Instructions For Form Ct-1 - 2016 (Page 2 of 8) in pdf

General Instructions

employee's share of these taxes with their Form 1040, U.S.

Individual Income Tax Return. You’re not required to collect

those taxes. For former employees, you must include on

Purpose of Form CT-1

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

of group-term life insurance over $50,000. You must also

These instructions give you some background information

separately report on Form W-2 the amount of railroad

about Form CT-1. They tell you who must file Form CT-1,

retirement taxes owed by the former employee for coverage

how to complete it line by line, and when and where to file it.

provided after separation from service. For more information,

Use Form CT-1 to report taxes imposed by the Railroad

see section 2 of Pub. 15-B and the General Instructions for

Retirement Tax Act (RRTA). Use Form 941, Employer's

Forms W-2 and W-3.

QUARTERLY Federal Tax Return, or, if applicable, Form

Timing. Compensation is considered paid when it is actually

944, Employer's ANNUAL Federal Tax Return, to report

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

federal income taxes withheld from your employees' wages

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

and other compensation.

account the employee can control, without any substantial

Who Must File

limit or condition on how and when the payment is to be

made.

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

compensation subject to tax under RRTA.

Any compensation paid during the current year that was

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

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

rates; you must include the compensation with the current

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

year's compensation on Form CT-1, lines 1–12, as

taxes. Include sick pay payments on lines 8–11 and, if the

appropriate. An exception applies to nonqualified deferred

withholding threshold is met, line 12 of Form CT-1. Follow the

compensation that was subject to Tier 1 and Tier 2 tax in a

reporting procedures for sick pay reporting in section 6 of

prior year. See the rules for nonqualified deferred

Pub. 15-A.

compensation plans in section 5 of Pub. 15-A.

After you file your first Form CT-1, you must file a return for

Exceptions. Compensation doesn't include the following.

each year, even if you didn’t pay taxable compensation

Certain benefits provided to or on behalf of an employee if

during the year, until you file a final return.

at the time the benefits are provided it is reasonable to

Disregarded entities and qualified subchapter S subsid-

believe the employee can exclude such benefits from

iaries (QSubs). Eligible single-owner disregarded entities

income. For information on what benefits are excludable, see

and QSubs are treated as separate entities for employment

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

tax purposes. Eligible single-member entities that haven’t

1. Certain employee achievement awards under section

elected to be taxed as corporations must report and pay

74(c),

employment taxes on compensation paid to their employees

2. Certain scholarship and fellowship grants under

using the entities' own names and EINs. See Regulations

section 117,

sections 1.1361-4(a)(7) and 301.7701-2(c)(2)(iv).

3. Certain fringe benefits under section 132, and

Where To File

4. Employer payments to an Archer MSA under section

Send Form CT-1 to:

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

Stock transferred to an individual pursuant to the exercise

Department of the Treasury

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

Internal Revenue Service Center

under an employee stock purchase plan (as defined in

Cincinnati, OH 45999-0007

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

individual.

When To File

Payments made specifically for traveling or other bona fide

and necessary expenses that meet the rules in the

File Form CT-1 by February 28, 2017.

regulations under section 62.

Definitions

Payments for services performed by a nonresident alien

temporarily present in the United States as a nonimmigrant

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

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

instructions are defined in section 3231 and in its regulations.

and Nationality Act.

Compensation under $25 earned in any month by an

Compensation

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

Compensation means payment in money, or in something

railway-labor-organization employer.

that may be used instead of money, for services performed

Exceptions for sickness or accident disability

as an employee of one or more employers. It includes

payments. For purposes of employee and employer Tier 1

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

taxes, compensation doesn't include sickness or accident

described below under Exceptions.

disability payments made to or on behalf of an employee or

dependents:

Group-term life insurance. Include in compensation the

Under a workers' compensation law,

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

Under section 2(a) of the Railroad Unemployment

an employee. This amount is subject to Tier 1 and Tier 2

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

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

injury,

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

Under the Railroad Retirement Act, or

Statement.

More than 6 months after the calendar month the

Former employees for whom you paid the cost of

employee last worked.

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

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Instructions for Form CT-1 (2016)

Instructions For Form Ct-1 - 2016 Page 2

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