Form CT-1 - Jan 2022

Form CT-1: Employer's annual railroad retirement tax return

What is Form CT-1?

Form CT-1, Employer's Annual Railroad Retirement Tax Return, is used by railroad employers to report taxes imposed under the Railroad Retirement Tax Act (RRTA). The form reports railroad retirement taxes withheld from employees and the employer's share of applicable railroad retirement taxes for the year. Form CT-1 is an annual federal tax return filed with the IRS. It applies to employers subject to the RRTA rather than employers covered by the Federal Insurance Contributions Act (FICA).

Who needs to file Form CT-1?

Railroad employers that are subject to the Railroad Retirement Tax Act generally must file Form CT-1 to report RRTA taxes. The filing requirement applies to employers covered by the railroad retirement system, including railroad companies and certain other employers engaged in the railroad industry.

Form CT-1 may be required when an employer has employees whose compensation is subject to railroad retirement taxes. The return reports both the employer's tax liability and the employee taxes withheld during the year.

Employers should determine whether they are subject to the RRTA before filing. Form CT-1 is not the standard employment tax return for businesses whose employees are covered by Social Security and Medicare under FICA.

What taxes are reported on Form CT-1?

Form CT-1 is used to report railroad retirement taxes under the RRTA. These taxes are divided into two tiers:

• Tier 1 taxes: Similar to Social Security and Medicare taxes under FICA, these taxes apply to covered railroad compensation and are paid by both the employer and employee.
• Tier 2 taxes: These taxes help fund railroad retirement benefits and are generally paid by both the employer and employee at different rates.

The form also accounts for Medicare tax and additional Medicare tax where applicable. The amount of tax depends on the employee's covered compensation and the applicable RRTA rules for the tax year.

Form CT-1 vs. Form 941: What's the difference?

Form CT-1 and Form 941 both report federal employment taxes, but they apply to different employment tax systems.

• Form CT-1 is used by railroad employers to report taxes imposed under the Railroad Retirement Tax Act
• Form 941 is used by most employers to report federal income tax withheld from employees' wages and Social Security and Medicare taxes under FICA

Railroad employers generally use Form CT-1 instead of Form 941 for compensation subject to the RRTA. Form CT-1 also has its own correction form, Form CT-1 X, for correcting errors on a previously filed Form CT-1.

When is Form CT-1 due?

Form CT-1 is generally due by the last day of February following the calendar year covered by the return. If the return is filed electronically, the deadline is generally extended to the last day of March. For example, a Form CT-1 covering the 2025 calendar year is generally due by February 28, 2026, for paper filing or March 31, 2026, when filed electronically. Employers should check the current IRS instructions for the applicable filing deadline and electronic filing requirements for the tax year being reported.

How is Form CT-1 filed?

Form CT-1 can be filed electronically through an IRS-authorized provider or by paper when permitted. Electronic filing may be required for employers that meet the IRS electronic filing threshold.

Before filing, compare the amounts reported on Form CT-1 with payroll records and the railroad employer's tax deposit records. Any tax due should be paid according to the applicable IRS payment requirements.

What information is needed to complete Form CT-1?

Gather the employer's payroll and tax records before completing the return. The information needed may include:

• Employer identification number (EIN)
• Legal name and address of the railroad employer
• Total compensation subject to RRTA taxes
• Tier 1 railroad retirement tax amounts
• Tier 2 railroad retirement tax amounts
• Medicare tax and additional Medicare tax, when applicable
• Employee tax withholdings
• Employer tax liabilities
• Tax deposits and payments made during the year

Accurate payroll records help ensure that the compensation and tax amounts reported on Form CT-1 agree with the employer's records.

What happens if Form CT-1 is filed late?

A railroad employer that files Form CT-1 late or does not pay the required tax on time may be subject to penalties and interest. The amount depends on factors such as how late the return or payment is and the amount of unpaid tax.Employers should file the return and pay any tax due by the applicable deadline to help avoid additional charges.

How do I correct an error on Form CT-1?

Use Form CT-1 X, Adjusted Employer's Annual Railroad Retirement Tax Return or Claim for Refund, to correct certain errors on a previously filed Form CT-1.Form CT-1 X can be used to correct reported compensation, RRTA taxes and other applicable amounts. The correction process depends on whether the original return understated or overstated the tax. A separate Form CT-1 X may be required for each calendar year being corrected.

Use Form CT-1 with Lumin

Complete the required information with Lumin’s fillable Form CT-1 template, review the details and make any necessary edits. Download the completed form when it’s ready to submit to the IRS.