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Department of the Treasury

Internal Revenue Service

Instructions for Form CT-1

Employer’s Annual Railroad Retirement Tax Return

Section references are to the Internal Revenue Code.

When To File

What’s New for 2001?

File Form CT-1 by February 28, 2002.

Third-party designee. You can now check a box on your

return if you want to allow a designated third party to resolve

Definitions

certain issues with the IRS. See page 6 for details.

Employer and employee. The terms “employer” and

Threshold for deposit requirement increased. Beginning in

“employee” used in these instructions are defined in section

2001, the threshold for the deposit requirement has increased

3231 and in its regulations.

from $1,000 to $2,500. See $2,500 Rule on page 3 for details.

Compensation. Compensation means payment in money, or

in something that may be used instead of money, for services

Photographs of Missing Children

performed as an employee of one or more employers. It

includes payment for time lost as an employee.

The Internal Revenue Service is a proud partner with the

National Center for Missing and Exploited Children.

Group-term life insurance. Include in compensation the

Photographs of missing children selected by the Center may

cost of group-term life insurance over $50,000 you provide to

appear in instructions on pages that would otherwise be blank.

an employee. This amount is subject to Tier I, Tier I Medicare,

and Tier II taxes, but not to Federal income tax withholding.

You can help bring these children home by looking at the

Include this amount on your employee’s Form W-2, Wage and

photographs and calling 1-800-THE-LOST (1-800-843-5678) if

Tax Statement.

you recognize a child.

Former employees for whom you paid the cost of group-term

General Instructions

life insurance over $50,000 must pay the employee’s share of

these taxes with their Form 1040. You are not required to

collect those taxes. For former employees, you must include on

Purpose of Form

Form W-2 the part of compensation that consists of payments

for group-term life insurance over $50,000 and the amount of

Use this form to report taxes imposed by the Railroad

railroad retirement taxes owed by the former employee for

Retirement Tax Act (RRTA).

coverage provided after separation from service. See Pub. 15-A

for more information.

Who Must File

Timing. Compensation is considered paid when it is actually

File Form CT-1 if you paid one or more employees

paid or when it is constructively paid. It is constructively paid

compensation subject to RRTA.

when it is set apart for the employee or credited to an account

An employer that pays sick pay or a third-party payer of sick

the employee can control without any limit or condition on how

pay that is subject to Tier I railroad retirement and Medicare

and when the payment is to be made.

taxes must file Form CT-1. See Pub. 15-A, Employer’s

Any compensation paid during the current year that was

Supplemental Tax Guide, for details. However, see the

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

exceptions under the definition of compensation below. Report

rates; you must include the compensation with the current

sick pay payments on lines 11 through 14 of Form CT-1.

year’s compensation on lines 5 through 14 of Form CT-1, as

appropriate.

Disregarded entities and qualified subchapter S

Exceptions. Compensation does not include:

subsidiaries. Form CT-1 taxes for employees of a qualified

•

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

subchapter S subsidiary (QSub) or an entity disregarded as an

time the benefit is provided it is reasonable to believe the

entity separate from its owner under Regulations section

employee can exclude such benefit from income. For

301.7701-2(c)(2) may be reported and paid either:

•

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

By its owner (as if the employees of the disregarded entity

Examples of this type of benefit include:

are employed directly by the owner) using the owner’s name

1. Certain employee achievement awards under

and taxpayer identification number (TIN) or

•

section 74(c),

By each entity recognized as a separate entity under state

2. Certain scholarship and fellowship grants under

law using the entity’s own name and TIN.

section 117,

If the second method is chosen, the owner retains

3. Certain fringe benefits under section 132, and

responsibility for the employment tax obligations of the

4. Employer payments to an Archer MSA under section 220.

•

disregarded entity. For more information, see Notice 99-6,

Payments made to or on behalf of an employee or

1999-1 C.B. 321.

dependents under a sickness or accident disability plan or a

medical or hospitalization plan in connection with sickness or

accident disability. This applies to Tier II and supplemental

Where To File

annuity work-hour taxes only.

Send Form CT-1 to:

Note: For purposes of employee and employer Tier I taxes,

compensation does not include sickness or accident disability

payments made —

Internal Revenue Service Center

Kansas City, MO 64999

1. Under a workers’ compensation law,

Cat. No. 16005H

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2001 Page 2

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