

Employer A is a monthly schedule depositor for 2004

the end of a semiweekly period is a nonbanking day, you have

because its Form CT-1 taxes for its lookback period (calendar

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

year 2002) were not more than $50,000. However, for 2005,

taxes accumulated for payments made on Friday and the

Employer A is a semiweekly schedule depositor because A’s

following Monday is a nonbanking day, the deposit normally

taxes exceeded $50,000 for its lookback period (calendar

due on Wednesday may be made on Thursday (allowing 3

year 2003).

banking days to make the deposit).

Adjustments and the lookback rule. To determine the

Exceptions to the Deposit Rules

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

Two exceptions apply to the above deposit rules, the

CT-1 taxes reported on your original return. Adjustments are

•

$2,500 rule and

not used for purposes of the lookback rule. See the instructions

•

$100,000 next-day deposit rule.

for Line 12 on page 5.

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

Example. Employer B originally reported Form CT-1 taxes

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

of $45,000 for the lookback period (2002). B discovered in

CT-1, no deposits are required. However, if you are unsure that

March 2004 that the tax during the lookback period was

you will accumulate less than $2,500, deposit under the

understated by $10,000 and will correct this error with an

appropriate deposit rules so that you will not be subject to

adjustment on the 2004 Form CT-1.

deposit penalties.

B is a monthly schedule depositor for 2004 because the

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

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

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

originally reported ($45,000), which was not more than $50,000.

deposit the taxes by the next banking day regardless of

The $10,000 adjustment is treated as part of the 2004 Form

whether you are a monthly or semiweekly schedule depositor.

CT-1 taxes.

If you are a monthly schedule depositor, and you

When To Deposit

accumulate $100,000 or more on any one day during the

month, you become a semiweekly schedule depositor for the

Monthly Schedule Depositor

remainder of the calendar year and for the following year.

If you are a monthly schedule depositor, deposit employer

Once a semiweekly schedule depositor accumulates

and employee Tier I and Tier II taxes accumulated during a

$100,000 or more in a deposit period, it must stop accumulating

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

at the end of that day and begin to accumulate anew on the

Example. Employer C is a monthly schedule depositor with

next day. The following example explains this rule.

seasonal employees. C paid wages each Friday during

Example of $100,000 next-day deposit rule. Employer E

February but did not pay any wages during March. Under the

is a semiweekly schedule depositor. On Monday, E

monthly schedule deposit rule, C must deposit the combined

accumulates taxes of $110,000 and must deposit this amount

taxes for the February paydays by March 15. C does not have a

by Tuesday, the next banking day. On Tuesday, E accumulates

deposit requirement for March (due by April 15) because no

additional taxes of $30,000. Because the $30,000 is not added

wages were paid and, therefore, C does not have a tax liability

to the previous $110,000, E must deposit the $30,000 by Friday

for the month.

using the semiweekly deposit schedule.

Semiweekly Schedule Depositor

Example of $100,000 next-day deposit rule during the

first year of business. Employer F started its business on

If you are a semiweekly schedule depositor, use the table

January 31, 2004. Because this was the first year of its

below to determine when to make deposits.

business, its Form CT-1 taxes for its lookback period are

considered to be zero, and F is a monthly schedule depositor.

Deposit Tier I and Tier II taxes

No later than...

On February 6, F paid compensation for the first time and

for payments made on...

accumulated taxes of $40,000. On February 13, F paid

compensation and accumulated taxes of $60,000, bringing its

Wednesday, Thursday, and/or

The following Wednesday

total accumulated (undeposited) taxes to $100,000. Because F

Friday

accumulated $100,000 or more on February 13 (Friday), F must

deposit the $100,000 by February 17 (Tuesday), the next

Saturday, Sunday, Monday,

The following Friday

banking day. F became a semiweekly schedule depositor on

and/or Tuesday

February 17. F will be a semiweekly schedule depositor for the

rest of 2004 and for 2005.

The last day of the calendar year ends the semiweekly

Example of when $100,000 next-day deposit rule does

deposit period and begins a new one. See Semiweekly

not apply. Employer G, a semiweekly schedule depositor,

Deposit Schedule in section 11 of Circular E (Pub. 15).

CAUTION

accumulated taxes of $95,000 on a Tuesday (of a

Example. Employer D, a semiweekly schedule depositor, pays

Saturday-through-Tuesday deposit period) and accumulated

wages on the last Saturday of each month. Although D is a

$10,000 on Wednesday (of a Wednesday-through-Friday

-3-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2003 Page 3

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