Instructions For Form Ct-1 - 2011 (Page 3 of 8) in pdf

Who Must File

compensation that was subject to Tier I and Tier II tax in a

prior year. See the rules for social security, Medicare, and

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

FUTA taxes in Nonqualified Deferred Compensation Plans

compensation subject to tax under RRTA.

in Pub. 15-A.

A payer of sick pay (including a third party) must file Form

Exceptions. Compensation does not include:

CT-1 if the sick pay is subject to Tier I railroad retirement

•

Certain benefits provided to or on behalf of an employee if

taxes. Include sick pay payments on lines 7 through 10 of

at the time the benefits are provided it is reasonable to

Form CT-1. Follow the reporting procedures for sick pay

believe the employee can exclude such benefits from

reporting in section 6 of Pub. 15-A.

income. For information on what benefits are excludable,

Disregarded entities and qualified subchapter S

see Pub. 15-B. Examples of this type of benefit include:

subsidiaries. Regulations section 301.7701-2(c)(2)(iv)

1. Certain employee achievement awards under

treats eligible single-owner disregarded entities and qualified

section 74(c),

subchapter S subsidiaries (Q Subs) as separate entities for

2. Certain scholarship and fellowship grants under

employment tax purposes. Business owners can no longer

section 117,

elect to treat the related employment taxes as a liability of

3. Certain fringe benefits under section 132, and

the owner. Instead, report the employment taxes on

4. Employer payments to an Archer MSA under section

employment tax returns filed by the disregarded entity or Q

220 or health savings accounts (HSA) under section 223.

Sub. For more information, see Disregarded entities and

•

Stock transferred to an individual pursuant to the exercise

qualified subchapter S subsidiaries in the Introduction

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

section of Pub. 15 (Circular E).

under an employee stock purchase plan (as defined in

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

Where To File

individual.

•

Send Form CT-1 to:

Payments made specifically for traveling or other bona

fide and necessary expenses that meet the rules in the

Department of the Treasury

regulations under section 62.

Internal Revenue Service Center

•

Payments for services performed by a nonresident alien

Cincinnati, OH 45999-0007

temporarily present in the United States as a nonimmigrant

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

When To File

and Nationality Act.

•

File Form CT-1 by February 29, 2012.

Compensation under $25 earned in any month by an

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

Definitions

railway-labor-organization employer.

•

Payments made to or on behalf of an employee or

The terms “employer” and “employee” used in these

dependents under a sickness or accident disability plan or a

instructions are defined in section 3231 and in its

medical or hospitalization plan in connection with sickness

regulations.

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

Compensation

For purposes of employee and employer Tier I

Compensation means payment in money, or in something

taxes, compensation does not include sickness or

that may be used instead of money, for services performed

accident disability payments made:

CAUTION

as an employee of one or more employers. It includes

payment for time lost as an employee. A few exceptions are

1. Under a workers’ compensation law,

described below under Exceptions.

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

Group-term life insurance. Include in compensation the

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

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

3. Under the Railroad Retirement Act, or

to an employee. This amount is subject to Tier I and Tier II

4. More than 6 months after the calendar month the

taxes, but not to federal income tax withholding. Include this

employee last worked.

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

Statement.

Employer and Employee Taxes

Former employees for whom you paid the cost of

group-term life insurance over $50,000 must pay the

Tax Rates and Compensation Bases

employee’s share of these taxes with their Form 1040. You

are not required to collect those taxes. For former

Tax Rates

Compensation Paid in 2011

employees, you must include on Form W-2 the part of

compensation that consists of the cost of group-term life

Tier I

insurance over $50,000 and the amount of railroad

Employer: Pays 6.2% of first . . . . . . . . . . . . . . . . . . . .

$106,800

retirement taxes owed by the former employee for coverage

provided after separation from service. For more

Employee: Pays 4.2% of first . . . . . . . . . . . . . . . . . . .

$106,800

information, see section 2 of Pub. 15-B.

Tier I Medicare

Timing. Compensation is considered paid when it is

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

All

actually paid or when it is constructively paid. It is

constructively paid when it is set apart for the employee, or

Tier II

credited to an account the employee can control, without

Employer: Pays 12.1% of first . . . . . . . . . . . . . . . . . . .

$79,200

any substantial limit or condition on how and when the

payment is to be made.

Employee: Pays 3.9% of first . . . . . . . . . . . . . . . . . . .

$79,200

Any compensation paid during the current year that was

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

Employer Taxes

rates; you must include the compensation with the current

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

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

appropriate. An exception applies to nonqualified deferred

divided into two parts. The amount of compensation subject

-2-

Instructions for Form CT-1 (2011)

Instructions For Form Ct-1 - 2011 Page 3

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