Instructions for Form CT-1 (2008)

Final return. If you stop paying taxable compensation and will not 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 “2008.”

Processing of your return may be delayed if you do not provide the required amounts in the Compensation and Tax columns.

Line 1— Tier I Employer Tax

Enter the compensation (other than tips and sick pay) subject to Tier I employer tax in the Compensation column. Do not enter more than $102,000 per employee. Multiply by 6.2% and enter the result in the Tax column.

Line 2— Tier I Employer Medicare Tax

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

Line 3— Tier II Employer Tax

Enter the compensation (other than tips) subject to Tier II employer tax in the Compensation column. Do not enter more than $75,900 per employee. Multiply by 12.1% and enter the result in the Tax column.

Line 4— Tier I Employee Tax

Enter the compensation, including tips reported, subject to Tier I employee tax in the Compensation column. Do not enter more than $102,000 per employee. Multiply by 6.2% and enter the result in the Tax column.

Stop collecting the 6.2% Tier I employee tax when the employee's wages and tips reach the maximum for the year ($102,000 for 2008). However, your liability for Tier I employer tax on compensation continues until the compensation, not including tips, totals $102,000 for the year.

Line 5— Tier I Employee Medicare Tax

Enter the compensation, including tips reported, subject to Tier I 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 on page 3.

Line 6— Tier II Employee Tax

Enter the compensation, including tips reported, subject to
Tier II employee tax in the Compensation column. Only the first $75,900 of the employee's compensation for 2008 is subject to this tax. Multiply by 3.9% and enter the result in the Tax column. For information on reporting tips, see Tips on page 3.

Any compensation paid during the current year that was earned in prior years (reported to the Railroad Retirement Board 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 Publication 15-A. Include such compensation with current year compensation on lines 1 through 6, as appropriate.

Lines 7 Through 10— Tier I Taxes onSick Pay

Enter any sick pay payments during the year that are subject to Tier I taxes and Tier I Medicare taxes in the Compensation column. If you are a railroad employer paying your employees sick pay, or a third-party payer who did not notify the employer of the payments (thereby subject to the employee and employer tax), make entries on lines 7 through 10. If you are 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 12— Adjustments to Taxes Based on Compensation

Enter on line 12:

A sick pay adjustment,
A fractions of cents adjustment (see Fractions of cents on page 6),
For errors discovered prior to January 1, 2009, corrections of underpayments or overpayments of taxes reported on prior year returns, including any adjustments resulting from an audit by the RRB, and
Credits for overpayments of penalty or interest paid on tax for earlier years.

Enter the total of these adjustments in the Tax column. If you are reporting both an addition and a subtraction, enter only the difference between the two on line 12. If the net adjustment is negative, report the amount on line 12 using a minus sign, if possible. If your computer software does not allow the use of minus signs, you may use parentheses.

Do not include on line 12 the 2007 overpayment that is applied to this year's return (this is included on line 14).

Required statement. Except for adjustments for fractions of cents, explain amounts entered on line 12 in a separate statement. Include your name, employer identification number (EIN), calendar year of the return, and “Form CT-1” on each page you attach. Include in the statement the following information.

An explanation of the item the adjustment is intended to correct showing the compensation subject to Tier I and
Tier II taxes and their respective tax rates.
The year(s) to which the adjustment relates.
The amount of the adjustment for each year.
The name and account number of any employee from whom employee tax was undercollected or overcollected.
How you and the employee have settled any undercollection or overcollection of employee tax.
When you discovered the error.

A timely filed return is considered to be filed on the last day of February of the year after the close of the tax year. Generally, adjustments for prior year returns may be made only within 3 years of that date.

Fractions of cents. If there is a difference between the total employee tax (lines 4, 5, 6, 9, and 10) and the total actually deducted (employee compensation including tips plus the employer's contribution) due to rounding fractions of cents when collecting the tax, report the deduction or addition on line 12.

If this is the only entry on line 12, you are not required to attach a statement explaining the adjustment.

Line 13— Total Railroad Retirement Taxes Based on Compensation

Combine the amounts shown on lines 11 and 12 and enter the result on line 13.

Line 14— Total Deposits for the Year

Enter the total Form CT-1 taxes you deposited. Also, include any overpayment applied from your 2007 Form CT-1.

Line 15— Balance Due

Subtract line 14 from line 13. You should have a balance due only if line 13 is less than $2,500, unless the balance due is a shortfall amount for monthly schedule depositors as explained under the Accuracy of Deposits Rule on page 4.

Form CT-1(V), Payment Voucher, has instructions for making a payment with Form CT-1. You do not have to pay if line 15 is less than $1.

Line 16— Overpayment

Enter the overpayment on the designated entry line. Then check the appropriate box to have the overpayment applied to your 2009 Form CT-1 or refunded to you. If line 16 is less than $1, we will send you a refund or apply it to your next return only on written request.

Third-Party Designee

If you want to allow an employee of your business, a return preparer, or other third party to discuss your 2008
Form CT-1 with the IRS, check the “Yes” box in the Third-Party Designee section of Form CT-1. Also, enter the designee's name, phone number, and any five digits that person chooses as his or her personal identification number (PIN).

By checking the “Yes” box, you are authorizing the IRS to speak with the designee to answer any questions relating to the processing of or the information reported on Form CT-1. You are also authorizing the designee to:

Exchange information concerning Form CT-1 with the IRS, and
Respond to certain IRS notices that you have shared with your designee relating to Form CT-1. The IRS will not send notices to your designee.

You are 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, Practice Before the IRS and Power of Attorney.

The authorization will automatically expire 1 year from the due date (without regard to extensions) for filing your 2008 Form CT-1. If you or your designee wants to revoke this authorization, send a written statement of revocation to: Department of the Treasury, Internal Revenue Service Center, Cincinnati, OH 45999. See Pub. 947 for more information.

Who Must Sign

Form CT-1 must be signed as follows:

Sole proprietorship—The individual who owns the business.
Corporation (including an LLC treated as a corporation)—The president, vice-president, or other principal officer duly authorized to act.
Partnership (including an LLC treated as a partnership) or unicorporated organization—A responsible and duly authorized member or officer having knowledge of its affairs.
Single member limited liability company (LLC) treated as a disregarded entity—The owner of the limited liability company (LLC).
Trust or estate—The fiduciary.

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

Alternative Signature Method

Corporate officers or duly authorized agents may sign Form CT-1, Employer's Annual Railroad Retirement Tax Return, by rubber stamp, mechanical device, or computer software program. For details and required documentation, see Rev. Proc. 2005-39 at www.irs.gov/irb/2005-28_IRB/ar16.html.

Paid Preparers

A paid preparer must sign Form CT-1 and provide the information in the Paid Preparer's Use Only section of Part I if the preparer was paid to prepare Form CT-1 and is not 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 IRS.

If you are a paid preparer, write your SSN and Preparer Tax Identification Number (PTIN) in the space provided. Include your complete address. If you work for a firm, write the firm's name and the EIN of the firm. You can apply for a PTIN using Form W-7P, Application for Preparer Tax Identification Number. You cannot use your PTIN in place of the EIN of the tax preparation firm.

Generally, you are not required to complete this section if you are filing the return as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, 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.

Specific Instructions