Instructions for IRS Form Ct-1 - Employer's Annual Railroad Retirement Tax Return 2018

January 1, 2018 "Instructions For Irs Form Ct-1 - Employer's Annual Railroad Retirement Tax Return" contain the updated filing procedures for the IRS-issued Form CT-1. Download your copy of the instructions by clicking the link below.

IRS Form CT-1 is a tax form issued by the United States Internal Revenue Service.

A up-to-date fillable 1 Form is available for download through this link.

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2018
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 unless
Where can you get telephone help? You can call the IRS
otherwise noted.
Business and Specialty Tax Line at 800-829-4933 or
800-829-4059 (TDD/TTY for persons who are deaf, hard of
Future Developments
hearing, or have a speech disability) Monday–Friday from
For the latest information about developments related to
7:00 a.m. to 7:00 p.m. local time (Alaska and Hawaii follow
Form CT-1 and its instructions, such as legislation enacted
Pacific time) for answers to your questions about completing
after they were published, go to IRS.gov/CT-1.
Form CT-1 or tax deposit rules.
What's New
Additional information.
Pub. 15 contains information for withholding, depositing,
Changes to tax rates and compensation bases. For the
reporting, and paying over employment taxes.
2018 tax rates and compensation bases, see
Employer and
Pub. 15-A contains specialized and detailed employment
Employee
Taxes, later.
tax information supplementing the basic information provided
in Pub. 15.
New filing address. The filing address for Form CT-1 has
Pub. 15-B contains information about the employment tax
changed; see
Where To
File, later.
treatment of various types of noncash compensation.
Reminders
Pub. 915 contains the federal income tax rules for social
security benefits and equivalent Tier 1 railroad retirement
Change of address. Use Form 8822-B to notify the IRS of
benefits.
an address change.
The Railroad Retirement Board (RRB) website at
RRB.gov
contains additional employer reporting information and
Correcting a previously filed Form CT-1. If you discover
instructions.
an error on a previously filed Form CT-1, make the correction
using Form CT-1 X. Form CT-1 X is filed separately from
How to get forms and publications. You can download or
Form CT-1. For more information, see the Instructions for
print some of the forms and publications you may need at
Form CT-1 X or go to IRS.gov/CorrectingEmploymentTaxes.
IRS.gov/Forms. Otherwise, you can go to
IRS.gov/
OrderForms
to place an order and have forms mailed to you.
Federal tax deposits must be made by electronic funds
You should receive your order within 10 business days.
transfer (EFT). You must use EFT to make all federal tax
deposits. Generally, an EFT is made using the Electronic
Photographs of Missing Children
Federal Tax Payment System (EFTPS). If you don't want to
The IRS is a proud partner with the
National Center for
use EFTPS, you can arrange for your tax professional,
Missing & Exploited Children ®
(NCMEC). Photographs of
financial institution, payroll service, or other trusted third party
missing children selected by the Center may appear in
to make electronic deposits on your behalf. Also, you may
instructions on pages that would otherwise be blank. You can
arrange for your financial institution to initiate a same-day
help bring these children home by looking at the photographs
wire payment on your behalf. EFTPS is a free service
and calling 1-800-THE-LOST (1-800-843-5678) if you
provided by the Department of the Treasury. Services
recognize a child.
provided by your tax professional, financial institution, payroll
service, or other third party may have a fee.
General Instructions
To get more information about EFTPS or to enroll in
EFTPS, go to EFTPS.gov, or call 800-555-4477 or
Purpose of Form CT-1
800-733-4829 (TDD). Additional information about EFTPS is
also available in Pub. 966.
These instructions give you some background information
about Form CT-1. They tell you who must file Form CT-1,
Outsourcing payroll duties. You’re responsible to ensure
how to complete it line by line, and when and where to file it.
that tax returns are filed and deposits and payments are
made, even if you contract with a third party to perform these
Use Form CT-1 to report taxes imposed by the Railroad
acts. You remain responsible if the third party fails to perform
Retirement Tax Act (RRTA). Use Form 941, Employer's
any required action. Before you choose to outsource any of
QUARTERLY Federal Tax Return, or, if applicable, Form
your payroll and related tax duties (that is, withholding,
944, Employer's ANNUAL Federal Tax Return, to report
reporting, and paying over income taxes and taxes imposed
federal income taxes withheld from your employees' wages
by the Railroad Retirement Tax Act) to a third-party payer,
and other compensation.
such as a payroll service provider or reporting agent, go to
Who Must File
IRS.gov/OutsourcingPayrollDuties
for helpful information on
this topic. For more information on the different types of
File Form CT-1 if you paid one or more employees
third-party payer arrangements, see section 16 of Pub. 15.
compensation subject to tax under RRTA.
Paid preparers. If you use a paid preparer to complete
A payer of sick pay (including a third party) must file Form
Form CT-1, the paid preparer must complete and sign the
CT-1 if the sick pay is subject to Tier 1 railroad retirement
paid preparer's section of Form CT-1.
taxes. Include sick pay payments on lines 8–11 and, if the
Nov 27, 2018
Cat. No. 16005H
2018
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 unless
Where can you get telephone help? You can call the IRS
otherwise noted.
Business and Specialty Tax Line at 800-829-4933 or
800-829-4059 (TDD/TTY for persons who are deaf, hard of
Future Developments
hearing, or have a speech disability) Monday–Friday from
For the latest information about developments related to
7:00 a.m. to 7:00 p.m. local time (Alaska and Hawaii follow
Form CT-1 and its instructions, such as legislation enacted
Pacific time) for answers to your questions about completing
after they were published, go to IRS.gov/CT-1.
Form CT-1 or tax deposit rules.
What's New
Additional information.
Pub. 15 contains information for withholding, depositing,
Changes to tax rates and compensation bases. For the
reporting, and paying over employment taxes.
2018 tax rates and compensation bases, see
Employer and
Pub. 15-A contains specialized and detailed employment
Employee
Taxes, later.
tax information supplementing the basic information provided
in Pub. 15.
New filing address. The filing address for Form CT-1 has
Pub. 15-B contains information about the employment tax
changed; see
Where To
File, later.
treatment of various types of noncash compensation.
Reminders
Pub. 915 contains the federal income tax rules for social
security benefits and equivalent Tier 1 railroad retirement
Change of address. Use Form 8822-B to notify the IRS of
benefits.
an address change.
The Railroad Retirement Board (RRB) website at
RRB.gov
contains additional employer reporting information and
Correcting a previously filed Form CT-1. If you discover
instructions.
an error on a previously filed Form CT-1, make the correction
using Form CT-1 X. Form CT-1 X is filed separately from
How to get forms and publications. You can download or
Form CT-1. For more information, see the Instructions for
print some of the forms and publications you may need at
Form CT-1 X or go to IRS.gov/CorrectingEmploymentTaxes.
IRS.gov/Forms. Otherwise, you can go to
IRS.gov/
OrderForms
to place an order and have forms mailed to you.
Federal tax deposits must be made by electronic funds
You should receive your order within 10 business days.
transfer (EFT). You must use EFT to make all federal tax
deposits. Generally, an EFT is made using the Electronic
Photographs of Missing Children
Federal Tax Payment System (EFTPS). If you don't want to
The IRS is a proud partner with the
National Center for
use EFTPS, you can arrange for your tax professional,
Missing & Exploited Children ®
(NCMEC). Photographs of
financial institution, payroll service, or other trusted third party
missing children selected by the Center may appear in
to make electronic deposits on your behalf. Also, you may
instructions on pages that would otherwise be blank. You can
arrange for your financial institution to initiate a same-day
help bring these children home by looking at the photographs
wire payment on your behalf. EFTPS is a free service
and calling 1-800-THE-LOST (1-800-843-5678) if you
provided by the Department of the Treasury. Services
recognize a child.
provided by your tax professional, financial institution, payroll
service, or other third party may have a fee.
General Instructions
To get more information about EFTPS or to enroll in
EFTPS, go to EFTPS.gov, or call 800-555-4477 or
Purpose of Form CT-1
800-733-4829 (TDD). Additional information about EFTPS is
also available in Pub. 966.
These instructions give you some background information
about Form CT-1. They tell you who must file Form CT-1,
Outsourcing payroll duties. You’re responsible to ensure
how to complete it line by line, and when and where to file it.
that tax returns are filed and deposits and payments are
made, even if you contract with a third party to perform these
Use Form CT-1 to report taxes imposed by the Railroad
acts. You remain responsible if the third party fails to perform
Retirement Tax Act (RRTA). Use Form 941, Employer's
any required action. Before you choose to outsource any of
QUARTERLY Federal Tax Return, or, if applicable, Form
your payroll and related tax duties (that is, withholding,
944, Employer's ANNUAL Federal Tax Return, to report
reporting, and paying over income taxes and taxes imposed
federal income taxes withheld from your employees' wages
by the Railroad Retirement Tax Act) to a third-party payer,
and other compensation.
such as a payroll service provider or reporting agent, go to
Who Must File
IRS.gov/OutsourcingPayrollDuties
for helpful information on
this topic. For more information on the different types of
File Form CT-1 if you paid one or more employees
third-party payer arrangements, see section 16 of Pub. 15.
compensation subject to tax under RRTA.
Paid preparers. If you use a paid preparer to complete
A payer of sick pay (including a third party) must file Form
Form CT-1, the paid preparer must complete and sign the
CT-1 if the sick pay is subject to Tier 1 railroad retirement
paid preparer's section of Form CT-1.
taxes. Include sick pay payments on lines 8–11 and, if the
Nov 27, 2018
Cat. No. 16005H
withholding threshold is met, line 12 of Form CT-1. Follow the
year's compensation on Form CT-1, lines 1–12, as
reporting procedures for sick pay reporting in section 6 of
appropriate. An exception applies to nonqualified deferred
Pub. 15-A.
compensation that was subject to Tier 1 and Tier 2 tax in a
prior year. See the rules for nonqualified deferred
After you file your first Form CT-1, you must file a return for
compensation plans in section 5 of Pub. 15-A.
each year, even if you didn’t pay taxable compensation
Exceptions. Compensation doesn't include the following.
during the year, until you file a final return.
Certain benefits provided to or on behalf of an employee if
Disregarded entities and qualified subchapter S subsid-
at the time the benefits are provided it is reasonable to
iaries (QSubs). Eligible single-owner disregarded entities
believe the employee can exclude such benefits from
and QSubs are treated as separate entities for employment
income. For information on what benefits are excludable, see
tax purposes. Eligible single-member entities that haven’t
Pub. 15-B. Examples of this type of benefit include:
elected to be taxed as corporations must report and pay
1. Certain employee achievement awards under section
employment taxes on compensation paid to their employees
74(c),
using the entities' own names and employer identification
2. Certain scholarship and fellowship grants under
numbers (EINs). See Regulations sections 1.1361-4(a)(7)
section 117,
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 or stock options.
Department of the Treasury
Payments made specifically for traveling or other bona fide
Internal Revenue Service Center
and necessary expenses that meet the rules in the
Kansas City, MO 64999-0048
regulations under section 62.
Payments for services performed by a nonresident alien
When To File
temporarily present in the United States as a nonimmigrant
under subparagraphs (F), (J), (M), or (Q) of the Immigration
File Form CT-1 by February 28, 2019.
and Nationality Act.
Definitions
Compensation under $25 earned in any month by an
employee in the service of a local lodge or division of a
The terms “employer” and “employee” used in these
railway-labor-organization employer.
instructions are defined in section 3231 and in its regulations.
Exceptions for sickness or accident disability
payments. For purposes of employee and employer Tier 1
Compensation
taxes, compensation doesn't include sickness or accident
Compensation means payment in money, meaning currency
disability payments made to or on behalf of an employee or
issued by a recognized authority as a medium of exchange,
dependents:
for services performed as an employee of one or more
Under a workers' compensation law,
employers. It includes payment for time lost as an employee.
Under section 2(a) of the Railroad Unemployment
A few exceptions are described below under Exceptions.
Insurance Act for days of sickness due to an on-the-job
Group-term life insurance. Include in compensation the
injury,
cost of group-term life insurance over $50,000 you provide to
Under the Railroad Retirement Act, or
an employee. This amount is subject to Tier 1 and Tier 2
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
For purposes of Tier 2 taxes, compensation doesn't
Statement.
include payments made to or on behalf of an employee or
Former employees for whom you paid the cost of
dependents under a sickness or accident disability plan or a
group-term life insurance over $50,000 must pay the
medical or hospitalization plan in connection with sickness or
employee's share of these taxes with their Form 1040, U.S.
accident disability.
Individual Income Tax Return. You’re not required to collect
those taxes. For former employees, you must include on
Form W-2 the part of compensation that consists of the cost
of group-term life insurance over $50,000. You must also
separately report on Form W-2 the amount of railroad
retirement taxes owed by the former employee for coverage
provided after separation from service. For more information,
see section 2 of Pub. 15-B and the General Instructions for
Forms W-2 and W-3.
Timing. Compensation is considered paid when it is actually
paid or when it is constructively paid. It is constructively paid
when it is set apart for the employee, or credited to an
account the employee can control, without any substantial
limit or condition on how and when the payment is to be
made.
Any compensation paid during the current year that was
earned in a prior year is taxable at the current year's tax
rates; you must include the compensation with the current
-2-
Instructions for Form CT-1 (2018)
Employer and Employee Taxes
over to the employee for charge customers, tips the
employee received directly from customers, and tips
received from other employees under any tip-sharing
Tax Rates and Compensation Bases
arrangement. Both directly and indirectly tipped employees
must report tips to you. Cash tips must be reported for every
Tax Rates
Compensation
month, unless the cash tips for the month are less than $20.
Paid in 2018
Stop collecting the Tier 1 Employee tax when his or her
Tier 1
compensation and tips for tax year 2018 reach $128,400.
Collect the Tier 1 Employee Medicare tax for the whole year
Employer and Employee: Each pay 6.2% of
on all compensation and tips. Collect the Tier 1 Employee
first
$128,400
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Medicare Tax withholding on compensation and
Tier 1 Medicare
tips that exceed $200,000 for the calendar year.
Employer and Employee: Each pay 1.45% of
All
. .
An employee must furnish you with a written (or electronic)
Tier 1 Employee Additional Medicare Tax
statement of cash tips, signed by the employee, showing (a)
withholding
his or her name, address, and social security number; (b)
Employee: Pays 0.9% on compensation
your name and address; (c) the month or period for which the
exceeding
$200,000
. . . . . . . . . . . . . . . . . . . . . .
statement is furnished; and (d) the total amount of cash tips.
Pub. 1244, Employee's Daily Record of Tips and Report to
Tier 2
Employer, a booklet for daily entry of tips and forms to report
Employer: Pays 13.1% of first
$95,400
. . . . . . . . . . . .
tips to employers, is available at IRS.gov/Forms.
Employee: Pays 4.9% of first
$95,400
. . . . . . . . . . . .
Tips are considered to be paid at the time the employee
reports them to you. You must collect both employee railroad
retirement tax and federal income tax on cash tips reported
Employer Taxes
to you from the employee's compensation (after withholding
employee railroad retirement and federal income tax related
Employers must pay both Tier 1 and Tier 2 taxes, except for
to the nontip compensation) or from other funds the
Tier 1 Employee Additional Medicare Tax. Tier 1 tax is
employee makes available. Apply the compensation or other
divided into two parts. The amount of compensation subject
funds first to the railroad retirement tax and then to federal
to each tax is different. See the table above for the 2018 tax
income tax. You don't have to pay employer railroad
rates and compensation bases.
retirement taxes on tips.
Concurrent employment. If two or more related
If, by the 10th of the month after the month you received
corporations that are rail employers employ the same
an employee's tip income report, you don't have enough
individual at the same time and pay that individual through a
employee funds available to withhold the employee tax, you
common paymaster that is one of the corporations, the
may report the excess amount without withholding the
corporations are considered a single employer. They have to
related tax. Include the tips your employees report to you on
pay, in total, no more in railroad retirement taxes than a
lines 4, 5, 6, and 7, even if you were unable to withhold the
single employer would. See Regulations section
employee's share of tax. Then report the uncollected Tier 1
31.3121(s)-1 for more information.
Employee tax, Tier 1 Employee Medicare tax, Tier 1
Successor employers. Successor employers should see
Employee Additional Medicare Tax withholding, and Tier 2
section 3231(e)(2)(C) and Pub. 15 to see if they can use the
Employee tax on tips on line 14. See section 6 in Pub. 15.
predecessor's compensation paid against the maximum
Depositing Taxes
compensation bases.
For Tier 1 and Tier 2 taxes, you’re either a monthly schedule
Employee Taxes
depositor or a semiweekly schedule depositor. However, see
You must withhold the employee's part of Tier 1 and Tier 2
the
$2,500 Rule
and the
$100,000 Next-Day Deposit Rule
taxes. See the table under
Employer and Employee
Taxes,
under
Exceptions to the Deposit
Rules, later. The terms
earlier, for the tax rates and compensation bases. See
Tips
“monthly schedule depositor” and “semiweekly schedule
below for information on the employee tax on tips.
depositor” identify which set of rules you must follow when a
tax liability arises (for example, when you have a payday).
Withholding or payment of employee tax by employer.
They don't refer to how often your business pays its
You must collect the employee railroad retirement tax from
employees or to how often you’re required to make deposits.
each employee by withholding it from employee
compensation. If you don't withhold the employee tax, you
If you were a monthly schedule depositor for the entire
must still pay the tax. If you withhold too much or too little tax
year, complete the Monthly Summary of Railroad Retirement
because you can't determine the correct amount, correct the
Tax Liability in Part II of Form CT-1. If you were a semiweekly
amount withheld by an adjustment, credit, or refund
schedule depositor during any part of the year or you
according to the applicable regulations.
accumulated $100,000 or more on any day during a deposit
If you pay the railroad retirement tax for your employee
period, you must complete Form 945-A, Annual Record of
rather than withholding it, the amount of the employee's
Federal Tax Liability.
compensation is increased by the amount of that tax. See
Lookback Period
Rev. Proc. 83-43,1983-1 C.B. 778, for information on how to
figure and report the proper amounts.
Before each year begins, you must determine the deposit
schedule to follow for depositing Tier 1 and Tier 2 taxes for a
Tips. Your employee must report cash tips to you by the
calendar year. This is determined from the total taxes
10th day of the month following the month the tips are
reported on your Form CT-1 for the calendar year lookback
received. The report should include charged tips you paid
period. The lookback period is the second calendar year
-3-
Instructions for Form CT-1 (2018)
preceding the current calendar year. For example, the
Semiweekly Schedule Depositor
lookback period for calendar year 2019 is calendar year
If you’re a semiweekly schedule depositor, use the table
2017.
below to determine when to make deposits.
Use the table below to determine which deposit schedule
to follow for 2019.
Deposit Tier 1 and Tier 2 taxes
No later than...
for payments made on...
IF you reported taxes
THEN for 2019 you’re a...
Wednesday, Thursday, and/or
The following Wednesday
for the lookback period (2017)
Friday
of...
Saturday, Sunday, Monday,
The following Friday
$50,000 or less
Monthly schedule depositor
and/or Tuesday
More than $50,000
Semiweekly schedule depositor
Example. Green, Inc., a semiweekly schedule depositor,
pays compensation on the last Saturday of each month.
Example. Rose Co. reported Form CT-1 taxes as follows.
Although Green, Inc., is a semiweekly schedule depositor,
2017 Form CT-1—$49,000.
Green, Inc., will deposit just once a month because Green,
2018 Form CT-1—$52,000.
Inc., pays compensation only once a month. The deposit,
Rose Co. is a monthly schedule depositor for 2019
however, will be made under the semiweekly deposit
because its Form CT-1 taxes for its lookback period
schedule as follows: Green, Inc.’s taxes for the May 25, 2019
(calendar year 2017) weren't more than $50,000. However,
(Saturday), payday must be deposited by May 31, 2019
for 2020, Rose Co. is a semiweekly schedule depositor
(Friday). Under the semiweekly deposit rule, taxes arising on
because the total taxes exceeded $50,000 for its lookback
Saturday through Tuesday must be deposited by the
period (calendar year 2018).
following Friday.
New employer. If you’re a new employer, your taxes for
The last day of the calendar year ends the
both years of the lookback period are considered to be zero.
semiweekly deposit period and begins a new one.
!
Therefore, you’re a monthly schedule depositor for the first
and second years of your business. However, see
$100,000
CAUTION
Next-Day Deposit
Rule, later.
Deposits Due on Business Days Only
Adjustments and the lookback rule. To determine the
If a deposit is required to be made on a day that isn't a
amount of taxes paid for the lookback period, use only the
business day, the deposit is considered to have been made
Form CT-1 taxes reported on your original return.
timely if it is made by the close of the next business day. A
Adjustments to a return for a prior period aren't taken into
business day is any day other than a Saturday, Sunday, or
account in determining the taxes for that prior period.
legal holiday. For example, if a deposit is due on a Friday and
Example. Maple Co. originally reported Form CT-1 taxes
Friday is a legal holiday, the deposit will be considered timely
of $45,000 for the lookback period (2017). Maple Co.
if it is made by the following Monday (if that Monday is a
discovered in March 2019 that the tax during the lookback
business day). The term “legal holiday” for deposit purposes
period (2017) was understated by $10,000 and will correct
includes only those legal holidays in the District of Columbia.
this error with an adjustment on Form CT-1 X filed for 2017.
For a list of legal holidays, see section 11 of Pub. 15.
Maple Co. is a monthly schedule depositor for 2019
because the lookback period Form CT-1 taxes are based on
Semiweekly schedule depositors will always have at least
the amount originally reported ($45,000), which wasn't more
3 business days following the close of the semiweekly period
than $50,000. For purposes of the lookback rule, the $10,000
to make a deposit. If any of the 3 weekdays after the end of a
adjustment doesn't affect either 2017 taxes or 2019 taxes.
semiweekly period is a legal holiday, you have 1 additional
See Treasury Decision 9405, available at
IRS.gov/irb/
day to deposit. For example, if you have Form CT-1 taxes
2008-32_IRB#TD-9405.
accumulated for payments made on Friday and the following
Monday is a legal holiday, the deposit normally due on
When To Deposit
Wednesday may be made on Thursday (allowing 3 business
Monthly Schedule Depositor
days to make the deposit).
If you’re a monthly schedule depositor, deposit employer and
Exceptions to the Deposit Rules
employee Tier 1 and Tier 2 taxes accumulated during a
calendar month by the 15th day of the following month.
The two exceptions that apply to the above deposit rules are
Example. Spruce Co. is a monthly schedule depositor
the:
with seasonal employees. Spruce Co. paid compensation
$2,500 Rule, and
each Friday during March but didn't pay any compensation
$100,000 Next-Day Deposit Rule.
during April. Under the monthly schedule deposit rule,
$2,500 Rule. If your total Form CT-1 taxes for the year are
Spruce Co. must deposit the combined taxes for the March
less than $2,500 and the taxes are fully paid with a timely
paydays by April 15. Spruce Co. doesn't have a deposit
filed Form CT-1, no deposits are required. However, if you’re
requirement for April (due by May 15) because no
unsure that you will accumulate less than $2,500, deposit
compensation was paid and, therefore, Spruce Co. doesn't
under the appropriate deposit rules so that you won't be
have a tax liability for the month.
subject to deposit penalties.
$100,000 Next-Day Deposit Rule. If you accumulate
undeposited taxes of $100,000 or more on any day during a
-4-
Instructions for Form CT-1 (2018)
deposit period, you must deposit the taxes by the next
Please check with your financial institution regarding
business day regardless of whether you’re a monthly or
availability, deadlines, and costs. Your financial institution
semiweekly schedule depositor.
may charge you a fee for payments made this way. To learn
more about the information you will need to give your
If you’re a monthly schedule depositor and you
financial institution to make a same-day wire payment, go to
accumulate $100,000 or more on any day during the month,
IRS.gov/SameDayWire.
you become a semiweekly schedule depositor on the next
day for the remainder of the calendar year and for the
Accuracy of Deposits Rule. You’re required to deposit
following year.
100% of your railroad retirement taxes on or before the
deposit due date. However, penalties won't be applied for
Once a semiweekly schedule depositor accumulates
depositing less than 100% if both of the following conditions
$100,000 or more in a deposit period, it must stop
are met.
accumulating at the end of that day and begin to accumulate
anew on the next day. The following examples explain this
1. Any deposit shortfall doesn't exceed the greater of
rule.
$100 or 2% of the amount of taxes otherwise required to be
Example of $100,000 Next-Day Deposit Rule.
deposited.
Fir Co. is a semiweekly schedule depositor. On Monday, Fir
2. The deposit shortfall is paid or deposited by the
Co. accumulates taxes of $110,000 and must deposit this
shortfall makeup date for each type of depositor as described
amount by Tuesday, the next business day. On Tuesday, Fir
below.
Co. accumulates additional taxes of $30,000. Because the
Monthly schedule depositor. Deposit the shortfall or pay
$30,000 isn't added to the previous $110,000, Fir Co. must
it with your return by the due date of Form CT-1. You may
deposit the $30,000 by Friday using the semiweekly deposit
pay the shortfall with Form CT-1 even if the amount is $2,500
schedule.
or more.
Example of $100,000 Next-Day Deposit Rule during
Semiweekly schedule depositor. Deposit the shortfall
the first year of business. Elm, Inc., started its business
by the earlier of the first Wednesday or Friday on or after the
on May 1, 2019. Because this was the first year of its
15th of the month following the month in which the shortfall
business, its Form CT-1 taxes for its lookback period (2017)
occurred. For example, if a semiweekly schedule depositor
are considered to be zero, and Elm, Inc., is a monthly
has a deposit shortfall during June 2019, the shortfall
schedule depositor. On May 3, Elm, Inc., paid compensation
makeup date is July 17, 2019 (Wednesday).
for the first time and accumulated taxes of $40,000. On May
Penalties and Interest
10, Elm, Inc., paid compensation and accumulated taxes of
$60,000, bringing its total accumulated (undeposited) taxes
The law provides penalties for failure to file a return, late filing
to $100,000. Because Elm, Inc., accumulated $100,000 or
of a return, late payment of taxes, failure to make deposits,
more on May 10 (Friday), Elm, Inc., must deposit the
and late deposits unless reasonable cause is shown. Interest
$100,000 by May 13 (Monday), the next business day. Elm,
is charged on taxes paid late at the rate set by law. For more
Inc., became a semiweekly schedule depositor on May 11.
information, see Pub. 15.
Elm, Inc., will be a semiweekly schedule depositor for the
rest of 2019 and for 2020.
If you receive a notice about a penalty after you file this
Example of when $100,000 Next-Day Deposit Rule
return, reply to the notice with an explanation and we will
doesn't apply. Oak Co., a semiweekly schedule depositor,
determine if you meet reasonable-cause criteria. Don't attach
accumulated taxes of $95,000 on a Tuesday (of a
an explanation when you file your return.
Saturday-through-Tuesday deposit period) and accumulated
$10,000 on Wednesday (of a Wednesday-through-Friday
Use Form 843 to request abatement of assessed
deposit period). Because the $10,000 was accumulated in a
penalties or interest. Don't request abatement of assessed
deposit period different from the one in which the $95,000
penalties or interest on Form CT-1 or Form CT-1 X.
was accumulated, the $100,000 Next-Day Deposit Rule
Order in which deposits are applied. Generally, tax
doesn’t apply. Thus, Oak Co. must deposit $95,000 by Friday
deposits are applied first to the most recent tax liability within
and $10,000 by the following Wednesday.
the specified tax period to which the deposit relates. If you
receive a failure-to-deposit penalty notice, you may
Electronic Deposit Requirement
designate how your payment is to be applied in order to
You must use EFT to make all federal tax deposits.
minimize the amount of the penalty. You must respond within
Generally, an EFT is made using EFTPS. To get more
90 days of the date of the notice. Follow the instructions on
information about EFTPS or to enroll in EFTPS, go to
the notice you received. See Rev. Proc. 2001-58 for more
EFTPS.gov, or call 800-555-4477 or 800-733-4829 (TDD).
information. You can find Rev. Proc. 2001-58 on page 579 of
Additional information about EFTPS is also available in Pub.
Internal Revenue Bulletin 2001-50 at
IRS.gov/pub/irs-irbs/
966.
irb01-50.pdf.
For an EFTPS deposit to be on time, you must
Trust fund recovery penalty. If taxes that must be withheld
submit the deposit by 8 p.m. Eastern time the day
!
(that is, trust fund taxes) aren't withheld or aren't deposited or
before the date the deposit is due.
paid to the United States Treasury, the trust fund recovery
CAUTION
penalty may apply. The penalty is 100% of the unpaid trust
Same-day wire payment option. If you fail to submit a
fund tax. If these unpaid taxes can't be immediately collected
deposit transaction on EFTPS by 8 p.m. Eastern time the day
from the employer or business, the trust fund recovery
before the date a deposit is due, you can still make your
penalty may be imposed on all persons who are determined
deposit on time by using the Federal Tax Collection Service
by the IRS to be responsible for collecting, accounting for, or
(FTCS) to make a same-day wire payment. To use the
paying over these taxes, and who acted willfully in not doing
same-day wire payment method, you will need to make
so. For more information, see Trust Fund Recovery Penalty
arrangements with your financial institution ahead of time.
in section 11 of Pub. 15.
-5-
Instructions for Form CT-1 (2018)

Download Instructions for IRS Form Ct-1 - Employer's Annual Railroad Retirement Tax Return 2018

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