Purpose of Form CT-1

These instructions give you some background information about Form CT-1. They tell you who must file Form CT-1, how to complete it line by line, and when and where to file it.

Use Form CT-1 to report taxes imposed by the RRTA. Use Form 941, Employer's QUARTERLY Federal Tax Return, or, if applicable, Form 944, Employer's ANNUAL Federal Tax Return, to report federal income taxes withheld from your employees' wages and other compensation.

Who Must File

File Form CT-1 if you paid one or more employees compensation subject to tax under the RRTA.

A payer of sick pay (including a third party) must file Form CT-1 if the sick pay is subject to Tier 1 railroad retirement taxes. Include sick pay payments on lines 8–11 and, if the withholding threshold is met, line 12 of Form CT-1. Follow the reporting procedures for sick pay reporting in section 6 of Pub. 15-A.

After you file your first Form CT-1, you must file a return for each year, even if you didn’t pay taxable compensation during the year, until you file a final return.

Where To File

Send Form CT-1 to:

When To File

File Form CT-1 by February 28, 2025.

Definitions

The terms “employer” and “employee” used in these instructions are defined in section 3231 and in its regulations.

Employer and Employee Taxes

Depositing Taxes

For Tier 1 and Tier 2 taxes, you’re either a monthly schedule depositor or a semiweekly schedule depositor. However, see $2,500 Rule and $100,000 Next-Day Deposit Rule under Exceptions to the Deposit Rules ,later. The terms “monthly schedule depositor” and “semiweekly schedule depositor” identify which set of rules you must follow when a tax liability arises (for example, when you have a payday). They don't refer to how often your business pays its employees or to how often you’re required to make deposits.

If you were a monthly schedule depositor for the entire year, complete the Monthly Summary of Railroad Retirement Tax Liability in Part II of Form CT-1. If you were a semiweekly schedule depositor during any part of the year or you accumulated $100,000 or more on any day during a deposit period, you must complete Form 945-A, Annual Record of Federal Tax Liability.

Penalties and Interest

The law provides penalties for failure to file a return, late filing of a return, late payment of taxes, failure to make deposits, and late deposits unless filing and/or paying late is due to reasonable cause and not due to willful neglect. Interest is charged on taxes paid late at the rate set by law. For more information, see Pub. 15.

If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. Don't attach an explanation when you file your return.

Use Form 843 to request abatement of assessed penalties or interest. Don't request abatement of assessed penalties or interest on Form CT-1 or CT-1 X.

Final Return

If you stop paying taxable compensation and won't have to file Form CT-1 in the future, you must file a final return and check the final return box at the top of Form CT-1 under “2024.” The final return should be accompanied by a statement providing the last date on which you paid compensation that you reported on Form CT-1, the address at which the records for your Forms CT-1 will be kept, and the name of the person keeping the records. If the business has been transferred to another person, the statement should include the name and address of the transferee and the date of the transfer. If the business wasn't transferred or the transferee isn't known, the statement should so state.

Processing of your return may be delayed if you don't provide the required amounts in the Compensation and Tax columns.

Line 1—Tier 1 Employer Tax

Enter the compensation (other than tips and sick pay) subject to Tier 1 Employer tax in the Compensation column. Multiply by 6.2% and enter the result in the Tax column. The total amount listed in the Compensation column for lines 1 and 8 combined may not be more than $168,600 per employee.

Line 2—Tier 1 Employer Medicare Tax

Enter the compensation (other than tips and sick pay) subject to Tier 1 Employer Medicare tax in the Compensation column. Multiply by 1.45% and enter the result in the Tax column.

Line 3—Tier 2 Employer Tax

Enter the compensation (other than tips) subject to Tier 2 Employer tax in the Compensation column. Don't enter more than $125,100 per employee. Multiply by 13.1% and enter the result in the Tax column.

Line 4—Tier 1 Employee Tax

Enter the compensation, including tips reported (but excluding sick pay), subject to Tier 1 Employee tax in the Compensation column. Multiply by 6.2% and enter the result in the Tax column. The total amount listed in the Compensation column for lines 4 and 10 combined may not be more than $168,600 per employee.

Stop collecting the 6.2% Tier 1 Employee tax when the employee's compensation (including sick pay) and tips reach the maximum for the year ($168,600 for 2024). However, your liability for Tier 1 Employer tax on compensation continues until the compensation paid in 2024 (including sick pay), but not including tips, totals $168,600 for the year.

Line 5—Tier 1 Employee Medicare Tax

Enter the compensation, including tips reported (but excluding sick pay), subject to Tier 1 Employee Medicare tax in the Compensation column. Multiply by 1.45% and enter the result in the Tax column. For information on reporting tips, see Tips, earlier.

Line 6—Tier 1 Employee Additional Medicare Tax Withholding

Enter the compensation, including tips reported (but excluding sick pay), that is subject to Tier 1 Employee Additional Medicare Tax withholding. You’re required to begin withholding Tier 1 Employee Additional Medicare Tax in the pay period in which you pay compensation in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Tier 1 Employee Additional Medicare Tax is only imposed on the employee. There is no employer share of Tier 1 Additional Medicare Tax. All compensation (including sick pay) that is subject to Tier 1 Medicare tax is subject to Tier 1 Employee Additional Medicare Tax if paid in excess of the $200,000 withholding threshold.

Go to IRS.gov/ADMTfaqs for more information on Tier 1 Employee Additional Medicare Tax.

Line 7—Tier 2 Employee Tax

Enter the compensation, including tips reported, subject to Tier 2 Employee tax in the Compensation column. Only the first $125,100 of the employee's compensation (including tips) is subject to this tax. Multiply by 4.9% and enter the result in the Tax column. For information on reporting tips, see Tips , earlier.

Any compensation paid during the current year that was earned in prior years (reported to the RRB on Form BA-4, Report of Creditable Compensation Adjustments) is taxable at the current year tax rates, unless special timing rules for nonqualified deferred compensation apply. See Pub.15-A. Include such compensation with current year compensation on lines 1–7, as appropriate.

Lines 8–12—Tier 1 Taxes on Sick Pay

Enter any sick pay payments during the year that are subject to Tier 1 taxes, Tier 1 Medicare taxes, and Tier 1 Employee Additional Medicare Tax withholding in the Compensation column. Multiply by the rate for the line and enter the result in the Tax column for that line. For Tier 1 Employer taxes, the total amount listed in the Compensation column for lines 1 and 8 combined may not be more than $168,600 per employee. For Tier 1 Employee taxes, the total amount listed in the Compensation column for lines 4 and 10 combined may not be more than $168,600 per employee. Tier 1 Medicare taxes aren't subject to a dollar limitation.

All compensation (including sick pay) that is subject to Tier 1 Medicare tax is subject to Tier 1 Employee Additional Medicare Tax if paid in excess of the $200,000 withholding threshold.

If you’re a railroad employer paying your employees sick pay, or a third-party payer who didn't notify the employer of the payments (thereby subject to the employee and employer taxes), make entries on lines 8–12. If you’re subject to only the employer or employee tax, complete only the applicable lines. Multiply by the appropriate rates and enter the results in the Tax column.

Line 13—Total Tax Based on Compensation

Add lines 1 through 12 and enter the result on line 13.

Line 14—Adjustments to Taxes Based on Compensation

Don't use line 14 for prior period adjustments. Make all prior period adjustments on Form CT-1 X.

Enter on line 14:

Enter the total of these adjustments in the Tax column. If you’re reporting both an addition and a subtraction, enter only the difference between the two on line 14. If the net adjustment is negative, report the amount on line 14 using a minus sign, if possible. If your computer software doesn't allow the use of minus signs, you may use parentheses.

Don't include on line 14 any 2023 overpayment that is applied to this year's return (this is included on line 16).

Line 15—Total Railroad Retirement Taxes Based on Compensation

Combine the amounts shown on lines 13 and 14 and enter the result on line 15.

Line 16—Total Deposits for the Year

Enter the total Form CT-1 deposits for the year, including any overpayment that you applied from filing Form CT-1 X and any overpayment that you applied from your 2023 return.

Line 17—Balance Due

If line 15 is more than line 16, enter the difference on line 17. Otherwise, see the instructions for line 18, later. You don't have to pay if line 17 is under $1. Generally, you should have a balance due only if your total railroad retirement taxes based on compensation (line 15) are less than $2,500. However, see Accuracy of deposits rule , earlier, regarding payments made under the accuracy of deposits rule.

If you were required to make federal tax deposits, pay the amount shown on line 17 by EFT. If you weren't required to make federal tax deposits or you're a monthly schedule depositor making a payment under the accuracy of deposits rule, you may pay the amount shown on line 17 by EFT, check, or money order. For more information on electronic payment options, go to IRS.gov/Payments.

If you pay by EFT, file your return using the address under Where To File , earlier. Don't file Form CT-1(V), Payment Voucher. If you pay by check or money order, make it payable to “United States Treasury.” Enter your EIN, “Form CT-1,” and “2024” on your check or money order. Complete Form CT-1(V) and enclose with Form CT-1.

Line 18—Overpayment

If line 16 is more than line 15, enter the difference on line 18. Never make an entry on both lines 18 and 17. If line 18 is less than $1, we will send you a refund or apply it to your next return only if you ask us in writing to do so.

If you deposited more than the correct amount for the year, you can have the overpayment refunded or applied to your next return by checking the appropriate box on line 18. Check only one box on line 18. If you don't check either box or if you check both boxes, generally we will apply the overpayment to your next return. Regardless of any boxes you check or don't check on line 18, we may apply your overpayment to any past due tax account that is shown in our records under your EIN.

Part II. Record of Railroad Retirement Tax Liability

This is a summary of your yearly tax liability, not a summary of deposits made. If line 15 is less than $2,500, don't complete Part II or Form 945-A.

If you’re a monthly schedule depositor, enter your tax liability for each month and figure the total liability for the year. If you don't enter your tax liability for each month, the IRS won't know when you should have made deposits and may assess an “averaged” FTD penalty. See section 11 of Pub. 15. If your tax liability for any month is negative, don't enter a negative amount for the month. Instead, enter zero for the month and subtract that negative amount from your tax liability for the next month.

The amount shown on line V must equal the amount shown on line 15.

If you’re a semiweekly schedule depositor or if you accumulate $100,000 or more in tax liability on any day in a deposit period, you must complete Form 945-A and file it with Form CT-1. Don't complete lines I–V if you file Form 945-A.

Third-Party Designee

If you want to allow an employee of your business, a return preparer, or another third party to discuss your Form CT-1 with the IRS, check the “Yes” box in the Third-Party Designee section. Also, enter the designee's name and phone number, and any five digits that person chooses as their personal identification number (PIN).

By checking “Yes” you authorize the IRS to talk to the person you named (your designee) about any questions we may have while we process your return. You also authorize your designee to do all of the following.

You’re not authorizing the designee to receive any refund check, bind you to anything (including additional tax liability), or otherwise represent you before the IRS. If you want to expand the designee's authority, see Pub. 947.

The authorization will automatically expire 1 year from the due date (without regard to extensions) for filing your Form CT-1. If you or your designee wants to revoke this authorization, send the revocation or withdrawal to the IRS office at which you file your Form CT-1.

Who Must Sign

The following persons are authorized to sign the return for each type of business entity.

Form CT-1 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed.

Paid Preparer Use Only

A paid preparer must sign Form CT-1 and provide the information in the Paid Preparer Use Only section of Part I if the preparer was paid to prepare Form CT-1 and isn't an employee of the filing entity. The preparer must give you a copy of the return in addition to the copy to be filed with the IRS.

If you're a paid preparer, enter your Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, enter the firm's name and the EIN of the firm. You can apply for a PTIN online or by filing Form W-12. For more information about applying for a PTIN online, go to IRS.gov/PTIN. You can't use your PTIN in place of the EIN of the tax preparation firm.

Generally, you’re not required to complete this section if you’re filing the return as a reporting agent and have a valid Form 8655 on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, by advising the client on determining whether its workers are employees or independent contractors for federal tax purposes.