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Use the table below to determine which deposit schedule

Employee Taxes

to follow for 2008.

You must withhold the employee’s part of Tier I and Tier II

taxes. See the table above for the tax rates and

IF you reported taxes

THEN for 2008 you are a...

compensation bases. See Tips below for information on the

for the lookback period (2006)

employee tax on tips.

of...

Withholding or payment of employee tax by employer.

$50,000 or less

Monthly schedule depositor

You must collect the employee railroad retirement tax from

each employee by deducting it from the compensation on

More than $50,000

Semiweekly schedule depositor

which employee tax is charged. If you do not withhold the

employee tax, you must still pay the tax. If you withhold too

much or too little tax because you cannot determine the

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

correct amount, correct the amount withheld by an

both years of the lookback period are considered to be zero.

adjustment, credit, or refund according to the regulations

Therefore, you are a monthly schedule depositor for the first

relating to the RRTA.

and second years of your business. However, see $100,000

Next-Day Deposit Rule on page 4.

If you pay the railroad retirement tax for your employee

rather than withholding it, see Rev. Proc. 83-43,

Example. Employer A reported Form CT-1 taxes as

1983-1 C.B. 778, for information on how to figure and report

follows:

•

the proper amounts.

2006 Form CT-1 — $49,000

•

2007 Form CT-1 — $52,000

Tips. An employee who receives tips must report them to

you by the 10th of the month following the month the tips are

Employer A is a monthly schedule depositor for 2008

received. Tips must be reported for every month, unless the

because its Form CT-1 taxes for its lookback period

tips for the month are less than $20.

(calendar year 2006) were not more than $50,000. However,

for 2009, Employer A is a semiweekly schedule depositor

An employee must furnish you with a written (or

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

electronic) statement of tips, signed by the employee,

(calendar year 2007).

showing (a) his or her name, address, and social security

number; (b) your name and address; (c) the month or period

Adjustments and the lookback rule. To determine the

for which the statement is furnished; and (d) the total

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

amount of tips. Pub. 1244, Employee’s Daily Record of Tips

Form CT-1 taxes reported on your original return.

and Report to Employer, a booklet for daily entry of tips and

Adjustments are not used for purposes of the lookback rule.

forms to report tips to employers, is available by calling

See the instructions for Line 12 on page 5.

1-800-TAX-FORM (1-800-829-3676) or on the IRS website

Example. Employer B originally reported Form CT-1

taxes of $45,000 for the lookback period (2006).

Tips are considered to be paid at the time the employee

B discovered in March 2008 that the tax during the lookback

reports them to you. You must collect both federal income

period (2006) was understated by $10,000 and will correct

tax and employee railroad retirement tax on tips reported to

this error with an adjustment on the 2008 Form CT-1.

you from the employee’s compensation (after deduction of

B is a monthly schedule depositor for 2008 because the

employee railroad retirement and federal income tax) or

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

from other funds the employee makes available. Apply the

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

compensation or other funds first to the railroad retirement

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

tax and then to federal income tax. You do not have to pay

2008 Form CT-1 taxes.

the employer railroad retirement taxes on tips.

When To Deposit

If, by the 10th of the month after the month you received

an employee’s tip income report, you do not have enough

Monthly Schedule Depositor

employee funds available to deduct the employee tax, you

no longer have to collect it. See section 6 in

If you are a monthly schedule depositor, deposit employer

Pub. 15 (Circular E).

and employee Tier I and Tier II taxes accumulated during a

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

Depositing Taxes

Example. Employer C is a monthly schedule depositor with

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

seasonal employees. C paid wages each Friday during

schedule depositor or a semiweekly schedule depositor.

February but did not pay any wages during March. Under

Also, see the $2,500 Rule and the $100,000 Next-Day

the monthly schedule deposit rule, C must deposit the

Deposit Rule under Exceptions to the Deposit Rules on

combined taxes for the February paydays by March 15.

page 4. 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

required to make deposits.

If you are a semiweekly schedule depositor, use the table

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 to follow for depositing Tier I and Tier II taxes for a

calendar year. This is determined from the total taxes

Wednesday, Thursday, and/or

The following Wednesday

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

Friday

period. The lookback period is the second calendar year

preceding the current calendar year. For example, the

Saturday, Sunday, Monday,

The following Friday

lookback period for calendar year 2008 is calendar

and/or Tuesday

year 2006.

-3-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - Internal Revenue Service - 2007 Page 3

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