2021 Instructions for Form CT-1, Employer's Annual Railroad Retirement Tax Return
Summary
The Internal Revenue Service's Instructions for Form CT-1 (2021), the employer's annual return for railroad retirement tax, from the Department of the Treasury. It states that the American Rescue Plan Act of 2021 (the ARP) adds new sections 3131, 3132 and 3133 to the Internal Revenue Code to provide credits for qualified sick and family leave compensation similar to those enacted under the FFCRA, and that employers may continue to claim FFCRA credits for leave taken before April 1, 2021. The instructions list what's new, reminders and general instructions, including the purpose of Form CT-1. They close with worksheet lines for the COBRA premium assistance credit, carried to Form CT-1, line 24c.
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2021 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 FFCRA may continue to claim tax credits for qualified sick
otherwise noted. and family leave compensation paid for leave taken before
April 1, 2021.
Contents Page
Future Developments . . . . . . . . . . . . . . . . . . . . . . . . 1 The American Rescue Plan Act of 2021 (the ARP) adds
new sections 3131, 3132, and 3133 to the Internal Revenue
What's New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Code to provide credits for qualified sick and family leave
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 compensation similar to the credits that were previously
General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 5 enacted under the FFCRA and amended and extended by
Purpose of Form CT-1 . . . . . . . . . . . . . . . . . . . . . 5 the COVID-related Tax Relief Act of 2020. The credits under
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . 5 sections 3131 and 3132 are available for qualified leave
compensation paid for leave taken after March 31, 2021, and
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 before October 1, 2021. Below are the major changes made
When To File . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 under the ARP.
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 • The ARP keeps the daily compensation thresholds that
Employer and Employee Taxes . . . . . . . . . . . . . . 6 previously existed. The aggregate cap on qualified sick leave
Depositing Taxes . . . . . . . . . . . . . . . . . . . . . . . . 7 compensation remains at 80 hours (10 days), but the
limitation on the number of days resets with respect to leave
Penalties and Interest . . . . . . . . . . . . . . . . . . . . . 9 taken by employees beginning on April 1, 2021. The
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . 10 aggregate cap on qualified family leave compensation
Third-Party Designee . . . . . . . . . . . . . . . . . . . . . . . 21 increases to $12,000 from the previous cap of $10,000, and
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 the aggregate cap resets with respect to leave taken by
employees beginning on April 1, 2021.
Paid Preparer Use Only . . . . . . . . . . . . . . . . . . . . . . 22
• The ARP also created a new category of leave under the
Worksheet 1. Credit for Qualified Sick and Family Emergency Paid Sick Leave Act (EPSLA) and the Expanded
Leave Compensation for Leave Taken Before Family and Medical Leave Act (Expanded FMLA) to include
April 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 the time the employee is seeking or awaiting the results of a
Worksheet 2. Employee Retention Credit for diagnostic test for, or a medical diagnosis of, COVID-19 (and
Qualified Compensation Paid After December the employee has been exposed to COVID-19 or the
31, 2020, and Before July 1, 2021 . . . . . . . . . . . 24 employee’s employer has requested such test or diagnosis),
Worksheet 3. Credit for Qualified Sick and Family or the employee is obtaining or accompanying an individual
Leave Compensation for Leave Taken After who is obtaining immunizations related to COVID-19 or
March 31, 2021, and Before October 1, 2021 . . . 25 recovering from or caring for an individual recovering from an
injury, disability, illness, or condition related to such
Worksheet 4. Employee Retention Credit for immunization. Additionally, employers may provide
Qualified Compensation Paid After June 30, employees with paid family leave if the employee is unable to
2021, and before January 1, 2022 . . . . . . . . . . . 26 work due to any of the conditions for which eligible employers
Worksheet 5. COBRA Premium Assistance may provide paid sick leave under the EPSLA.
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 • The credits are still increased by the qualified health plan
expenses allocable to the qualified sick and family leave
Future Developments compensation, but the credits are now also increased,
For the latest information about developments related to subject to the qualified leave compensation limitations, by
Form CT-1 and its instructions, such as legislation enacted certain amounts paid under collective bargaining agreements
after they were published, go to IRS.gov/CT1. that are properly allocable to the qualified leave
compensation. The collectively bargained contributions paid
What's New by an eligible employer that are eligible for the credit are
Changes to tax rates and compensation bases. For the collectively bargained defined benefit pension plan
2021 tax rates and compensation bases, see Employer and contributions and collectively bargained apprenticeship
Employee Taxes, later. program contributions that are properly allocable to qualified
leave compensation.
The COVID-19 related credit for qualified sick and fami- • Under section 3133, the credits are increased by the
ly leave compensation has been extended and amen- amount of the Tier 1 Employer tax and Tier 1 Employer
ded. The Families First Coronavirus Response Act (FFCRA) Medicare tax on the qualified sick and family leave
was amended by legislation. The FFCRA requirement that compensation.
employers provide paid sick and family leave for reasons • Governmental employers (except for the federal
related to COVID-19 (the employer mandate) expired on government and its agencies and instrumentalities unless
December 31, 2020; however, the COVID-related Tax Relief described in section 501(c)(1)) may now claim the credits.
Act of 2020 extends the periods for which employers • Generally, the same compensation can’t be used as both
providing leave that otherwise meets the requirements of the qualified sick leave compensation and qualified family leave
Jan 21, 2022 Cat. No. 16005H
compensation. Additionally, you may not benefit from both credit that was previously enacted under the CARES Act and
the credit for qualified sick and family leave compensation amended and extended by the Taxpayer Certainty and
and the employee retention credit with respect to the same Disaster Tax Relief Act of 2020. Generally, the rules for the
compensation. The credit for qualified sick leave employee retention credit for qualified compensation paid
compensation and qualified family leave compensation before July 1, 2021, and qualified compensation paid after
doesn't apply to compensation taken into account as payroll June 30, 2021, are substantially similar. However, the
costs for a Small Business Interruption Loan under the Infrastructure Investment and Jobs Act (Infrastructure Act)
Paycheck Protection Program (PPP) that is forgiven or in amends section 3134 of the Internal Revenue Code, as
connection with shuttered operator grants and restaurant enacted under the ARP, to limit the availability of the
revitalization grants. employee retention credit in the fourth quarter of 2021 to
• The credit for qualified sick and family leave compensation employers that are recovery startup businesses, as defined
isn’t allowed if the employer provides the leave in a manner in section 3134(c)(5). Thus, for compensation paid after
that discriminates in favor of highly compensated employees, September 30, 2021, and before January 1, 2022, only the
full-time employees, or employees on the basis of compensation paid by recovery startup businesses can be
employment tenure. See Highly compensated employee, qualified compensation as described in these instructions.
later, for the definition. See Recovery startup business, later, for more information
How you report qualified sick and family leave about a recovery startup business.
compensation and the credit for qualified sick and family Qualified compensation for the employee retention credit
leave compensation has changed. For leave taken before under section 3134 doesn't include compensation taken into
April 1, 2021, the qualified sick and family leave account for credits under sections 41, 45A, 45P, 45S, 51,
compensation is subject to the Tier 1 Employer Medicare tax 1396, 3131, and 3132. Additionally, qualified compensation
(line 2), Tier 1 Employee tax (line 4), Tier 1 Employee for the employee retention credit can't include amounts used
Medicare tax (line 5), and, if applicable, Tier 1 Employee as payroll costs for a Small Business Interruption Loan under
Additional Medicare Tax (line 6). For leave taken after March the PPP that is forgiven or amounts used as payroll costs for
31, 2021, and before October 1, 2021, qualified sick and shuttered operator grants and restaurant revitalization grants.
family leave compensation is subject to the Tier 1 Employer For compensation paid before July 1, 2021, the
tax (line 1), Tier 1 Employer Medicare tax (line 2), Tier 1 nonrefundable portion of the employee retention credit is
Employee tax (line 4), Tier 1 Employee Medicare tax (line 5), against the Tier 1 Employer tax. However, for compensation
and, if applicable, Tier 1 Employee Additional Medicare Tax paid after June 30, 2021, and before January 1, 2022, the
(line 6). Regardless of when the leave was taken, qualified nonrefundable portion of the employee retention credit is
sick and family leave compensation is subject to Tier 2 tax for against the Tier 1 Employer Medicare tax. The nonrefundable
both the employer and employee (lines 3 and 7). Qualified portion of the credit is now claimed on line 17a and, if
sick leave compensation and qualified family leave applicable, the refundable portion of the credit is claimed on
compensation for leave taken before April 1, 2021, are line 24a. For more information, see the instructions for
reported on lines 30 and 32, respectively. Qualified sick line 17a and line 24a, later. Use Worksheet 2 to figure the
leave compensation and qualified family leave compensation credit for compensation paid before July 1, 2021. Use
for leave taken after March 31, 2021, and before October 1, Worksheet 4 to figure the credit for compensation paid after
2021, are reported on lines 36 and 39, respectively. For June 30, 2021, and before January 1, 2022.
leave taken before April 1, 2021, the credit for qualified sick
and family leave compensation is reported on line 16 See Notice 2021-23, 2021-16 I.R.B. 1113, available at
(nonrefundable portion) and, if applicable, line 23 (refundable IRS.gov/irb/2021-16_IRB#NOT-2021-23, for guidance on the
portion); and the nonrefundable portion of the credit is employee retention credit provided under section 2301 of the
against the Tier 1 Employer tax. For leave taken after March CARES Act, as amended by section 207 of the Taxpayer
31, 2021, and before October 1, 2021, the credit for qualified Certainty and Disaster Tax Relief Act of 2020, for qualified
sick and family leave compensation is reported on line 17b compensation paid after December 31, 2020, and before
(nonrefundable portion) and, if applicable, line 24b July 1, 2021. See Notice 2021-49, 2021-34 I.R.B. 316,
(refundable portion); and the nonrefundable portion of the available at IRS.gov/irb/2021-34_IRB#NOT-2021-49 for
credit is against the Tier 1 Employer Medicare tax. For more guidance on the employee retention credit provided under
information, see the instructions for line 16, line 17b, line 23, the ARP for compensation paid after June 30, 2021, and
and line 24b, later. before January 1, 2022. Notice 2021-49 also discusses
miscellaneous issues that apply to all of 2021. See Notice
Use Worksheet 1 to figure the credit for leave taken before 2021-65, 2021-51 I.R.B. 880, available at IRS.gov/irb/
April 1, 2021. Use Worksheet 3 to figure the credit for leave 2021-51_IRB#NOT-2021-65, for modifications to Notice
taken after March 31, 2021, and before October 1, 2021. For 2021-49 under the Infrastructure Act. For more information
more information about the credit for qualified sick and family about the employee retention credit, go to IRS.gov/ERC.
leave compensation, go to IRS.gov/PLC.
New credit for COBRA premium assistance payments.
The COVID-19 related employee retention credit has Section 9501 of the ARP provides for COBRA premium
been extended and amended. The Coronavirus Aid, assistance in the form of a full reduction in the premium
Relief, and Economic Security (CARES) Act was amended otherwise payable by certain individuals and their families
by legislation. The Taxpayer Certainty and Disaster Tax who elect COBRA continuation coverage due to a loss of
Relief Act of 2020 modifies the calculation of the employee coverage as the result of a reduction in hours or an
retention credit and extends the date through which the credit involuntary termination of employment (assistance eligible
may be claimed to qualified compensation paid before July 1, individuals). This COBRA premium assistance is available for
2021. periods of coverage beginning on or after April 1, 2021,
The ARP adds new section 3134 to the Internal Revenue through periods of coverage beginning on or before
Code to provide an employee retention credit similar to the September 30, 2021. Some multiemployer plans and
-2- Instructions for Form CT-1 (2021)
insurers don't normally file an employment tax return but will 8. The deferred amount of the Tier 1 employer taxes was
need to file one if they want to claim the COBRA premium only available for deposits due on or after March 27, 2020,
assistance credit. and before January 1, 2021, as well as deposits and
Section 9501(b) of the ARP adds new section 6432 to the payments due after January 1, 2021, that were required for
Internal Revenue Code that allows a credit (COBRA premium compensation paid on or after March 27, 2020, and before
assistance credit) against Tier 1 Employer Medicare tax in an January 1, 2021. Therefore, the line previously used for the
amount equal to the premiums not paid by assistance eligible employer deferral has been “Reserved for future use.” One-
individuals for COBRA continuation coverage by reason of half of the Tier 1 employer taxes was due by December 31,
section 9501(a)(1) of the ARP. The nonrefundable portion of 2021, and the remainder is due by December 31, 2022.
the credit is reported on line 17c and, if applicable, the Because both December 31, 2021, and December 31, 2022,
refundable portion of the credit is reported on line 24c. If you are nonbusiness days, payments made on the next business
claim this credit, you must also report the number of day will be considered timely. Any payments or deposits you
individuals provided COBRA premium assistance on made before December 31, 2021, were first applied against
line 17d. Use Worksheet 5 to figure the credit. For more your payment due on December 31, 2021, and then applied
information, see the instructions for line 17c, line 17d, and against your payment due on December 31, 2022. For more
line 24c, later. For more information on COBRA premium information about the deferral of employment tax deposits,
assistance payments and the credit, see Notice 2021-31, go to IRS.gov/ETD. See Paying the deferred amount of the
2021-23 I.R.B. 1173, available at IRS.gov/irb/ Tier 1 employer taxes and How to pay the deferred amount of
2021-23_IRB#NOT-2021-31; and Notice 2021-46, 2021-33 Tier 1 employer and employee taxes, later, for information
I.R.B. 303, available at IRS.gov/irb/ about paying the deferred amount of the Tier 1 employer
2021-33_IRB#NOT-2021-46. taxes.
Advance payment of COVID-19 credits extended. Based Deferral of the Tier 1 employee taxes expired. The
on the extensions of the credit for qualified sick and family Presidential Memorandum on Deferring Payroll Tax
leave compensation and the employee retention credit, and Obligations in Light of the Ongoing COVID-19 Disaster,
the new credit for COBRA premium assistance payments, issued on August 8, 2020, directed the Secretary of the
discussed above, Form 7200, Advance Payment of Employer Treasury to defer the withholding, deposit, and payment of
Credits Due to COVID-19, may be filed to request an the Tier 1 employee taxes reported on lines 4 and 10 on
advance payment. For more information, including compensation paid during the period from September 1,
information on which employers are eligible to request an 2020, through December 31, 2020. The deferral of the
advance payment, deadlines for requesting an advance, and withholding and payment of the Tier 1 employee taxes was
the amount that can be advanced, see the Instructions for available for employees whose applicable compensation
Form 7200. paid for a biweekly pay period were less than $4,000, or the
equivalent threshold amount for other pay periods. The line
The Infrastructure Act amends section 3134 of the Internal previously used for the employee deferral has been
Revenue Code, as enacted under the ARP, to limit the “Reserved for future use.” The COVID-related Tax Relief Act
availability of the employee retention credit in the fourth of 2020 deferred the due date for the withholding and
quarter of 2021 to employers that are recovery startup payment of the Tier 1 employee taxes until the period
businesses, as defined in section 3134(c)(5). See Recovery beginning on January 1, 2021, and ending on December 31,
startup business, later, for more information about a recovery 2021. For more information about the deferral of the Tier 1
startup business. Some employers that are no longer eligible employee taxes, see Notice 2020-65, 2020-38 I.R.B. 567,
to claim the employee retention credit for the fourth quarter of available at IRS.gov/irb/2020-38_IRB#NOT-2020-65; and
2021 may have already submitted Form 7200 to request an Notice 2021-11, 2021-06 I.R.B. 827, available at IRS.gov/irb/
advance payment of the employee retention credit for the 2021-06_IRB#NOT-2021-11. Also see Paying the deferred
fourth quarter of 2021. If the Form 7200 hasn't been amount of the Tier 1 employee taxes and How to pay the
processed, the IRS will use the employer's indication of deferred amount of Tier 1 employer and employee taxes,
whether it is a recovery startup business (Form 7200, Part 1, later, for information about paying the deferred amount of the
line H) as part of the determination regarding whether the Tier 1 employee taxes.
Form 7200 claiming the employee retention credit in the
fourth quarter of 2021 should be accepted or rejected. A Reminders
refund or credit of any portion of the employee retention
credit to a taxpayer in excess of the amount to which the Paying the deferred amount of the Tier 1 employer tax-
taxpayer is entitled is an erroneous refund that the employer es. One-half of the Tier 1 employer taxes was due by
must repay, regardless of whether the refund or credit is December 31, 2021, and the remainder is due by December
advanced. Accordingly, if an employer requested and 31, 2022. Because both December 31, 2021, and December
received an advance payment of the employee retention 31, 2022, are nonbusiness days, payments made on the next
credit for the fourth calendar quarter of 2021, and the business day will be considered timely. Any payments or
employer isn't a recovery startup business, the employer isn't deposits you made before December 31, 2021, were first
eligible for an employee retention credit and must repay the applied against your payment due on December 31, 2021,
amount of the advance. Employers who need to repay and then applied against your payment due on December 31,
excess advance payments of the employee retention credit 2022. For example, if your Tier 1 employer taxes for 2020
must do so by February 28, 2022, by including the advance were $20,000 and you deposited $5,000 of the $20,000
payment on their 2021 Form CT-1, Part I, line 26, and paying during 2020 and you deferred $15,000 on Form CT-1,
any balance due by February 28, 2022. line 21, then you were required to pay $5,000 by December
31, 2021, and must pay $10,000 by December 31, 2022.
Deferral of the Tier 1 employer taxes expired. The However, if your Tier 1 employer taxes for 2020 were
CARES Act allowed employers to defer the deposit and $20,000 and you deposited $15,000 of the $20,000 during
payment of the Tier 1 employer taxes reported on lines 1 and
Instructions for Form CT-1 (2021) -3-
2020 and you deferred $5,000 on Form CT-1, line 21, then Correcting a previously filed Form CT-1. If you discover
you didn't need to pay any deferred amount by December 31, an error on a previously filed Form CT-1, make the correction
2021, because 50% of the amount that could have been using Form CT-1 X. Form CT-1 X is filed separately from
deferred ($10,000) was already paid and was first applied Form CT-1. For more information, see the Instructions for
against your payment that was due on December 31, 2021. Form CT-1 X or go to IRS.gov/CorrectingEmploymentTaxes.
Accordingly, you must pay the $5,000 deferral by December
31, 2022. Payment of the deferral isn't reported on Form Change of address. Use Form 8822-B to notify the IRS of
CT-1. For additional information, go to IRS.gov/ETD. an address change.
Paying the deferred amount of the Tier 1 employee tax- Federal tax deposits must be made by electronic funds
es. The due date for the withholding and payment of the Tier transfer (EFT). You must use EFT to make all federal tax
1 employee taxes was postponed until the period beginning deposits. Generally, an EFT is made using EFTPS. If you
on January 1, 2021, and ending on December 31, 2021. The don't want to use EFTPS, you can arrange for your tax
employer was required to withhold and pay the total deferred professional, financial institution, payroll service, or other
Tier 1 employee taxes ratably from compensation paid to the trusted third party to make electronic deposits on your behalf.
employee between January 1, 2021, and December 31, Also, you may arrange for your financial institution to initiate a
2021. If necessary, the employer was allowed to make same-day wire payment on your behalf. EFTPS is a free
arrangements to otherwise collect the total deferred taxes service provided by the Department of the Treasury.
from the employee. The employer was liable to pay the Services provided by your tax professional, financial
deferred taxes to the IRS and was required to do so before institution, payroll service, or other third party may have a
January 1, 2022, to avoid interest, penalties, and additions to fee.
tax on those amounts. Because January 1, 2022, was a To get more information about EFTPS or to enroll in
nonbusiness day, payments made on January 3, 2022, were EFTPS, go to EFTPS.gov, or call 800-555-4477 or
considered timely. Payment of the deferral isn't reported on 800-733-4829 (TDD). Additional information about EFTPS is
Form CT-1. For more information about the deferral of the also available in Pub. 966.
Tier 1 employee taxes, see Notice 2020-65 and Notice
Paid preparers. If you use a paid preparer to complete
2021-11.
Form CT-1, the paid preparer must complete and sign the
How to pay the deferred amount of Tier 1 employer and paid preparer's section of Form CT-1.
employee taxes. You may pay the amount you owe
Additional information. For more information, see one of
electronically using the Electronic Federal Tax Payment
the resources discussed next.
System (EFTPS) or by a check or money order. The
preferred method of payment is EFTPS. For more • Pub. 15 contains information for withholding, depositing,
information, go to EFTPS.gov, or call 800-555-4477 or reporting, and paying over employment taxes.
800-733-4829 (TDD). To pay the deferred amount using • Pub. 15-A contains specialized and detailed employment
EFTPS, select Form CT-1, calendar year 2020, and the tax information supplementing the basic information provided
option to pay the deferred amount. in Pub. 15.
If you pay by check or money order, include a 2020 Form
• Pub. 15-B contains information about the employment tax
treatment of various types of noncash compensation.
CT-1(V), Payment Voucher. The 2020 Form CT-1(V) is on
page 3 of Form CT-1 and is available at IRS.gov/CT1 (select
• Pub. 915 contains the federal income tax rules for social
security benefits and equivalent Tier 1 railroad retirement
the link for "All Form CT-1 Revisions" under "Other Items You
benefits.
May Find Useful"). Make the check or money order payable
to "United States Treasury." Enter your EIN, "Form CT-1,"
• The Railroad Retirement Board (RRB) website at RRB.gov
contains additional employer reporting information and
and "2020" on your check or money order.
instructions.
Payments should be sent to:
How to get forms and publications. You can download or
Department of the Treasury print most of the forms and publications you may need at
Internal Revenue Service IRS.gov/Forms. Otherwise, you can go to IRS.gov/
Cincinnati, OH 45999-0030 OrderForms to place an order and have forms mailed to you.
The IRS will process your order as soon as possible. Don't
For more information about the deferral of Tier 1 employer resubmit requests you've already sent us. You can get forms
and employee taxes, go to IRS.gov/ETD and see Notice and publications faster online.
2020-65 and Notice 2021-11. Where can you get telephone help? You can call the IRS
Outsourcing payroll duties. Generally, as an employer, Business and Specialty Tax Line at 800-829-4933 or
you’re responsible to ensure that tax returns are filed and 800-829-4059 (TDD/TTY for persons who are deaf, hard of
deposits and payments are made, even if you contract with a hearing, or have a speech disability) Monday–Friday from
third party to perform these acts. You remain responsible if 7:00 a.m. to 7:00 p.m. local time (Alaska and Hawaii follow
the third party fails to perform any required action. Before you Pacific time) for answers to your questions about completing
choose to outsource any of your payroll and related tax Form CT-1 or tax deposit rules.
duties (that is, withholding, reporting, and paying over
income taxes and taxes imposed by the Railroad Retirement
Photographs of Missing Children
Tax Act) to a third-party payer, such as a payroll service The IRS is a proud partner with the National Center for
provider or reporting agent, go to IRS.gov/ Missing & Exploited Children® (NCMEC). Photographs of
OutsourcingPayrollDuties for helpful information on this topic. missing children selected by the Center may appear in
For more information on the different types of third-party instructions on pages that would otherwise be blank. You can
payer arrangements, see section 16 of Pub. 15. help bring these children home by looking at the photographs
-4- Instructions for Form CT-1 (2021)
and calling 1-800-THE-LOST (1-800-843-5678) if you party would be making the payments as an agent of the
recognize a child. employer. The employer is required to do the reporting and
payment of railroad retirement taxes with respect to the
General Instructions qualified sick leave compensation and claim the credit for the
qualified sick leave compensation unless the employer has
Purpose of Form CT-1 an agency agreement with the third-party payer that requires
the third-party payer to do the collecting, reporting, and/or
These instructions give you some background information paying or depositing railroad retirement taxes on the qualified
about Form CT-1. They tell you who must file Form CT-1, sick leave compensation. If the employer has an agency
how to complete it line by line, and when and where to file it. agreement with the third-party payer, the third-party payer
Use Form CT-1 to report taxes imposed by the Railroad includes the qualified sick leave compensation on the Form
Retirement Tax Act (RRTA). Use Form 941, Employer's CT-1 filed by the third party and claims the sick leave credit
QUARTERLY Federal Tax Return, or, if applicable, Form on behalf of the employer on Form CT-1.
944, Employer's ANNUAL Federal Tax Return, to report After you file your first Form CT-1, you must file a return for
federal income taxes withheld from your employees' wages each year, even if you didn’t pay taxable compensation
and other compensation. during the year, until you file a final return.
In accordance with Notice 2020-24, 2020-18 I.R.B. 1122, Disregarded entities and qualified subchapter S subsid-
available at IRS.gov/irb/2021-18_IRB#NOT-2021-24, as iaries (QSubs). Eligible single-owner disregarded entities
modified by Notice 2021-65, you may have reduced deposits and QSubs are treated as separate entities for employment
of employment taxes otherwise required to be made that are tax purposes. Eligible single-member entities that haven’t
reported on Form 941 (generally, income tax withholding) in elected to be taxed as corporations must report and pay
anticipation of claiming the credit for qualified sick and family employment taxes on compensation paid to their employees
leave compensation, the employee retention credit, and/or using the entities' own names and employer identification
the COBRA premium assistance credit. For more information numbers (EINs). See Regulations sections 1.1361-4(a)(7)
about qualified sick and family leave compensation, see the and 301.7701-2(c)(2)(iv).
line 1 instructions, later. For more information about these
credits, see the line 16, line 17a, line 17b, and line 17c Where To File
instructions, later. Because these credits are reported when Send Form CT-1 to:
the 2021 Form CT-1 is filed in 2022, a reduction in deposits
of income tax withholding as described above may have Department of the Treasury
resulted in the issuance of a balance due notice and the Internal Revenue Service Center
imposition of penalties and interest when the Form 941 Kansas City, MO 64999-0048
quarterly return was processed.
If you reduced your deposits of employment taxes When To File
reported on Form 941 in anticipation of the credit for qualified File Form CT-1 by February 28, 2022.
sick and family leave compensation, the employee retention
credit, and/or the COBRA premium assistance credit for Definitions
quarters in 2021, and this resulted in those amounts being The terms “employer” and “employee” used in these
included as a balance due in a notice, contact us as soon as instructions are defined in section 3231 and in its regulations.
possible by either (1) writing to the address shown on your
notice, or (2) calling the telephone number shown on your Compensation
notice. If you contact us in writing, include a copy of your Compensation means payment in money, meaning currency
notice and the amount of employment tax deposits reported issued by a recognized authority as a medium of exchange,
on Form 941 that you reduced in anticipation of the credit for for services performed as an employee of one or more
qualified sick and family leave compensation, the employee employers. It includes payment for time lost as an employee.
retention credit, and/or the COBRA premium assistance A few exceptions are described later under Exceptions.
credit. Whether you owe tax, penalties, and interest will
depend upon the credits properly claimed on Form CT-1. Group-term life insurance. Include in compensation the
cost of group-term life insurance over $50,000 you provide to
Who Must File an employee. This amount is subject to Tier 1 and Tier 2
taxes, but not to federal income tax withholding. Include this
For purposes of these instructions, all references to amount on your employee's Form W-2, Wage and Tax
TIP "sick pay" mean ordinary sick pay, not “qualified sick Statement.
leave compensation.”
Former employees for whom you paid the cost of
File Form CT-1 if you paid one or more employees group-term life insurance over $50,000 must pay the
compensation subject to tax under RRTA. employee's share of these taxes with their Form 1040, U.S.
Individual Income Tax Return, or Form 1040-SR, U.S. Tax
A payer of sick pay (including a third party) must file Form
Return for Seniors. You’re not required to collect those taxes.
CT-1 if the sick pay is subject to Tier 1 railroad retirement
For former employees, you must include on Form W-2 the
taxes. Include sick pay payments on lines 8–11 and, if the
part of compensation that consists of the cost of group-term
withholding threshold is met, line 12 of Form CT-1. Follow the
life insurance over $50,000. You must also separately report
reporting procedures for sick pay reporting in section 6 of
on Form W-2 the amount of railroad retirement taxes owed
Pub. 15-A.
by the former employee for coverage provided after
If a third-party payer of sick pay is also paying qualified separation from service. For more information, see section 2
sick leave compensation on behalf of an employer, the third
Instructions for Form CT-1 (2021) -5-
of Pub. 15-B and the General Instructions for Forms W-2 and
W-3.
Employer and Employee Taxes
Timing. Compensation is considered paid when it is actually Tax Rates and Compensation Bases
paid or when it is constructively paid. It is constructively paid
when it is set apart for the employee, or credited to an Tax Rates Compensation
account the employee can control, without any substantial Paid in 2021
limit or condition on how and when the payment is to be Tier 1
made.
Employer and Employee: Each pay 6.2%
Any compensation paid during the current year that was of first . . . . . . . . . . . . . . . . . . . . . . . . . . . $142,800
earned in a prior year is taxable at the current year's tax Tier 1 Medicare
rates; you must include the compensation with the current
year's compensation on Form CT-1, lines 1–12, as Employer and Employee: Each pay 1.45% of . . All
appropriate. An exception applies to nonqualified deferred Tier 1 Employee Additional Medicare Tax
compensation that was subject to Tier 1 and Tier 2 tax in a withholding
prior year. See the rules for nonqualified deferred Employee: Pays 0.9% on
compensation plans in section 5 of Pub. 15-A. compensation exceeding . . . . . . . . . . . . . $200,000
Exceptions. Compensation doesn't include the following. Tier 2
• Certain benefits provided to or on behalf of an employee if Employer: Pays 13.1% of first . . . . . . . . . . . . $106,200
at the time the benefits are provided it is reasonable to
Employee: Pays 4.9% of first . . . . . . . . . . . . $106,200
believe the employee can exclude such benefits from
income. For information on what benefits are excludable, see
Pub. 15-B. Examples of this type of benefit include:
1. Certain employee achievement awards under section Employer Taxes
74(c), Employers must pay both Tier 1 and Tier 2 taxes, except for
2. Certain scholarship and fellowship grants under the Tier 1 Employer tax (line 1) on qualified sick and family
section 117, leave compensation for leave taken before April 1, 2021, and
3. Certain fringe benefits under section 132, and the Tier 1 Employee Additional Medicare Tax. Tier 1 tax is
divided into two parts. The amount of compensation subject
4. Employer payments to an Archer MSA under section to each tax is different. See the table above for the 2021 tax
220 or health savings accounts (HSAs) under section 223. rates and compensation bases.
• Stock or stock options.
• Payments made specifically for traveling or other bona fide Concurrent employment. If two or more related
and necessary expenses that meet the rules in the corporations that are rail employers employ the same
regulations under section 62. individual at the same time and pay that individual through a
• Payments for services performed by a nonresident alien common paymaster that is one of the corporations, the
temporarily present in the United States as a nonimmigrant corporations are considered a single employer. They have to
under subparagraphs (F), (J), (M), or (Q) of the Immigration pay, in total, no more in railroad retirement taxes than a
and Nationality Act. single employer would. See Regulations section
• Compensation under $25 earned in any month by an 31.3121(s)-1 for more information.
employee in the service of a local lodge or division of a Successor employers. Successor employers should see
railway-labor-organization employer. section 3231(e)(2)(C) and Pub. 15 to see if they can use the
Exceptions for sickness or accident disability predecessor's compensation paid against the maximum
payments. For purposes of employee and employer Tier 1 compensation bases.
taxes, compensation doesn't include sickness or accident
disability payments made to or on behalf of an employee or Employee Taxes
dependents: You must withhold the employee's part of Tier 1 and Tier 2
• Under a workers' compensation law, taxes. See the table under Employer and Employee Taxes,
• Under section 2(a) of the Railroad Unemployment earlier, for the tax rates and compensation bases. See Tips,
Insurance Act for days of sickness due to an on-the-job later, for information on the employee tax on tips.
injury,
• Under the Railroad Retirement Act, or Withholding or payment of employee tax by employer.
• More than 6 months after the calendar month the You must collect the employee railroad retirement tax from
employee last worked. each employee by withholding it from employee
compensation. If you don't withhold the employee tax, you
For purposes of Tier 2 taxes, compensation doesn't
must still pay the tax. If you withhold too much or too little tax
include payments made to or on behalf of an employee or
because you can't determine the correct amount, correct the
dependents under a sickness or accident disability plan or a
amount withheld by an adjustment, credit, or refund
medical or hospitalization plan in connection with sickness or
according to the applicable regulations.
accident disability.
If you pay the railroad retirement tax for your employee
rather than withholding it, the amount of the employee's
compensation is increased by the amount of that tax. See
Rev. Proc. 83-43,1983-1 C.B. 778, for information on how to
figure and report the proper amounts.
-6- Instructions for Form CT-1 (2021)
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
over to the employee for charge customers, tips the preceding the current calendar year. For example, the
employee received directly from customers, and tips lookback period for calendar year 2022 is calendar year
received from other employees under any tip-sharing 2020.
arrangement. Both directly and indirectly tipped employees
must report tips to you. Cash tips must be reported for every Use the table below to determine which deposit schedule
month, unless the cash tips for the month are less than $20. to follow for 2022.
Stop collecting the Tier 1 Employee tax when his or her
IF you reported taxes THEN for 2022 you’re a...
compensation and tips for tax year 2021 reach $142,800. (Form CT-1, line 19) for the
Collect the Tier 1 Employee Medicare tax for the whole year lookback period (2020) of...
on all compensation and tips. Collect the Tier 1 Employee
$50,000 or less Monthly schedule depositor
Additional Medicare Tax withholding on compensation and
tips that exceed $200,000 for the calendar year. More than $50,000 Semiweekly schedule depositor
An employee must furnish you with a written (or electronic)
statement of cash tips, signed by the employee, showing (a)
his or her name, address, and social security number; (b)
your name and address; (c) the month or period for which the Example. Rose Co. reported Form CT-1 taxes as follows.
statement is furnished; and (d) the total amount of cash tips. • 2020 Form CT-1, line 19—$49,000.
Pub. 1244, Employee's Daily Record of Tips and Report to • 2021 Form CT-1, line 19—$52,000.
Employer, a booklet for daily entry of tips and forms to report Rose Co. is a monthly schedule depositor for 2022
tips to employers, is available at IRS.gov/Forms. because its Form CT-1 taxes for its lookback period
Tips are considered to be paid at the time the employee (calendar year 2020) weren't more than $50,000. However,
reports them to you. You must collect both employee railroad for 2023, Rose Co. is a semiweekly schedule depositor
retirement tax and federal income tax on cash tips reported because the total taxes exceeded $50,000 for its lookback
to you from the employee's compensation (after withholding period (calendar year 2021).
employee railroad retirement and federal income tax related New employer. If you’re a new employer, your taxes for
to the nontip compensation) or from other funds the both years of the lookback period are considered to be zero.
employee makes available. Apply the compensation or other Therefore, you’re a monthly schedule depositor for the first
funds first to the railroad retirement tax and then to federal and second years of your business. However, see $100,000
income tax. You don't have to pay employer railroad Next-Day Deposit Rule, later.
retirement taxes on tips.
Adjustments and the lookback rule. To determine the
If, by the 10th of the month after the month you received amount of taxes paid for the lookback period, use only the
an employee's tip income report, you don't have enough Form CT-1 taxes reported on your original return.
employee funds available to withhold the employee tax, you Adjustments to a return for a prior period aren't taken into
may report the excess amount without withholding the account in determining the taxes for that prior period.
related tax. Include the tips your employees report to you on
Example. Maple Co. originally reported Form CT-1 taxes
lines 4, 5, 6, and 7, even if you were unable to withhold the
of $45,000 for the lookback period (2020). Maple Co.
employee's share of tax. Then report the uncollected Tier 1
discovered in March 2022 that the tax during the lookback
Employee tax, Tier 1 Employee Medicare tax, Tier 1
period (2020) was understated by $10,000 and will correct
Employee Additional Medicare Tax withholding, and Tier 2
this error with an adjustment on Form CT-1 X filed for 2020.
Employee tax on tips on line 14. See section 6 of Pub. 15.
Maple Co. is a monthly schedule depositor for 2022
Depositing Taxes because the lookback period Form CT-1 taxes are based on
For Tier 1 and Tier 2 taxes, you’re either a monthly schedule the amount originally reported ($45,000), which wasn't more
depositor or a semiweekly schedule depositor. However, see than $50,000. For purposes of the lookback rule, the $10,000
the $2,500 Rule and the $100,000 Next-Day Deposit Rule adjustment doesn't affect either 2020 taxes or 2022 taxes.
under Exceptions to the Deposit Rules, later. The terms See Treasury Decision 9405, available at IRS.gov/irb/
“monthly schedule depositor” and “semiweekly schedule 2008-32_IRB#TD-9405.
depositor” identify which set of rules you must follow when a
tax liability arises (for example, when you have a payday). When To Deposit
They don't refer to how often your business pays its Monthly Schedule Depositor
employees or to how often you’re required to make deposits.
If you’re a monthly schedule depositor, deposit employer and
If you were a monthly schedule depositor for the entire employee Tier 1 and Tier 2 taxes accumulated during a
year, complete the Monthly Summary of Railroad Retirement calendar month by the 15th day of the following month.
Tax Liability in Part II of Form CT-1. If you were a semiweekly Example. Spruce Co. is a monthly schedule depositor
schedule depositor during any part of the year or you with seasonal employees. Spruce Co. paid compensation
accumulated $100,000 or more on any day during a deposit each Friday during May but didn't pay any compensation
period, you must complete Form 945-A, Annual Record of during June. Under the monthly schedule deposit rule,
Federal Tax Liability. Spruce Co. must deposit the combined taxes for the May
paydays by June 15. Spruce Co. doesn't have a deposit
Lookback Period requirement for June (due by July 15) because no
Before each year begins, you must determine the deposit compensation was paid and, therefore, Spruce Co. doesn't
schedule to follow for depositing Tier 1 and Tier 2 taxes for a have a tax liability for the month.
Instructions for Form CT-1 (2021) -7-
Semiweekly Schedule Depositor deposit period, you must deposit the taxes by the next
business day regardless of whether you’re a monthly or
If you’re a semiweekly schedule depositor, use the table
semiweekly schedule depositor. If you're a monthly schedule
below to determine when to make deposits.
depositor and accumulate a $100,000 tax liability on any day
Deposit Tier 1 and Tier 2 taxes No later than...
during the deposit period, you become a semiweekly
for payments made on... schedule depositor on the next day and remain so for at least
the rest of the calendar year and for the following calendar
Wednesday, Thursday, and/or The following Wednesday year. If you become a semiweekly schedule depositor under
Friday
this rule solely as a result of the relief provided in Notice
Saturday, Sunday, Monday, The following Friday 2021-65 regarding the early termination of the employee
and/or Tuesday retention credit for the fourth quarter of 2021, you may be
converted back to a monthly schedule depositor by
contacting the IRS. You may continue to deposit in
accordance with your status as a monthly schedule
Example. Green, Inc., a semiweekly schedule depositor, depositor, but you may receive a system-generated
pays compensation on the last Friday of each month. failure-to-deposit (FTD) penalty notice after you file your
Although Green, Inc., is a semiweekly schedule depositor, Form CT-1 for 2022. Contact the IRS at the toll-free number
Green, Inc., will deposit just once a month because Green, on your FTD penalty notice to request abatement of the FTD
Inc., pays compensation only once a month. The deposit, penalty and to be converted back to a monthly schedule
however, will be made under the semiweekly deposit depositor. Aside from this exception, ordinary rules for
schedule as follows: Green, Inc.’s taxes for the April 29, 2022 determining deposit frequency will continue to apply. The
(Friday), payday must be deposited by May 4, 2022 $100,000 tax liability threshold requiring a next-day deposit is
(Wednesday). Under the semiweekly deposit rule, taxes determined before you consider any reduction of your liability
arising on Wednesday through Friday must be deposited by for nonrefundable credits. For more information, including an
the following Wednesday. example, see frequently asked question 17 at IRS.gov/ETD.
The last day of the calendar year ends the If you’re a monthly schedule depositor and you
! semiweekly deposit period and begins a new one. accumulate $100,000 or more on any day during the month,
CAUTION you become a semiweekly schedule depositor on the next
day for the remainder of the calendar year and for the
Deposits Due on Business Days Only following year.
Once a semiweekly schedule depositor accumulates
If a deposit is required to be made on a day that isn't a
$100,000 or more in a deposit period, it must stop
business day, the deposit is considered to have been made
accumulating at the end of that day and begin to accumulate
timely if it is made by the close of the next business day. A
anew on the next day. The following examples explain this
business day is any day other than a Saturday, Sunday, or
rule.
legal holiday. For example, if a deposit is due on a Friday and
Friday is a legal holiday, the deposit will be considered timely Example of $100,000 Next-Day Deposit Rule.
if it is made by the following Monday (if that Monday is a Fir Co. is a semiweekly schedule depositor. On Monday, Fir
business day). The term “legal holiday” for deposit purposes Co. accumulates taxes of $110,000 and must deposit this
includes only those legal holidays in the District of Columbia. amount by Tuesday, the next business day. On Tuesday, Fir
For a list of legal holidays, see section 11 of Pub. 15. Co. accumulates additional taxes of $30,000. Because the
$30,000 isn't added to the previous $110,000, Fir Co. must
deposit the $30,000 by Friday using the semiweekly deposit
Semiweekly schedule depositors will always have at least
schedule.
3 business days following the close of the semiweekly period
to make a deposit. If any of the 3 weekdays after the end of a Example of $100,000 Next-Day Deposit Rule during
semiweekly period is a legal holiday, you have 1 additional the first year of business. Elm, Inc., started its business
day to deposit. For example, if you have Form CT-1 taxes on Monday, May 2, 2022. Because this was the first year of
accumulated for payments made on Friday and the following its business, its Form CT-1 taxes for its lookback period
Monday is a legal holiday, the deposit normally due on (2020) are considered to be zero, and Elm, Inc., is a monthly
Wednesday may be made on Thursday (allowing 3 business schedule depositor. On Wednesday, May 4, it paid
days to make the deposit). compensation for the first time and accumulated taxes of
$40,000. On Friday, May 6, it paid compensation and
accumulated taxes of $60,000, bringing its total accumulated
Exceptions to the Deposit Rules (undeposited) taxes to $100,000. Because Elm, Inc.,
The two exceptions that apply to the deposit rules are the: accumulated $100,000 or more on May 6 (Friday), Elm, Inc.,
• $2,500 Rule, and must deposit the $100,000 by May 9 (Monday), the next
• $100,000 Next-Day Deposit Rule. business day. Elm, Inc., became a semiweekly schedule
depositor on May 7. Elm, Inc., will be a semiweekly schedule
$2,500 Rule. If your total Form CT-1 taxes after adjustments
depositor for the rest of 2022 and for 2023.
and nonrefundable credits (line 19) for the year are less than
Example of when $100,000 Next-Day Deposit Rule
$2,500 and the taxes are fully paid with a timely filed Form
doesn't apply. Oak Co., a semiweekly schedule depositor,
CT-1, no deposits are required. However, if you’re unsure
accumulated taxes of $95,000 on a Tuesday (of a
that you will accumulate less than $2,500, deposit under the
Saturday-through-Tuesday deposit period) and accumulated
appropriate deposit rules so that you won't be subject to
$10,000 on Wednesday (of a Wednesday-through-Friday
deposit penalties.
deposit period). Because the $10,000 was accumulated in a
$100,000 Next-Day Deposit Rule. If you accumulate deposit period different from the one in which the $95,000
undeposited taxes of $100,000 or more on any day during a
-8- Instructions for Form CT-1 (2021)
was accumulated, the $100,000 Next-Day Deposit Rule EFTPS.gov, or call 800-555-4477 or 800-733-4829 (TDD).
doesn’t apply. Thus, Oak Co. must deposit $95,000 by Friday Additional information about EFTPS is also available in Pub.
and $10,000 by the following Wednesday. 966.
Reducing your deposits for COVID-19 credits. For an EFTPS deposit to be on time, you must
Employers eligible to claim the credit for qualified sick and submit the deposit by 8 p.m. Eastern time the day
family leave compensation, the employee retention credit, !
CAUTION before the date the deposit is due.
and/or the COBRA premium assistance credit can reduce
their deposits by the amount of their anticipated credits. You Same-day wire payment option. If you fail to submit a
may reduce your deposits of federal employment taxes in deposit transaction on EFTPS by 8 p.m. Eastern time the day
anticipation of the COBRA premium assistance credit with before the date a deposit is due, you can still make your
regard to a period of coverage as of the date you are entitled deposit on time by using the Federal Tax Collection Service
to the credit. Employers won't be subject to an FTD penalty (FTCS) to make a same-day wire payment. To use the
for reducing their deposits if certain conditions are met. See same-day wire payment method, you will need to make
the instructions for line 16, line 17a, line 17b, and line 17c for arrangements with your financial institution ahead of time.
more information on these credits. For more information on Please check with your financial institution regarding
reducing deposits, see Notice 2020-22, 2020-17 I.R.B. 664, availability, deadlines, and costs. Your financial institution
available at IRS.gov/irb/2020-17_IRB#NOT-2020-22; and may charge you a fee for payments made this way. To learn
Notice 2021-24. See the instructions for Part II, later, for more about the information you will need to give your
instructions on how to adjust your tax liabilities reported on financial institution to make a same-day wire payment, go to
Part II or Form 945-A for nonrefundable credits. IRS.gov/SameDayWire.
Due to the termination of the employee retention credit for
Accuracy of Deposits Rule. You’re required to deposit
the fourth quarter of 2021 for employers that aren't recovery
100% of your railroad retirement taxes on or before the
startup businesses, the IRS will no longer waive FTD
deposit due date. However, penalties won't be applied for
penalties for employers that reduce deposits in anticipation of
depositing less than 100% if both of the following conditions
the employee retention credit after December 20, 2021,
are met.
unless the employer is a recovery startup business. Some
employers that are no longer eligible to claim the employee 1. Any deposit shortfall doesn't exceed the greater of
retention credit for the fourth quarter of 2021 may have $100 or 2% of the amount of taxes otherwise required to be
already reduced their employment tax deposits in deposited.
anticipation of claiming the employee retention credit for the 2. The deposit shortfall is paid or deposited by the
fourth quarter of 2021. For deposits due on or before shortfall makeup date for each type of depositor as described
December 20, 2021, with respect to compensation paid on or below.
after October 1, 2021, an employer that isn't a recovery • Monthly schedule depositor. Deposit the shortfall or pay
startup business won't be subject to an FTD penalty for the it with your return by the due date of Form CT-1. You may
fourth quarter of 2021 if the employer: pay the shortfall with Form CT-1 even if the amount is $2,500
• Reduced its deposits in anticipation of the employee or more.
retention credit, consistent with the rules provided by section • Semiweekly schedule depositor. Deposit the shortfall
3.b. of Notice 2021-24; by the earlier of the first Wednesday or Friday on or after the
• Deposits the amounts initially retained in anticipation of the 15th of the month following the month in which the shortfall
employee retention credit on or before the due date of the occurred. For example, if a semiweekly schedule depositor
deposit for compensation paid on December 31, 2021 has a deposit shortfall during May 2022, the shortfall makeup
(regardless of whether compensation is actually paid on that date is June 15, 2022 (Wednesday).
date); and
• Reports the tax liability associated with the termination of Penalties and Interest
the employer’s employee retention credit on their 2021 Form The law provides penalties for failure to file a return, late filing
CT-1, Part II (for December), or, if a semiweekly schedule of a return, late payment of taxes, failure to make deposits,
depositor, on Form 945-A for the applicable day or days in and late deposits unless filing and/or paying late is due to
December. For more information, see the Part II instructions, reasonable cause and not due to willful neglect. Interest is
later. charged on taxes paid late at the rate set by law. For more
Example. Reducing deposits for COBRA premium information, see Pub. 15. Deposit or pay your taxes when
assistance. Maple Co. has a semimonthly payroll period. they are due, unless you meet the requirements discussed in
Sophie Rose elected COBRA premium assistance on May Notice 2020-22 and Notice 2021-24. See Notice 2021-65 for
17, 2021. Maple Co. became entitled to a COBRA premium modifications to Notice 2021-24 under the Infrastructure Act.
assistance credit as of May 17, 2021, for the premiums not If you receive a notice about a penalty after you file this
paid by Sophie (an assistance eligible individual) for the return, reply to the notice with an explanation and we will
periods of coverage of April 1, 2021, through April 30, 2021, determine if you meet reasonable cause criteria. Don't attach
and May 1, 2021, through May 31, 2021. Maple Co. could an explanation when you file your return.
have reduced its federal employment tax deposits as of May
17, 2021, in anticipation of the credit to which Maple Co. Use Form 843 to request abatement of assessed
became entitled. penalties or interest. Don't request abatement of assessed
penalties or interest on Form CT-1 or Form CT-1 X.
Electronic Deposit Requirement Order in which deposits are applied. Generally, tax
You must use EFT to make all federal tax deposits. deposits are applied first to the most recent tax liability within
Generally, an EFT is made using EFTPS. To get more the specified tax period to which the deposit relates. If you
information about EFTPS or to enroll in EFTPS, go to receive an FTD penalty notice, you may designate how your
payment is to be applied in order to minimize the amount of
Instructions for Form CT-1 (2021) -9-
the penalty. You must respond within 90 days of the date of FFCRA and amended for purposes of the ARP. See the
the notice. Follow the instructions on the notice you received. instructions for line 16 for information about the credit for
See Rev. Proc. 2001-58 for more information. You can find qualified sick and family leave compensation for leave taken
Rev. Proc. 2001-58 on page 579 of Internal Revenue Bulletin before April 1, 2021, and the instructions for line 17b for
2001-50 at IRS.gov/pub/irs-irbs/irb01-50.pdf. information about the credit for qualified sick and family leave
compensation for leave taken after March 31, 2021, and
Trust fund recovery penalty. If taxes that must be withheld
before October 1, 2021.
(that is, trust fund taxes) aren't withheld or aren't deposited or
paid to the United States Treasury, the trust fund recovery Although qualified sick leave compensation and
penalty may apply. The penalty is 100% of the unpaid trust ! qualified family leave compensation are defined as
fund tax. If these unpaid taxes can't be immediately collected CAUTION compensation determined without regard to the
from the employer or business, the trust fund recovery exclusions under section 3231(e)(1) for purposes of the
penalty may be imposed on all persons who are determined credit for qualified sick and family leave compensation, don't
by the IRS to be responsible for collecting, accounting for, or include any compensation otherwise excluded under section
paying over these taxes, and who acted willfully in not doing 3231(e)(1) when reporting qualified sick leave compensation
so. For more information, see Trust Fund Recovery Penalty and qualified family leave compensation on lines 1, 2, 3, 4, 5,
in section 11 of Pub. 15. The trust fund recovery penalty 6, and 7.
won't apply to any amount of trust fund taxes an employer
EPSLA. Employers with fewer than 500 employees and,
holds back in anticipation of any credits they are entitled to. It
for leave taken after March 31, 2021, and before October 1,
also won't apply to applicable taxes properly deferred under
2021, certain governmental employers without regard to
Notice 2020-65 and Notice 2021-11 if paid by the due date.
number of employees (except for the federal government and
its agencies and instrumentalities unless described in section
Specific Instructions 501(c)(1)) are entitled to a credit if they provide paid sick
leave to employees that otherwise meets the requirements of
Final Return the EPSLA. Under the EPSLA, as amended for purposes of
If you stop paying taxable compensation and won't have to the ARP, compensation is qualified sick leave compensation
file Form CT-1 in the future, you must file a final return and if paid to employees that are unable to work or telework
check the final return box at the top of Form CT-1 under before October 1, 2021, because the employee:
“2021.” The final return should be accompanied by a 1. Is subject to a federal, state, or local quarantine or
statement providing the last date on which you paid isolation order related to COVID-19;
compensation that you reported on Form CT-1, the address 2. Has been advised by a health care provider to
at which the records for your Forms CT-1 will be kept, and self-quarantine due to concerns related to COVID-19;
the name of the person keeping the records. If the business 3. Is experiencing symptoms of COVID-19 and seeking a
has been transferred to another person, the statement should medical diagnosis; or, for leave taken after March 31, 2021,
include the name and address of the transferee and the date and before October 1, 2021, is seeking or awaiting the
of the transfer. If the business wasn't transferred or the results of a diagnostic test for, or a medical diagnosis of,
transferee isn't known, the statement should so state. COVID-19 (and the employee has been exposed to
Processing of your return may be delayed if you don't COVID-19 or the employee's employer has requested such
! provide the required amounts in the Compensation test or diagnosis), or the employee is obtaining
CAUTION and Tax columns. immunizations related to COVID-19 or recovering from an
injury, disability, illness, or condition related to such
Line 1—Tier 1 Employer Tax immunization;
Enter the compensation (other than tips and sick pay), 4. Is caring for an individual subject to an order described
including qualified sick leave compensation and qualified in (1) or who has been advised as described in (2);
family leave compensation for leave taken after March 31, 5. Is caring for son or daughter because the school or
2021, and before October 1, 2021; and qualified place of care for that child has been closed, or the childcare
compensation (other than qualified health plan expenses) for provider for that child is unavailable, due to COVID-19
the employee retention credit, subject to Tier 1 Employer tax precautions; or
in the Compensation column. Don't include qualified sick 6. Is experiencing any other substantially similar
leave compensation or qualified family leave compensation condition specified by the U.S. Department of Health and
for leave taken before April 1, 2021. Multiply by 6.2% and Human Services, which for leave taken after March 31, 2021,
enter the result in the Tax column. The total amount listed in and before October 1, 2021, includes to accompany an
the Compensation column for lines 1 and 8 combined may individual to obtain immunization related to COVID-19, or to
not be more than $142,800 per employee. For more care for an individual who is recovering from any injury,
information on qualified compensation for the employee disability, illness, or condition related to the immunization.
retention credit, see the instructions for line 17a, later.
Son or daughter. A son or daughter must generally have
Qualified Sick Leave Compensation and been under 18 years of age or incapable of self-care
Qualified Family Leave Compensation because of a mental or physical disability. A son or daughter
includes a biological child, adopted child, stepchild, foster
Qualified sick leave compensation. For purposes of the child, legal ward, or child for whom the employee assumes
credit for qualified sick and family leave compensation, parental status and carries out the obligations of a parent.
qualified sick leave compensation is compensation Limits on qualified sick leave compensation. The
(determined without regard to the exclusions under section EPSLA, as amended for purposes of the ARP, provides
3231(e)(1)) paid under the EPSLA as enacted under the different limitations for different circumstances under which
-10- Instructions for Form CT-1 (2021)
qualified sick leave compensation is paid. For paid sick leave other paid time off. After an employee takes leave for 10
qualifying under (1), (2), or (3), earlier, the amount of days, the employer provides the employee paid leave (that
qualified sick leave compensation is determined at the is, qualified family leave compensation) for up to 10 weeks.
employee's regular rate of pay, but the compensation may For leave taken after March 31, 2021, and before October 1,
not exceed $511 for any day (or portion of a day) for which 2021, the 10-day rule discussed above doesn't apply and the
the individual is paid sick leave. For paid sick leave qualifying paid leave can be provided for up to 12 weeks.
under (4), (5), or (6), earlier, the amount of qualified sick Rate of pay and limit on compensation. The rate of pay
leave compensation is determined at two-thirds the must be at least two-thirds of the employee's regular rate of
employee's regular rate of pay, but the compensation may pay (as determined under the Fair Labor Standards Act of
not exceed $200 for any day (or portion of a day) for which 1938), multiplied by the number of hours the employee
the individual is paid sick leave. The EPSLA also limits each otherwise would have been scheduled to work. For leave
individual to a maximum of up to 80 hours of paid sick leave taken after March 31, 2020, and before April 1, 2021, the
in total for leave taken after March 31, 2020, and before April, qualified family leave compensation can't exceed $200 per
1, 2021. The ARP resets this limit at 80 hours of paid sick day or $10,000 in the aggregate per employee. For leave
leave for leave taken after March 31, 2021, and before taken after March 31, 2021, and before October 1, 2021, the
October 1, 2021. Therefore, for leave taken after March 31, limit resets and the total qualified leave compensation can't
2020, and before April 1, 2021, the maximum amount of paid exceed $200 per day or $12,000 in the aggregate per
sick leave compensation can't exceed $5,110 for an employee.
employee for leave under (1), (2), or (3), and it can't exceed For more information about qualified family leave
$2,000 for an employee for leave under (4), (5), or (6). These compensation, go to IRS.gov/PLC.
maximum amounts also reset and apply to leave taken after
March 31, 2021, and before October 1, 2021. Line 2—Tier 1 Employer Medicare Tax
For more information about qualified sick leave Enter the compensation (other than tips and sick pay),
compensation, go to IRS.gov/PLC. including qualified sick leave compensation, qualified family
Qualified family leave compensation. For purposes of leave compensation, and qualified compensation (other than
the credit for qualified sick and family leave compensation, qualified health plan expenses) for the employee retention
qualified family leave compensation is compensation credit, subject to Tier 1 Employer Medicare tax in the
(determined without regard to the exclusions under section Compensation column. Multiply by 1.45% and enter the
3231(e)(1)) paid under the Expanded FMLA as enacted result in the Tax column.
under the FFCRA and amended for purposes of the ARP.
However, some compensation eligible for the credit should
Line 3—Tier 2 Employer Tax
not be reported as taxable compensation on lines 1, 2, 3, 4, Enter the compensation (other than tips), including qualified
5, 6, and 7. See the Caution, earlier, for more information. sick leave compensation, qualified family leave
See the instructions for line 16 for information about the compensation, and qualified compensation (other than
credit for qualified sick and family leave compensation for qualified health plan expenses) for the employee retention
leave taken before April 1, 2021, and the instructions for credit, subject to Tier 2 Employer tax in the Compensation
line 17b for information about the credit for qualified sick and column. Don't enter more than $106,200 per employee.
family leave compensation for leave taken after March 31, Multiply by 13.1% and enter the result in the Tax column.
2021, and before October 1, 2021.
Expanded FMLA. Employers with fewer than 500
Line 4—Tier 1 Employee Tax
employees and, for leave taken after March 31, 2021, and Enter the compensation, including tips reported (but
before October 1, 2021, certain governmental employers excluding sick pay), qualified sick leave compensation,
without regard to number of employees (except for the qualified family leave compensation, and qualified
federal government and its agencies and instrumentalities compensation (other than qualified health plan expenses) for
unless described in section 501(c)(1)) are entitled to a credit the employee retention credit, subject to Tier 1 Employee tax
under the FFCRA, as amended for purposes of the ARP, if in the Compensation column. Multiply by 6.2% and enter the
they provide paid family leave to employees that otherwise result in the Tax column. The total amount listed in the
meets the requirements of the Expanded FMLA. For leave Compensation column for lines 4 and 10 combined may not
taken before April 1, 2021, compensation is qualified family be more than $142,800 per employee.
leave compensation if paid to an employee who has been Stop collecting the 6.2% Tier 1 Employee tax when the
employed for at least 30 calendar days when an employee is employee's compensation (including sick pay), tips, qualified
unable to work due to the need to care for a son or daughter sick leave compensation, qualified family leave
under 18 years of age or incapable of self-care because of a compensation, and qualified compensation (other than
mental or physical disability because the school or place of qualified health plan expenses) for the employee retention
care for that child has been closed, or the childcare provider credit reach the maximum for the year ($142,800 for 2021).
for that child is unavailable, due to a public health However, your liability for Tier 1 Employer tax on
emergency. See Son or daughter, earlier, for more compensation continues until the compensation (including
information. For leave taken after March 31, 2021, and sick pay), and qualified compensation (other than qualified
before October 1, 2021, the leave can be granted for any health plan expenses) for the employee retention credit, but
other reason provided by the EPSLA, as amended for not including tips, totals $142,800 for the year.
purposes of the ARP.
For leave taken before April 1, 2021, the first 10 days for Line 5—Tier 1 Employee Medicare
which an employee takes leave may be unpaid. During this
period, employees may use other forms of paid leave, such
Tax
as qualified sick leave, accrued sick leave, annual leave, or Enter the compensation, including tips reported (but
excluding sick pay), qualified sick leave compensation,
Instructions for Form CT-1 (2021) -11-
qualified family leave compensation, and qualified column for lines 1 and 8 combined may not be more than
compensation (other than qualified health plan expenses) for $142,800 per employee. For Tier 1 Employee taxes, the total
the employee retention credit subject to Tier 1 Employee amount listed in the Compensation column for lines 4 and 10
Medicare tax in the Compensation column. Multiply by 1.45% combined may not be more than $142,800 per employee.
and enter the result in the Tax column. For information on Tier 1 Medicare taxes aren't subject to a dollar limitation.
reporting tips, see Tips, earlier.
All compensation (including sick pay) that is subject to
Line 6—Tier 1 Employee Additional Tier 1 Medicare tax is subject to Tier 1 Employee Additional
Medicare Tax if paid in excess of the $200,000 withholding
Medicare Tax Withholding threshold.
Enter the compensation, including tips reported (but If you’re a railroad employer paying your employees sick
excluding sick pay), qualified sick leave compensation, pay, or a third-party payer who didn't notify the employer of
qualified family leave compensation, and qualified the payments (thereby subject to the employee and employer
compensation (other than qualified health plan expenses) for tax), make entries on lines 8–12. If you’re subject to only the
the employee retention credit, that is subject to Tier 1 employer or employee tax, complete only the applicable
Employee Additional Medicare Tax withholding. You’re lines. Multiply by the appropriate rates and enter the results
required to begin withholding Tier 1 Employee Additional in the Tax column.
Medicare Tax in the pay period in which you pay
compensation in excess of $200,000 to an employee and Line 13—Total Tax Based on
continue to withhold it each pay period until the end of the
calendar year. Tier 1 Employee Additional Medicare Tax is Compensation
only imposed on the employee. There is no employer share Add lines 1 through 12 and enter the result on line 13.
of Tier 1 Additional Medicare Tax. All compensation
(including sick pay) that is subject to Tier 1 Medicare tax is Line 14—Adjustments to Taxes Based
subject to Tier 1 Employee Additional Medicare Tax if paid in
excess of the $200,000 withholding threshold.
on Compensation
Don't use line 14 for prior period adjustments. Make
Go to IRS.gov/ADMT for more information on Tier 1 all prior period adjustments on Form CT-1 X.
Employee Additional Medicare Tax. !
CAUTION
Line 7—Tier 2 Employee Tax Enter on line 14:
Enter the compensation, including tips reported, qualified
• A fractions-of-cents adjustment (see Adjustment for
fractions of cents, later);
sick leave compensation, qualified family leave
compensation, and qualified compensation (other than
• Credits for overpayments of penalty or interest paid on tax
for earlier years; and
qualified health plan expenses) for the employee retention
credit, subject to Tier 2 Employee tax in the Compensation
• Any uncollected Tier 1 Employee tax, Tier 1 Employee
Medicare tax, Tier 1 Employee Additional Medicare Tax, and
column. Only the first $106,200 of the employee's
Tier 2 Employee tax on tips.
compensation (including tips, qualified sick leave
compensation, qualified family leave compensation, and Enter the total of these adjustments in the Tax column. If
qualified compensation (other than qualified health plan you’re reporting both an addition and a subtraction, enter
expenses) for the employee retention credit) for 2021 is only the difference between the two on line 14. If the net
subject to this tax. Multiply by 4.9% and enter the result in the adjustment is negative, report the amount on line 14 using a
Tax column. For information on reporting tips, see Tips, minus sign, if possible. If your computer software doesn't
earlier. allow the use of minus signs, you may use parentheses.
Any compensation paid during the current year that Don't include on line 14 any 2020 overpayment that is
! was earned in prior years (reported to the Railroad applied to this year's return (this is included on line 20).
CAUTION Retirement Board on Form BA-4, Report of
Required statement. Except for adjustments for fractions of
Creditable Compensation Adjustments) is taxable at the
cents, explain amounts entered on line 14 in a separate
current year tax rates, unless special timing rules for
statement. Include your name, EIN, calendar year of the
nonqualified deferred compensation apply. See Pub.15-A.
return, and “Form CT-1” on each page you attach. Include in
Include such compensation with current year compensation
the statement the following information.
on lines 1–7, as appropriate.
• An explanation of the item the adjustment is intended to
correct showing the compensation subject to Tier 1 and Tier
Lines 8—12—Tier 1 Taxes on Sick 2 taxes and their respective tax rates.
Pay • The amount of the adjustment.
• The name and account number of any employee from
Don't include qualified sick leave compensation, whom employee tax was undercollected or overcollected.
! qualified family leave compensation, or qualified • How you and the employee have settled any
CAUTION compensation for the employee retention credit on undercollection or overcollection of employee tax.
lines 8 through 12.
Adjustment for fractions of cents. If there is a small
Enter any sick pay payments during the year that are difference between the total employee tax (lines 4–7 and 10–
subject to Tier 1 taxes, Tier 1 Medicare taxes, and Tier 1 12) and the total actually withheld from employee
Employee Additional Medicare Tax withholding in the compensation including tips, it may be caused by rounding to
Compensation column. Multiply by the rate for the line and the nearest cent each time you figured payroll. The
enter the result in the Tax column for that line. For Tier 1 difference, positive or negative, is your fractions-of-cents
Employer taxes, the total amount listed in the Compensation adjustment to be reported on line 14. If the actual amount
-12- Instructions for Form CT-1 (2021)
withheld is less, report a negative adjustment in the entry paid for with after-tax contributions. For more information, go
space. If the actual amount is more, report a positive to IRS.gov/PLC.
adjustment.
You must include the full amount (both the
If this is the only entry on line 14, you’re not required TIP nonrefundable and refundable portions) of the credit
TIP to attach a statement explaining the adjustment. for qualified sick and family leave compensation in
your gross income for the tax year that includes the last day
of any calendar quarter in which a credit is allowed. You can't
Line 15—Total Taxes After use the same compensation for the employee retention credit
Adjustments and the credits for paid sick and family leave.
Combine the amounts shown on lines 13 and 14 and enter
the result on line 15.
Line 17a—Nonrefundable Portion of
Form CT-1 and these instructions use the terms Employee Retention Credit
TIP “nonrefundable” and “refundable” when discussing Certain government entities are entitled to the credit
credits. The term “nonrefundable” means the portion TIP for 2021, including (1) federal instrumentalities
of the credit which is limited by law to the amount of certain described in section 501(c)(1) and exempt from tax
taxes. The term “refundable” means the portion of the credit under section 501(a); and (2) any government, agency, or
which is in excess of those taxes. instrumentality that is a college or university or the principal
purpose or function of the entity is providing medical or
Line 16—Nonrefundable Portion of hospital care.
Credit for Qualified Sick and Family
Instructions for Qualified Compensation Paid
Leave Compensation for Leave Taken After December 31, 2020, and Before July 1,
Before April 1, 2021 2021
Certain private employers with fewer than 500 employees Enter the nonrefundable portion of the employee retention
that provide paid sick leave under the EPSLA and/or provide credit from Worksheet 2, Step 2, line 2h. The employee
paid family leave under the Expanded FMLA are eligible to retention credit is 70% of the qualified compensation you
claim the credit for qualified sick and family leave paid to your employees after December 31, 2020, and before
compensation for leave taken before April 1, 2021. For July 1, 2021. Qualified compensation includes qualified
purposes of this credit, qualified sick leave compensation health plan expenses for the employee retention credit. The
and qualified family leave compensation are compensation nonrefundable portion of the credit is limited to the Tier 1
(determined without regard to the exclusions under section Employer tax (line 1) and Tier 1 Employer tax—Sick pay
3231(e)(1)) paid under the EPSLA and Expanded FMLA. (line 8) after that share is first reduced by any credit claimed
Enter the nonrefundable portion of the credit for qualified sick for the nonrefundable portion of the credit for qualified sick
and family leave compensation from Worksheet 1, Step 2, and family leave compensation for leave taken before April 1,
line 2j. The credit for qualified sick and family leave 2021. Any credit in excess of the remaining amount of the
compensation consists of the qualified sick leave Tier 1 Employer tax (line 1) and Tier 1 Employer tax—Sick
compensation, the qualified family leave compensation, the pay (line 8) is refundable and reported on Form CT-1,
qualified health plan expenses allocable to that line 24a. For more information on the employee retention
compensation, and the Tier 1 Employer Medicare tax credit for qualified compensation paid after December 31,
allocable to that compensation. The nonrefundable portion of 2020, and before July 1, 2021, see Notice 2021-23.
the credit is limited to the Tier 1 Employer tax (line 1) and Tier
Qualified compensation for the employee retention
1 Employer tax—Sick Pay (line 8).
credit paid after December 31, 2020, and before July 1,
Any credit in excess of the remaining amount of the Tier 1 2021. The tax credit is equal to 70% of qualified
Employer tax (line 1) and Tier 1 Employer tax—Sick Pay compensation paid to employees after December 31, 2020,
(line 8) is refundable and reported on Form CT-1, line 23. For and before July 1, 2021. Qualified compensation, including
more information on the credit for qualified sick and family qualified health plan expenses, is limited to a maximum of
leave compensation, go to IRS.gov/PLC. $10,000 in each of the first quarter and the second quarter of
2021 ($20,000 in total). Qualified compensation is
Qualified health plan expenses allocable to qualified
compensation paid to certain employees during any period in
sick and family leave compensation. The credit for
a quarter in which your operations are fully or partially
qualified sick leave compensation and qualified family leave
suspended due to a governmental order or during a quarter
compensation is increased to cover the qualified health plan
in which your gross receipts (within the meaning of section
expenses that are properly allocable to the qualified leave
448(c) or, if you're a tax-exempt organization, section 6033)
compensation for which the credit is allowed. These qualified
are less than 80% of the gross receipts for the same calendar
health plan expenses are amounts paid or incurred by the
quarter in calendar year 2019.
employer to provide and maintain a group health plan but
only to the extent such amounts are excluded from the The compensation and qualified health plan expenses
employees’ income as coverage under an accident or health considered in calculating your credit depend on the size of
plan. The amount of qualified health plan expenses generally your workforce. Eligible employers that had an average
includes both the portion of the cost paid by the employer number of 500 or fewer full-time employees during 2019
and the portion of the cost paid by the employee with pre-tax count compensation paid to all their employees and the
salary reduction contributions. However, the qualified health qualified health plan expenses paid or incurred for all
plan expenses shouldn't include amounts that the employee employees during any period in the first and second quarters
of 2021, in which busines operations are fully or partially
Instructions for Form CT-1 (2021) -13-
suspended due to a governmental order or during a quarter Enter the nonrefundable portion of the employee retention
in which gross receipts are less than 80% of the gross credit from Worksheet 4, Step 2, line 2h. The employee
receipts for the same calendar quarter in calendar year 2019. retention credit is 70% of the qualified compensation you
Eligible employers that had an average number of more than paid to your employees after June 30, 2021, and before
500 full-time employees in 2019 may count only January 1, 2022. Qualified compensation includes qualified
compensation paid to employees for time that the employees health plan expenses for the employee retention credit. The
weren't providing services, and qualified health plan nonrefundable portion of the credit is limited to the Tier 1
expenses paid or incurred by the employer allocable to the Employer Medicare tax (line 2) and Tier 1 Employer
time those employees weren't providing services, due to the Medicare tax—Sick pay (line 9), after that share is first
suspension or decline in gross receipts. reduced by any credit claimed for the nonrefundable portion
Qualified compensation doesn't include compensation for of the credit for qualified sick and family leave compensation
which the employer receives a credit for qualified sick and for leave taken after March 31, 2021, and before October 1,
family leave, and any compensation taken into account in 2021. Any credit in excess of the remaining amount of the
determining the employee retention credit can't be taken into Tier 1 Employer Medicare tax (line 2) and Tier 1 Employer
account as compensation for purposes of the credits under Medicare tax—Sick pay (line 9) is refundable and reported
sections 41, 45A, 45P, 45S, 51, and 1396. Employers can on Form CT-1, line 24a. For more information about the
receive both a Small Business Interruption Loan under the employee retention credit for qualified compensation paid
PPP and the employee retention credit; however, employers after June 30, 2021, and before January 1, 2022, see Notice
can't receive both loan forgiveness and a credit for the same 2021-49.
compensation. Qualified compensation for the employee retention
Qualified health plan expenses for the employee reten- credit paid after June 30, 2021, and before January 1,
tion credit. Qualified compensation for the employee 2022. The tax credit is equal to 70% of qualified
retention credit includes qualified health plan expenses. compensation paid to employees after June 30, 2021, and
Qualified health plan expenses are amounts paid or incurred before January 1, 2022. Qualified compensation, including
by the employer to provide and maintain a group health plan qualified health plan expenses, are limited to a maximum of
but only to the extent such amounts are excluded from the $10,000 for each employee in each of the third quarter and
employees' income as coverage under an accident or health the fourth quarter of 2021 ($20,000 in total). Qualified
plan. The amount of qualified health plan expenses taken compensation is compensation paid to certain employees
into account in determining the amount of qualified during any period in a quarter in which your operations are
compensation generally includes both the portion of the cost fully or partially suspended due to due to a governmental
paid by the employer and the portion of the cost paid by the order or during a quarter in which your gross receipts (within
employee with pre-tax salary reduction contributions. the meaning of section 448(c) or, if you're a tax-exempt
However, the qualified health plan expenses shouldn't organization, section 6033) are less than 80% of the gross
include amounts that the employee paid for with after-tax receipts for the same calendar quarter in calendar year 2019;
contributions. Generally, qualified health plan expenses are or compensation paid by a recovery startup business. See
those which are allocable to an employee (and to a period) in Recovery startup business, later, for more information about
which your business operations are fully or partially a recovery startup business. A recovery startup business
suspended due to a governmental order or experience a must enter the total of any amounts included in lines 17a and
decline in gross receipts. The allocation will be treated as 24a on lines 42 and 43, as applicable, for compensation paid
proper if made on the basis of being pro rata among periods after June 30, 2021, and before January 1, 2022. The
of coverage. recovery startup business is limited to a $50,000 employee
retention credit in each of the third quarter and fourth quarter
If you complete Worksheet 2 because you paid of 2021 ($100,000 in total for the year). For more information,
TIP qualified compensation for the employee retention see the instructions for line 42 and line 43, later.
credit after December 31, 2020, and before July 1,
Unless you're a severely financially distressed employer,
2021, and you also complete Worksheet 4 because you paid
the compensation and qualified health plan expenses
qualified compensation for the employee retention credit
considered in calculating your credit depend on the size of
after June 30, 2021, and before January 1, 2022, you must
your workforce. Eligible employers that had an average
add the amounts from Worksheet 2, Step 2, line 2h, and
number of 500 or fewer full-time employees during 2019
Worksheet 4, Step 2, line 2h, together and report the total on
count compensation paid to all their employees and the
Form CT-1, line 17a.
qualified health plan expenses paid or incurred for all
employees during any period in the third and fourth quarters
Instructions for Qualified Compensation Paid of 2021, in which business operations are fully or partially
After June 30, 2021, and Before January 1, 2022 suspended due to a governmental order or during a quarter
in which gross receipts are less than 80% of the gross
The Infrastructure Act amends section 3134 of the receipts for the same calendar quarter in calendar year 2019.
! Internal Revenue Code, as enacted under the ARP, Eligible employers that had an average number of more than
CAUTION to limit the availability of the employee retention
500 full-time employees in 2019 may count only
credit in the fourth quarter of 2021 to employers that are compensation paid to employees for time that the employees
recovery startup businesses, as defined in section 3134(c) weren't providing services, and qualified health plan
(5). Thus, for compensation paid after September 30, 2021, expenses paid or incurred by the employer allocable to the
and before January 1, 2022, only the compensation paid by time those employees weren't providing services, due to the
recovery startup businesses can be qualified compensation suspension or decline in gross receipts.
as described in these instructions. See Recovery startup
business, later, for more information about a recovery startup Qualified compensation under section 3134 for the
business. employee retention credit doesn't include compensation
-14- Instructions for Form CT-1 (2021)
taken into account for credits under sections 41, 45A, 45P, The credit for qualified sick and family leave
45S, 51, 1396, 3131 (qualified sick leave compensation for compensation consists of the:
leave taken after March 31, 2021, and before October 1, • Qualified sick leave compensation and/or qualified family
2021), and 3132 (qualified family leave compensation for leave compensation;
leave taken after March 31, 2021, and before October 1, • Qualified health plan expenses allocable to qualified sick
2021). Qualified compensation also doesn't include and family leave compensation;
compensation that was used as payroll costs in connection • Collectively bargained defined benefit pension plan
with a Shuttered Venue Operator Grant under section 324 of contributions, subject to the qualified leave compensation
the Economic Aid to Hard-Hit Small Businesses, Nonprofits, limitations, allocable to the qualified sick and family leave
and Venues Act; or a restaurant revitalization grant under compensation;
section 5003 of the ARP. Employers can receive both a • Collectively bargained apprenticeship program
Small Business Interruption Loan under the PPP and the contributions, subject to the qualified leave compensation
employee retention credit; however, employers can't receive limitations, allocable to the qualified sick and family leave
both loan forgiveness and a credit for the same compensation; and
compensation. • Tier 1 Employer tax and Tier 1 Employer Medicare tax
Severely financially distressed employer. Severely allocable to the qualified sick and family leave compensation.
financially distressed employers are eligible employers
The nonrefundable portion of the credit is limited to the
during the third quarter of 2021 whose gross receipts are less
Tier 1 Employer Medicare tax (line 2) and Tier 1 Employer
than 10% of the gross receipts for the same calendar quarter
Medicare tax—Sick pay (line 9). You can't claim the credit if
in calendar year 2019.
you provide the leave in a manner that discriminates in favor
Recovery startup business. A recovery startup business of highly compensated employees, full-time employees, or
is an employer that: employees on the basis of employment tenure when making
• Began carrying on a trade or business after February 15, qualified sick and/or family leave available to employees.
2020; See Highly compensated employee, later, for the definition.
• Had average annual gross receipts of $1 million or less for
the 3 tax years ending with the tax year before the calendar For qualified sick and family leave compensation paid
quarter in which the employee retention credit is claimed; before July 1, 2021, for leave taken after March 31, 2021,
and and before July 1, 2021, the credit for qualified sick and
• Only for credit claimed in the third quarter of 2021, isn’t family leave compensation is reduced by the amount of the
otherwise eligible for the employee retention credit because credit allowed under section 2301 of the CARES Act (for the
business operations weren’t fully or partially suspended due employee retention credit) or under section 41 (for the credit
to a governmental order or because gross receipts (within the for increasing research activities) with respect to
meaning of section 448(c) or, if you're a tax-exempt compensation taken into account for determining the credit
organization, section 6033) weren’t less than 80% of the under section 2301 of the CARES Act or section 41 and the
gross receipts for the same calendar quarter in calendar year credit for qualified sick and family leave compensation; and
2019. any compensation taken into account in determining the
credit for qualified sick and family leave compensation can't
Line 17b—Nonrefundable Portion of be taken into account as compensation for purposes of the
Credit for Qualified Sick and Family credits under sections 45A, 45P, 45S, and 51. For leave
taken after June 30, 2021, the credit for qualified sick and
Leave Compensation for Leave Taken family leave compensation is reduced by the amount of the
credit allowed under section 41 (for the credit for increasing
After March 31, 2021, and Before research activities) with respect to compensation taken into
October 1, 2021 account for determining the credit for qualified sick and family
Employers with fewer than 500 employees and certain leave compensation; and any compensation taken into
governmental employers without regard to number of account in determining the credit for qualified sick and family
employees (except for the federal government and its leave compensation can't be taken into account as
agencies and instrumentalities unless described in section compensation for purposes of the credits under sections
501(c)(1)) are entitled to a credit if they provide paid sick 45A, 45P, 45S, 51, and 3134. For leave taken after March
leave to employees that otherwise meets the requirements of 31, 2021, and before October 1, 2021, qualified
the EPSLA, as amended for purposes of the ARP, and/or compensation also doesn't include compensation that was
provide paid family leave to employees that otherwise meets used as payroll costs in connection with a Shuttered Venue
the requirements under the Expanded FMLA, as amended Operator Grant under section 324 of the Economic Aid to
for purposes of the ARP, for qualified sick and family leave Hard-Hit Small Businesses, Nonprofits, and Venues Act; or a
compensation for leave taken after March 31, 2021, and restaurant revitalization grant under section 5003 of the ARP.
before October 1, 2021. For purposes of this credit, qualified Employers can receive both a Small Business Interruption
sick leave compensation and qualified family leave Loan under the PPP and the credit for qualified sick and
compensation are compensation determined without regard family leave compensation; however, employers can't
to the exclusions from the definition of compensation under receive both loan forgiveness and a credit for the same
section 3231(e)(1), that an employer pays that otherwise compensation. The same compensation can't be treated as
meet the requirements of the EPSLA or Expanded FMLA, as both qualified sick leave compensation and qualified family
enacted under the FFCRA and amended for purposes of the leave compensation.
ARP. Enter the nonrefundable portion of the credit for Any credit in excess of the remaining amount of the Tier 1
qualified sick and family leave compensation from Worksheet Employer Medicare tax (line 2) and Tier 1 Employer
3, Step 2, line 2r. Medicare tax—Sick pay (line 9) is refundable and reported
on Form CT-1, line 24b. For more information on the credit
Instructions for Form CT-1 (2021) -15-
for qualified sick and family leave compensation, go to collective bargaining agreement for benefits under a
IRS.gov/PLC. registered apprenticeship program, as the rate is applied to
contribution base units, as defined by section 4001(a)(11) of
Qualified health plan expenses allocable to qualified
ERISA.
sick and family leave compensation. The credit for
qualified sick leave compensation and qualified family leave Allocation rules. The amount of collectively bargained
compensation is increased to cover the qualified health plan apprenticeship program contributions allocated to qualified
expenses that are properly allocable to the qualified leave sick leave compensation and/or qualified family leave
compensation for which the credit is allowed. These qualified compensation during the quarter for which you’re claiming
health plan expenses are amounts paid or incurred by the the credit is the apprenticeship program contribution rate
employer to provide and maintain a group health plan but (expressed as an hourly rate) multiplied by the number of
only to the extent such amounts are excluded from the hours qualified sick leave compensation and/or qualified
employees' income as coverage under an accident or health family leave compensation was provided to employees
plan. The amount of qualified health plan expenses generally covered under the collective bargaining agreement during
includes both the portion of the cost paid by the employer the quarter for which you’re claiming the credit.
and the portion of the cost paid by the employee with pre-tax Highly compensated employee. A highly compensated
salary reduction contributions. However, qualified health plan employee is an employee who meets either of the following
expenses don't include amounts that the employee paid for tests.
with after-tax contributions. For more information, go to 1. The employee was a 5% owner at any time during the
IRS.gov/PLC. year or the preceding year.
Collectively bargained defined benefit pension plan 2. The employee received more than $130,000 in pay for
contributions. For purposes of qualified sick and family the preceding year.
leave compensation, collectively bargained defined benefit
pension plan contributions are contributions during the You can choose to ignore test (2) if the employee wasn't
quarter for which you’re claiming the credit that are: also in the top 20% of employees when ranked by pay for the
• Paid or incurred by an employer on behalf of its employees preceding year.
to a defined benefit plan, as defined in section 414(j), which
meets the requirements of section 401(a);
Line 17c—Nonrefundable Portion of
• Made based on a pension contribution rate; and COBRA Premium Assistance Credit
• Required to be made under the terms of a collective Enter the COBRA premium assistance that you provided for
bargaining agreement in effect during the quarter for which periods of coverage beginning on or after April 1, 2021,
you’re claiming the credit. through periods of coverage beginning on or before
Pension contribution rate. The pension contribution rate September 30, 2021. You can claim the credit for a period of
is the contribution rate that the employer is obligated to pay coverage once the individual elects COBRA continuation
under the terms of a collective bargaining agreement to a coverage, and for any period of coverage beginning after the
defined benefit plan, as the rate is applied to contribution election, as of the beginning of such period of coverage for
base units, as defined by section 4001(a)(11) of the which the individual doesn't pay the premiums for the
Employee Retirement Income Security Act of 1974 (ERISA). coverage. Don't include any amount that was included as
Allocation rules. The amount of collectively bargained qualified compensation for the employee retention credit or
defined benefit pension plan contributions allocated to included as qualified health plan expenses allocable to
qualified sick leave compensation and/or qualified family qualified sick and family leave compensation. Enter the
leave compensation during the quarter for which you’re nonrefundable portion of the COBRA premium assistance
claiming the credit is the pension contribution rate credit from Worksheet 5, Step 2, line 2g. See COBRA
(expressed as an hourly rate) multiplied by the number of background next for more information about COBRA.
hours qualified sick leave compensation and/or qualified
family leave compensation was provided to employees COBRA background. The Consolidated Omnibus Budget
covered under the collective bargaining agreement during Reconciliation Act of 1985 (COBRA) provides certain former
the quarter for which you’re claiming the credit. employees, retirees, spouses, former spouses, and
dependent children the right to temporary continuation of
Collectively bargained apprenticeship program contri- health coverage at group rates. COBRA generally covers
butions. For purposes of qualified sick and family leave multiemployer health plans and health plans maintained by
compensation, collectively bargained apprenticeship private-sector employers (other than churches) with 20 or
program contributions are contributions during the quarter for more full- and part-time employees. Parallel requirements
which you’re claiming the credit that are: apply to these plans under ERISA. Under the Public Health
• Paid or incurred by an employer on behalf of its employees Service Act, COBRA requirements also apply to health plans
to a registered apprenticeship program, which is an covering state or local government employees. Similar
apprenticeship registered under the National Apprenticeship requirements apply under some state laws.
Act of August 16, 1937, and meets the standards of Federal
Regulations under subpart A of Part 29 and Part 30 of title 29; Line 17d—Number of Individuals
• Made based on an apprenticeship program contribution Provided COBRA Premium
rate; and
• Required to be made under the terms of a collective Assistance
bargaining agreement in effect during the quarter for which Enter the number of individuals provided COBRA premium
you’re claiming the credit. assistance for periods of coverage beginning on or after April
Apprenticeship program contribution rate. The 1, 2021, through periods of coverage beginning on or before
apprenticeship program contribution rate is the contribution September 30, 2021. Count each assistance eligible
rate that the employer is obligated to pay under the terms of a
-16- Instructions for Form CT-1 (2021)
individual that received assistance as one individual, whether The Infrastructure Act amends section 3134 of the
or not the COBRA coverage was for insurance that covered ! Internal Revenue Code, as enacted under the ARP,
more than one assistance eligible individual. For example, if CAUTION to limit the availability of the employee retention
the coverage was for a former employee, spouse, and two credit in the fourth quarter of 2021 to employers that are
children, you would include one individual on line 17d. recovery startup businesses, as defined in section 3134(c)
Further, each individual is reported only once per year. For (5). Thus, for compensation paid after September 30, 2021,
example, an assistance eligible individual that received and before January 1, 2022, only the compensation paid by
assistance monthly is only reported as one individual. recovery startup businesses can be qualified compensation
as described in these instructions. See Recovery startup
Line 18—Total Nonrefundable Credits business, earlier, for more information about a recovery
Add lines 16, 17a, 17b, and 17c. Enter the total on line 18. startup business.
Line 19—Total Taxes After Credit for qualified compensation paid after June 30,
2021, and before January 1, 2022. Enter the refundable
Adjustments and Nonrefundable portion of the employee retention credit from Worksheet 4,
Credits Step 2, line 2i. The employee retention credit is 70% of
Subtract line 18 from line 15 and enter the result on line 19. qualified compensation for the employee retention credit paid
after June 30, 2021, and before January 1, 2022. The
Line 20—Total Deposits for the Year refundable portion of the credit is allowed after the Tier 1
Enter the total Form CT-1 deposits for the year, including any employer Medicare taxes from lines 2 and 9 are reduced to
overpayment that you applied from filing Form CT-1 X and zero by nonrefundable credits.
any overpayment that you applied from your 2020 return. Line 24b—Refundable Portion of
Line 23—Refundable Portion of Credit Credit for Qualified Sick and Family
for Qualified Sick and Family Leave Leave Compensation for Leave Taken
Compensation for Leave Taken After March 31, 2021, and Before
Before April 1, 2021 October 1, 2021
Certain private employers with fewer than 500 employees Employers with fewer than 500 employees and certain
that provide paid sick leave under the EPSLA and/or provide governmental employers without regard to number of
paid family leave under the Expanded FMLA are eligible to employees (except for the federal government and its
claim the credit for qualified sick and family leave agencies and instrumentalities unless described in section
compensation. Enter the refundable portion of the credit for 501(c)(1)) are entitled to a credit if they provide paid sick
qualified sick and family leave compensation from Worksheet leave to employees that otherwise meets the requirements of
1, Step 2, line 2k. The credit for qualified sick and family the EPSLA, as amended for purposes of the ARP, and/or
leave compensation consists of the qualified sick leave provide paid family leave to employees that otherwise meets
compensation, the qualified family leave compensation, the the requirements under the Expanded FMLA, as amended
qualified health plan expenses allocable to that for purposes of the ARP, for leave taken after March 31,
compensation, and the Tier 1 Employer Medicare tax 2021, and before October 1, 2021. Enter the refundable
allocable to that compensation. The refundable portion of the portion of the credit for qualified sick and family leave
credit is allowed after the Tier 1 employer taxes from lines 1 compensation from Worksheet 3, Step 2, line 2s. The
and 8 are reduced to zero by nonrefundable credits. refundable portion of the credit is allowed after the Tier 1
employer Medicare taxes from lines 2 and 9 are reduced to
Line 24a—Refundable Portion of zero by nonrefundable credits.
Employee Retention Credit Line 24c—Refundable Portion of
If you complete Worksheet 2 because you paid
TIP qualified compensation for the employee retention
COBRA Premium Assistance Credit
credit after December 31, 2020, and before July 1, Enter the refundable portion of the COBRA premium
2021, and you also complete Worksheet 4 because you paid assistance credit from Worksheet 5, Step 2, line 2h. The
qualified compensation for the employee retention credit refundable portion of the credit is allowed after the Tier 1
after June 30, 2021, and before January 1, 2022, you must employer Medicare taxes from lines 2 and 9 are reduced to
add the amounts from Worksheet 2, Step 2, line 2i, and zero by nonrefundable credits.
Worksheet 4, Step 2, line 2i, together and report the total on
Form CT-1, line 24a.
Line 25—Total Deposits and
Refundable Credits
Credit for qualified compensation paid after December
Add lines 20, 23, 24a, 24b, and 24c. Enter the total on
31, 2020, and before July 1, 2021. Enter the refundable
line 25.
portion of the employee retention credit from Worksheet 2,
Step 2, line 2i. The employee retention credit is 70% of the Line 26—Total Advances Received
qualified compensation for the employee retention credit paid
after December 31, 2020, and before July 1, 2021. The from Filing Form(s) 7200 for the Year
refundable portion of the credit is allowed after the Tier 1 Enter the total advances received from filing Form(s) 7200 for
employer taxes from lines 1 and 8 are reduced to zero by the year. If you filed Form 7200 but you haven’t received the
nonrefundable credits. advance before filing Form CT-1, don’t include that amount.
Instructions for Form CT-1 (2021) -17-
Employers were eligible to file Form 7200 if they paid
qualified sick leave compensation, qualified family leave
Lines 30 Through 43
compensation, or qualified compensation for the employee The amounts entered on lines 30 through 41 are
retention credit, and/or provide COBRA premium assistance ! amounts that you use on the worksheets at the end
and the amount of deposits they retained wasn’t sufficient to CAUTION of these instructions to figure certain credits. If you’re
cover their anticipated credits. Include on line 26 any claiming these credits, you must enter the applicable
advance payment of the employee retention credit that you amounts. Lines 42 and 43 apply only if you're eligible for the
received for the fourth quarter of 2021 even if you’re no employee retention credit in the third or fourth quarter of 2021
longer eligible for the employee retention credit because solely because your business is a recovery startup business.
you’re not a recovery startup business. See Advance
payment of COVID-19 credits extended, earlier, for more Line 30—Qualified Sick Leave
information.
Form 7200 may be filed up to the earlier of January
Compensation for Leave Taken
TIP 31, 2022, or the filing of Form CT-1 for the year. Before April 1, 2021
However, if you file Form 7200 after the end of the Enter the qualified sick leave compensation you paid to your
year, it's possible that it may not be processed prior to the employees for leave taken before April 1, 2021, including any
processing of the filed Form CT-1. Advance payment qualified sick leave compensation that was above the Tier 1
requests on Form 7200 won't be paid after your Form CT-1 is compensation base and any qualified sick leave
processed. When the IRS processes Form CT-1, we will compensation excluded from the definition of compensation
correct the amount reported on line 26 to match the amount under section 3231(e)(1). This amount is also entered on
of advance payments issued or contact you to reconcile the Worksheet 1, Step 2 , line 2a. See the instructions for line 16
difference before we finish processing Form CT-1. for information about the credit for qualified sick and family
leave compensation for leave taken before April 1, 2021. For
Line 27—Total Deposits and more information about qualified sick leave compensation,
go to IRS.gov/PLC.
Refundable Credits Less Advances
Subtract line 26 from line 25 and enter the result on line 27. Line 31—Qualified Health Plan
Line 28—Balance Due Expenses Allocable to Compensation
If line 19 is more than line 27, enter the difference on line 28. Reported on Line 30
Otherwise, see Line 29—Overpayment, later. You don't have Enter the qualified health plan expenses allocable to qualified
to pay if line 28 is under $1. Generally, you should have a sick leave compensation for leave taken before April 1, 2021.
balance due only if your total railroad retirement taxes based This amount is also entered on Worksheet 1, Step 2, line 2b.
on compensation (line 19) are less than $2,500. However,
see Accuracy of Deposits Rule, earlier, regarding payments Line 32—Qualified Family Leave
made under the accuracy of deposits rule.
Compensation for Leave Taken
If you were required to make federal tax deposits, pay the
amount shown on line 28 by EFT. If you weren't required to Before April 1, 2021
make federal tax deposits or you're a monthly schedule Enter the qualified family leave compensation you paid to
depositor making a payment under the accuracy of deposits your employees for leave taken before April 1, 2021,
rule, you may pay the amount shown on line 28 by EFT, including any qualified family leave compensation that was
check, or money order. For more information on electronic above the Tier 1 compensation base and any qualified family
payment options, go to IRS.gov/Payments. leave compensation excluded from the definition of
compensation under section 3231(e)(1). This amount is also
If you pay by EFT, file your return using the address under entered on Worksheet 1, Step 2, line 2e. See the instructions
Where To File, earlier. Don't file Form CT-1(V), Payment for line 16 for information about the credit for qualified sick
Voucher. If you pay by check or money order, make it and family leave compensation for leave taken before April 1,
payable to “United States Treasury.” Enter your EIN, “Form 2021. For more information about qualified family leave
CT-1,” and “2021” on your check or money order. Complete compensation, go to IRS.gov/PLC.
Form CT-1(V) and enclose with Form CT-1.
Line 33—Qualified Health Plan
Line 29—Overpayment
If line 27 is more than line 19, enter the difference on line 29.
Expenses Allocable to Compensation
Never make an entry on both lines 29 and 28. If line 29 is Reported on Line 32
less than $1, we will send you a refund or apply it to your next Enter the qualified health plan expenses allocable to qualified
return only if you ask us in writing to do so. family leave compensation for leave taken before April 1,
If you deposited more than the correct amount for the 2021. This amount is also entered on Worksheet 1, Step 2,
year, you can have the overpayment refunded or applied to line 2f.
your next return by checking the appropriate box on line 29. The total amount reported on lines 34 and 35,
Check only one box on line 29. If you don't check either box ! discussed next, can't exceed $10,000 per employee
or if you check both boxes, generally we will apply the CAUTION each quarter.
overpayment to your next return. Regardless of any boxes
you check or don't check on line 29, we may apply your
overpayment to any past due tax account that is shown in our
records under your EIN.
-18- Instructions for Form CT-1 (2021)
Line 34—Qualified Compensation for Line 38—Amounts Under Certain
the Employee Retention Credit Collectively Bargained Agreements
Enter the qualified compensation for the employee retention Allocable to Qualified Sick Leave
credit (excluding the amount of any qualified health plan
expenses). For qualified compensation paid after December Compensation Reported on Line 36
31, 2020, and before July 1, 2021, the applicable qualified Enter the collectively bargained defined benefit pension plan
compensation from the total on line 34 is entered on contributions and collectively bargained apprenticeship
Worksheet 2, Step 2, line 2a. For qualified compensation program contributions allocable to qualified sick leave
paid after June 30, 2021, and before January 1, 2022, the compensation for leave taken after March 31, 2021, and
applicable qualified compensation from the total on line 34 is before October 1, 2021. This amount is also entered on
entered on Worksheet 4, Step 2, line 2a. Worksheet 3, Step 2, line 2c.
Line 35—Qualified Health Plan Line 39—Qualified Family Leave
Expenses for the Employee Retention Compensation for Leave Taken After
Credit March 31, 2021, and Before October
Enter the qualified health plan expenses for the employee
retention credit. These expenses are generally those which
1, 2021
are allocable to an employee (and to a period) in which your Enter the qualified family leave compensation you paid to
business operations are fully or partially suspended due to a your employees for leave taken after March 31, 2021, and
governmental order or experience a decline in gross receipts. before October 1, 2021, including any qualified family leave
The allocation will be treated as proper if made on the basis compensation that was above the Tier 1 compensation base
of being pro rata among periods of coverage. For more and any qualified family leave compensation excluded from
information, go to IRS.gov/ERC. For qualified health plan the definition of compensation under section 3231(e)(1). See
expenses allocable to qualified compensation paid after the instructions for line 17b, earlier, for more information
December 31, 2020, and before July 1, 2021, the applicable about qualified family leave compensation for leave taken
qualified expenses from the total entered on line 35 are after March 31, 2021, and before October 1, 2021. This
entered on Worksheet 2, Step 2, line 2b. For qualified health amount is also entered on Worksheet 3, Step 2, line 2g.
plan expenses allocable to qualified compensation paid after
June 30, 2021, and before January 1, 2022, the applicable
Line 40—Qualified Health Plan
qualified expenses from the total entered on line 35 are Expenses Allocable to Qualified
entered on Worksheet 4, Step 2, line 2b.
Family Leave Compensation
Line 36—Qualified Sick Leave Reported on Line 39
Compensation for Leave Taken After Enter the qualified health plan expenses allocable to qualified
March 31, 2021, and Before October family leave compensation for leave taken after March 31,
2021, and before October 1, 2021. This amount is also
1, 2021 entered on Worksheet 3, Step 2, line 2h.
Enter the qualified sick leave compensation you paid to your
employees for leave taken after March 31, 2021, and before
Line 41—Amounts Under Certain
October 1, 2021, including any qualified sick leave Collectively Bargained Agreements
compensation that was above the Tier 1 compensation base
and any qualified sick leave compensation excluded from the Allocable to Qualified Family Leave
definition of compensation under section 3231(e)(1). See the Compensation Reported on Line 39
instructions for line 17b, earlier, for more information about
qualified sick leave compensation for leave taken after March Enter the collectively bargained defined benefit pension plan
31, 2021, and before October 1, 2021. This amount is also contributions and collectively bargained apprenticeship
entered on Worksheet 3, Step 2, line 2a. program contributions allocable to qualified family leave
compensation for leave taken after March 31, 2021, and
Line 37—Qualified Health Plan before October 1, 2021. This amount is also entered on
Worksheet 3, Step 2, line 2i.
Expenses Allocable to Qualified Sick
Leave Compensation Reported on Line 42—If You're Eligible for the
Line 36 Employee Retention Credit in the
Enter the qualified health plan expenses allocable to qualified Third Quarter Solely Because Your
sick leave compensation for leave taken after March 31, Business Is a Recovery Startup
2021, and before October 1, 2021. This amount is also
entered on Worksheet 3, Step 2, line 2b. Business...
If you're eligible for the employee retention credit in the third
quarter of 2021 solely because your business is a recovery
startup business, enter the total of any amounts included on
lines 17a and 24a that are attributable to qualified
Instructions for Form CT-1 (2021) -19-
compensation paid after June 30, 2021, and before October Example. Maple Co. is a monthly schedule depositor that
1, 2021. pays employees every Friday. In 2021, Maple Co. had pay
dates every Friday of 2021 starting January 1, 2021. Maple
Line 43—If You're Eligible for the Co. paid qualified sick and family leave compensation on
Employee Retention Credit in the March 12 and March 19. The nonrefundable portion of the
credit for qualified sick and family leave compensation for the
Fourth Quarter Solely Because Your year is $3,000. On Part II, Maple Co. will use the $3,000 to
reduce the liability for the January 1 pay date, but not below
Business Is a Recovery Startup zero. If any nonrefundable portion of the credit remains,
Business... Maple Co. applies it to the liability for the January 8 pay date,
Under the Infrastructure Act , you must be a recovery startup then the January 15 pay date, and so forth until the entire
business to claim the employee retention credit for qualified $3,000 is used.
compensation paid after September 30, 2021, and before Nonrefundable portion of employee retention credit
January 1, 2022 (fourth quarter 2021). If you're eligible for the for compensation paid after December 31, 2020, and
employee retention credit in the fourth quarter of 2021 solely before July 1, 2021 (line 17a). The nonrefundable portion
because your business is a recovery startup business, enter of the employee retention credit is limited to the Tier 1
the total of any amounts included on lines 17a and 24a that employer taxes reported on Form CT-1, lines 1 and 8, on
are attributable to qualified compensation paid after compensation paid during the year that is remaining after that
September 30, 2021, and before January 1, 2022. share is first reduced by any credit claimed on Form CT-1,
line 16, for the nonrefundable portion of the credit for
Part II. Record of Railroad Retirement qualified sick and family leave compensation for leave taken
before April 1, 2021. In completing Part II or Form 945-A, you
Tax Liability take into account the nonrefundable portion of the employee
This is a summary of your yearly tax liability, not a summary retention credit against the liability for the first payroll
of deposits made. If line 19 is less than $2,500, don't payment of the year, but not below zero. Then reduce the
complete Part II or Form 945-A. liability for each successive payroll payment of the year until
the nonrefundable portion of the credit is used. Any
If you’re a monthly schedule depositor, enter your tax
employee retention credit that is remaining at the end of the
liability for each month and figure the total liability for the
year because it exceeds the Tier 1 employer taxes reported
year. If you don't enter your tax liability for each month, the
on Form CT-1, lines 1 and 8, is claimed on line 24a as a
IRS won't know when you should have made deposits and
refundable credit. The refundable portion of the credit doesn’t
may assess an “averaged” FTD penalty. See section 11 of
reduce the liability reported on Part II or Form 945-A.
Pub. 15. If your tax liability for any month is negative, don't
enter a negative amount for the month. Instead, enter zero for Example. Maple Co. is a monthly schedule depositor that
the month and subtract that negative amount from your tax pays employees every Friday. In 2021, Maple Co. had pay
liability for the next month. dates every Friday of 2021 starting January 1, 2021. Maple
Co. paid qualified compensation for the employee retention
Adjusting tax liability for nonrefundable credits claimed credit on May 7 and May 14. The nonrefundable portion of
on lines 16, 17a, 17b, and 17c. Monthly schedule the employee retention credit for the year is $3,000. On Part
depositors and semiweekly schedule depositors must II, Maple Co. will use the $3,000 to reduce the liability for the
account for nonrefundable credits claimed on lines 16, 17a, January 1 pay date, but not below zero. If any nonrefundable
17b, and 17c when reporting their tax liabilities on Part II or portion of the credit remains, Maple Co. applies it to the
Form 945-A. The total tax liability for the year must equal the liability for the January 8 pay date, then the January 15 pay
amount reported on line 19. Failure to account for the date, and so forth until the entire $3,000 is used.
nonrefundable credits on Part II or Form 945-A may cause
Part II or Form 945-A to report more than the total tax liability The Infrastructure Act amends section 3134 of the
reported on line 19. Don't reduce your monthly tax liability ! Internal Revenue Code, as enacted under the ARP,
reported on Part II or your daily tax liability reported on Form CAUTION to limit the availability of the employee retention
945-A below zero. credit in the fourth quarter of 2021 to employers that are
Nonrefundable portion of credit for qualified sick and recovery startup businesses, as defined in section 3134(c)
family leave compensation for leave taken before April (5). Thus, for compensation paid after September 30, 2021,
1, 2021 (line 16). The nonrefundable portion of the credit for and before January 1, 2022, only the compensation paid by
qualified sick and family leave compensation for leave taken recovery startup businesses can be qualified compensation
before April 1, 2021, is limited to the Tier 1 employer taxes as described in these instructions. See Recovery startup
reported on Form CT-1, lines 1 and 8, on compensation paid business, earlier, for more information about a recovery
in the year. In completing Part II or Form 945-A, you take into startup business.
account the nonrefundable portion of the credit for qualified
sick and family leave compensation against the liability for If you're no longer eligible to claim the employee retention
the first payroll payment of the year, but not below zero. Then credit for the fourth quarter of 2021, but you already reduced
reduce the liability for each successive payroll payment of the your employment tax deposits in anticipation of claiming the
year until the nonrefundable portion of the credit is used. Any employee retention credit for the fourth quarter of 2021, you
credit for qualified sick and family leave compensation for must deposit the amounts initially retained in anticipation of
leave taken before April 1, 2021, that is remaining at the end the employee retention credit on or before the due date of the
of the year because it exceeds the Tier 1 employer taxes deposit for compensation paid on December 31, 2021
reported on Form CT-1, lines 1 and 8, is claimed on line 23 (regardless of whether compensation is actually paid on that
as a refundable credit. The refundable portion of the credit date), based on how you choose to report the tax liability
doesn’t reduce the liability reported on Part II or Form 945-A. resulting from the termination of the employee retention
credit on Form 945-A or, if a monthly schedule depositor, on
-20- Instructions for Form CT-1 (2021)
Form CT-1, Part II. In order to obtain the relief under Notice account the nonrefundable portion of the COBRA premium
2021-65 and avoid an FTD penalty, employers must deposit assistance credit against the liability for the first payroll
the amounts in accordance with the due date or dates of the payment of the year but not below zero. Then reduce the
applicable day or days the tax liabilities resulting from the liability for each successive payroll payment of the year until
termination of the employee retention credit are reported on the nonrefundable portion of the credit is used. Any COBRA
Form 945-A or Form CT-1, Part II, as applicable. However, premium assistance credit that is remaining at the end of the
this relief doesn't apply to deposit payments that were year because it exceeds the Tier 1 employer Medicare tax
untimely due to any circumstance other than the change in reported on Form CT-1, lines 2 and 9, is claimed on line 24c
eligibility for the employee retention credit or to employers as a refundable credit. The refundable portion of the credit
who reduced deposits after December 20, 2021. See Notice doesn't reduce the liability reported on Part II or Form 945-A.
2021-65 for more information.
You may reduce your deposits by the amount of the
Nonrefundable portion of employee retention credit TIP nonrefundable and refundable portions of the credit
for compensation paid after June 30, 2021, and before for qualified sick and family leave compensation, the
January 1, 2022 (line 17a). The nonrefundable portion of nonrefundable and refundable portions of the employee
the employee retention credit is limited to the Tier 1 employer retention credit, and the nonrefundable and refundable
Medicare tax reported on Form CT-1, lines 2 and 9, on portions of the COBRA premium assistance credit, as
compensation paid during the year that is remaining after that discussed earlier under Reducing your deposits for
share is first reduced by any credit claimed on Form CT-1, COVID-19 credits.
line 17b, for the nonrefundable portion of the credit for
qualified sick and family leave compensation for leave taken The amount shown on line V must equal the amount
after March 31, 2021, and before October 1, 2021. In shown on line 19.
completing Part II or Form 945-A, you take into account the !
CAUTION
nonrefundable portion of the employee retention credit
against the liability for the first payroll payment of the year, If you’re a semiweekly schedule depositor or if you
but not below zero. Then reduce the liability for each accumulate $100,000 or more in tax liability on any day in a
successive payroll payment of the year until the deposit period, you must complete Form 945-A and file it with
nonrefundable portion of the credit is used. Any employee Form CT-1. Don't complete lines I–V if you file Form 945-A.
retention credit that is remaining at the end of the year The $100,000 tax liability threshold requiring a next-day
because it exceeds the Tier 1 employer Medicare tax deposit is determined before you consider any reduction of
reported on Form CT-1, lines 2 and 9, is claimed on line 24a your liability for nonrefundable credits. For more information,
as a refundable credit. The refundable portion of the credit including an example, see frequently asked question 17 at
doesn't reduce the liability reported on Part II or Form 945-A. IRS.gov/ETD.
Nonrefundable portion of credit for qualified sick and
family leave compensation for leave taken after March Third-Party Designee
31, 2021, and before October 1, 2021 (line 17b). The If you want to allow an employee of your business, a return
nonrefundable portion of the credit for qualified sick and preparer, or another third party to discuss your 2021 Form
family leave compensation for leave taken after March 31, CT-1 with the IRS, check the “Yes” box in the Third-Party
2021, and before October 1, 2021, is limited to the Tier 1 Designee section. Also, enter the designee's name, phone
employer Medicare tax reported on Form CT-1, lines 2 and 9, number, and any five digits that person chooses as his or her
on compensation paid during the year. In completing Part II personal identification number (PIN).
or Form 945-A, you take into account the nonrefundable
portion of the credit for qualified sick and family leave By checking “Yes” you authorize the IRS to talk to the
compensation against the liability for the first payroll payment person you named (your designee) about any questions we
of the year, but not below zero. Then reduce the liability for may have while we process your return. You also authorize
each successive payroll payment of the year until the your designee to do all of the following.
nonrefundable portion of the credit is used. Any credit for • Give us any information that is missing from your return.
qualified sick and family leave compensation for leave taken • Call us for information about processing your return.
after March 31, 2021, and before October 1, 2021, that is • Respond to certain IRS notices that you have shared with
remaining at the end of the year because it exceeds the Tier the designee about math errors and return preparation. The
1 employer Medicare tax reported on Form CT-1, lines 2 and IRS won't send notices to your designee.
9, is claimed on line 24b as a refundable credit. The
refundable portion of the credit doesn't reduce the liability You’re not authorizing the designee to receive any refund
reported on Part II or Form 945-A. check, bind you to anything (including additional tax liability),
Nonrefundable portion of COBRA premium or otherwise represent you before the IRS. If you want to
assistance credit (line 17c). The nonrefundable portion of expand the designee's authority, see Pub. 947.
the COBRA premium assistance credit is limited to the Tier 1
The authorization will automatically expire 1 year from the
employer Medicare tax reported on Form CT-1, lines 2 and 9,
due date (without regard to extensions) for filing your 2021
on compensation paid during the year that is remaining after
Form CT-1. If you or your designee wants to revoke this
that share is first reduced by any credit claimed on Form
authorization, send the revocation or withdrawal to the IRS
CT-1, line 17b, for the nonrefundable portion of the credit for
office at which you file your Form CT-1.
qualified sick and family leave compensation for leave taken
after March 31, 2021, and before October 1, 2021; and/or Who Must Sign
any credit claimed on Form CT-1, line 17a, for the
The following persons are authorized to sign the return for
nonrefundable portion of the employee retention credit for
each type of business entity.
compensation paid after June 30, 2021, and before January
1, 2022. In completing Part II or Form 945-A, you take into • Sole proprietorship—The individual who owns the
business.
Instructions for Form CT-1 (2021) -21-
• Corporation (including a limited liability company the preparer was paid to prepare Form CT-1 and isn't an
(LLC) treated as a corporation)—The president, vice employee of the filing entity. The preparer must give you a
president, or other principal officer duly authorized to sign. copy of the return in addition to the copy to be filed with the
• Partnership (including an LLC treated as a IRS.
partnership) or unincorporated organization—A
responsible and duly authorized partner, member, or officer If you're a paid preparer, enter your Preparer Tax
having knowledge of its affairs. Identification Number (PTIN) in the space provided. Include
your complete address. If you work for a firm, enter the firm's
• Single-member LLC treated as a disregarded entity name and the EIN of the firm. You can apply for a PTIN
for federal income tax purposes—The owner of the LLC
or a principal officer duly authorized to sign. 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
• Trust or estate—The fiduciary. your PTIN in place of the EIN of the tax preparation firm.
Form CT-1 also may be signed by a duly authorized agent
of the taxpayer if a valid power of attorney has been filed. Generally, you’re not required to complete this section if
you’re filing the return as a reporting agent and have a valid
Alternative signature method. Corporate officers or duly Form 8655 on file with the IRS. However, a reporting agent
authorized agents may sign Form CT-1 by rubber stamp, must complete this section if the reporting agent offered legal
mechanical device, or computer software program. For advice, for example, by advising the client on determining
details and required documentation, see Rev. Proc. 2005-39, whether its workers are employees or independent
2005-28 I.R.B. 82, available at IRS.gov/irb/ contractors for federal tax purposes.
2005-28_IRB#RP-2005-39.
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
-22- Instructions for Form CT-1 (2021)
Worksheet 1. Credit for Qualified Sick and Family Leave
Compensation for Leave Taken Before April 1, 2021 Keep for Your Records
Determine how you will complete this worksheet
If you paid qualified sick leave compensation and/or qualified family leave compensation for leave taken before April 1, 2021, complete Step 1
and Step 2. Caution: Use Worksheet 3 to figure the credit for qualified sick and family leave compensation for leave taken after March 31, 2021,
and before October 1, 2021.
Step 1. Figure the Tier 1 Employer Tax
1a Enter the amount from Form CT-1, line 1 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . 1a
1b Enter the amount from Form CT-1, line 8 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . 1b
1c Tier 1 Employer tax. Add lines 1a and 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1c
Step 2. Figure the credit for qualified sick and family leave compensation
2a Qualified sick leave compensation reported on Form CT-1, line 30 . . . . . . . . . . . . . . 2a
2a(i) Enter the amount, if any, included on line 2a that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 2a(i)
2a(ii) Subtract line 2a(i) from line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(ii)
2b Qualified health plan expenses allocable to qualified sick leave compensation
reported on Form CT-1, line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
2c Tier 1 Employer Medicare tax on qualified sick leave compensation. Multiply line 2a(ii)
by 1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
2d Credit for qualified sick leave compensation. Add lines 2a, 2b, and 2c . . . . . . . . 2d
2e Qualified family leave compensation reported on Form CT-1, line 32 . . . . . . . . . . . . . 2e
2e(i) Enter the amount, if any, included on line 2e that is compensation excluded from the 2e(i)
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . .
2e(ii) Subtract line 2e(i) from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e(ii)
2f Qualified health plan expenses allocable to qualified family leave compensation
reported on Form CT-1, line 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
2g Tier 1 Employer Medicare tax on qualified family leave compensation. Multiply
line 2e(ii) by 1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
2h Credit for qualified family leave compensation. Add lines 2e, 2f, and 2g . . . . . . . 2h
2i Credit for qualified sick and family leave compensation. Add lines 2d
and 2h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2i
2j Nonrefundable portion of credit for qualified sick and family leave
compensation for leave taken before April 1, 2021. Enter the smaller of line 1c or
line 2i. Enter this amount on Form CT-1, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2j
2k Refundable portion of credit for qualified sick and family leave compensation
for leave taken before April 1, 2021. Subtract line 2j from line 2i and enter this
amount on Form CT-1, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2k
Instructions for Form CT-1 (2021) -23-
Worksheet 2. Employee Retention Credit for Qualified
Compensation Paid After December 31, 2020, and Before July 1,
2021 Keep for Your Records
Determine how you will complete this worksheet.
If you paid qualified compensation after December 31, 2020, and before July 1, 2021, for purposes of the employee retention credit, complete Step 1
and Step 2. If you're claiming a credit for qualified sick and family leave compensation for leave taken before April 1, 2021, complete Worksheet 1
before starting this worksheet. Caution: Use Worksheet 4 to figure the employee retention credit for qualified compensation paid after June 30, 2021,
and before January 1, 2022.
Step 1. Figure the Tier 1 Employer Tax
1a If you completed Worksheet 1 to claim a credit for qualified sick and family leave
compensation for leave taken before April 1, 2021, enter the amount from Worksheet 1,
Step 1, line 1c, and go to Step 2. If you’re not claiming a credit for qualified sick and family
leave compensation for leave taken before April 1, 2021, continue by completing lines 1b–
1d below and then go to Step 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a
1b Enter the amount from Form CT-1, line 1 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
1c Enter the amount from Form CT-1, line 8 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c
1d Tier 1 Employer tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1d
Step 2. Figure the employee retention credit for qualified compensation paid after December 31, 2020, and before July 1, 2021
Caution: The total amount included on lines 2a and 2b is limited to a maximum of $10,000
per employee in each of the first quarter and the second quarter of 2021 ($20,000 in total
for purposes of this worksheet)
2a Qualified compensation (excluding qualified health plan expenses) for the employee
retention credit for qualified compensation paid after December 31, 2020, and before July
1, 2021 (this qualified compensation is included in the total reported on Form CT-1,
line 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
2b Qualified health plan expenses allocable to qualified compensation for the employee
retention credit for qualified compensation paid after December 31, 2020, and before July
1, 2021 (these qualified health plan expenses are included in the total reported on Form
CT-1, line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
2c Add lines 2a and 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
2d Retention credit. Multiply line 2c by 70% (0.70) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
2e Enter the amount of the Tier 1 Employer tax from Step 1, line 1a, or, if applicable, Step 1,
line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
2f Enter the nonrefundable portion of the credit for qualified sick and family leave
compensation for leave taken before April 1, 2021, from Worksheet 1, Step 2,
line 2j . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
2g Subtract line 2f from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
2h Nonrefundable portion of employee retention credit. Enter the smaller of line 2d or
line 2g. Enter this amount on Form CT-1, line 17a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2h
2i Refundable portion of employee retention credit. Subtract line 2h from line 2d and
enter this amount on Form CT-1, line 24a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2i
-24- Instructions for Form CT-1 (2021)
Worksheet 3. Credit for Qualified Sick and Family Leave
Compensation for Leave Taken After March 31, 2021, and Before
October 1, 2021 Keep for Your Records
Determine how you will complete this worksheet.
If you paid qualified sick leave compensation and/or qualified family leave compensation for leave taken after March 31, 2021, and before October 1,
2021, complete Step 1 and Step 2. Caution: Use Worksheet 1 to figure the credit for qualified sick and family leave compensation for leave taken
before April 1, 2021.
Step 1. Figure the Tier 1 Employer Medicare Tax
1a Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1a
1b Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
1c Tier 1 Employer Medicare tax. Add lines 1a and 1b . . . . . . . . . . . . . . . . . . . . . . . . . . 1c
Step 2. Figure the credit for qualified sick and family leave compensation
2a Qualified sick leave compensation for leave taken after March 31, 2021, and before
October 1, 2021 (Form CT-1, line 36) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
2a(i) Enter the amount, if any, included on line 2a that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(i)
2a(ii) Subtract line 2a(i) from line 2a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(ii)
2a(iii) Enter the amount, if any, included on line 2a that was not included as compensation on
Form CT-1, lines 1, 4, 8, and 10, because the qualified sick leave compensation was
limited by the Tier 1 compensation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(iii)
2a(iv) Subtract line 2a(iii) from line 2a(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a(iv)
2b Qualified health plan expenses allocable to qualified sick leave compensation taken after
March 31, 2021, and before October 1, 2021 (Form CT-1, line 37) . . . . . . . . . . . . . . . . . 2b
2c Amounts under certain collectively bargained agreements allocable to qualified sick leave
compensation for leave taken after March 31, 2021, and before October 1, 2021 (Form
CT-1, line 38) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
2d Tier 1 Employer tax on qualified sick leave compensation. Multiply line 2a(iv) by 6.2%
(0.062) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
2e Tier 1 Employer Medicare tax on qualified sick leave compensation. Multiply line 2a(ii) by
1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
2f Credit for qualified sick leave compensation. Add lines 2a, 2b, 2c, 2d and 2e . . . . . . 2f
2g Qualified family leave compensation for leave taken after March 31, 2021, and before
October 1, 2021 (Form CT-1, line 39) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
2g(i) Enter the amount, if any, included on line 2g that is compensation excluded from the
definition of compensation under section 3231(e)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g(i)
2g(ii) Subtract line 2g(i) from line 2g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g(ii)
2g(iii) Enter the amount, if any, included on line 2g that was not included as compensation on
Form CT-1, lines 1, 4, 8, and 10, because the qualified family leave compensation was
limited by the Tier 1 compensation base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g(iii)
2g(iv) Subtract line 2g(iii) from line 2g(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g(iv)
2h Qualified health plan expenses allocable to qualified family leave compensation taken after
March 31, 2021, and before October 1, 2021 (Form CT-1, line 40) . . . . . . . . . . . . . . . . . 2h
2i Amounts under certain collectively bargained agreements allocable to qualified family
leave compensation for leave taken after March 31, 2021, and before October 1, 2021
(Form CT-1, line 41) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2i
2j Tier 1 Employer tax on qualified family leave compensation. Multiply line 2g(iv) by 6.2%
(0.062) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2j
2k Tier 1 Employer Medicare tax on qualified family leave compensation. Multiply line 2g(ii) by
1.45% (0.0145) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2k
2l Credit for qualified family leave compensation. Add lines 2g, 2h, 2i, 2j, and 2k . . . . . 2l
2m Credit for qualified sick and family leave compensation. Add lines 2f and 2l . . . . . . . 2m
2n Enter any employee retention credit claimed under section 2301 of the CARES Act (from
Worksheet 2, line 2d) with respect to qualified compensation paid after March 31, 2021,
and before July 1, 2021, that was also taken into account for the credit for qualified sick
and family leave compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2n
2o Enter any credit claimed under section 41 for increasing research activities with respect to
any compensation taken into account for the credit for qualified sick and family leave
compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2o
2p Add lines 2n and 2o . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2p
2q Credit for qualified sick and family leave compensation after adjusting for other
credits. Subtract line 2p from line 2m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2q
2r Nonrefundable portion of credit for qualified sick and family leave compensation
for leave taken after March 31, 2021, and before October 1, 2021. Enter the smaller of
line 1c or line 2q. Enter this amount on Form CT-1, line 17b . . . . . . . . . . . . . . . . . . . . . . 2r
2s Refundable portion of credit for qualified sick and family leave compensation for
leave taken after March 31, 2021, and before October 1, 2021. Subtract line 2r from
line 2q and enter this amount on Form CT-1, line 24b . . . . . . . . . . . . . . . . . . . . . . . . . . 2s
Instructions for Form CT-1 (2021) -25-
Worksheet 4. Employee Retention Credit for Qualified
Compensation Paid After June 30, 2021, and before January 1,
2022 Keep for Your Records
Determine how you will complete this worksheet.
If you paid qualified compensation after June 30, 2021, and before January 1, 2022, for purposes of the employee retention credit, complete Step 1 and
Step 2. If you're claiming a credit for qualified sick and family leave compensation for leave taken after March 31, 2021, and before October 1, 2021,
complete Worksheet 3 before starting this worksheet. Caution: Use Worksheet 2 to figure the employee retention credit for qualified compensation paid
after December 31, 2020, and before July 1, 2021.
Step 1. Figure the Tier 1 Employer Medicare Tax
1a If you completed Worksheet 3 to claim a credit for qualified sick and family leave
compensation for leave taken after March 31, 2021, and before October 1, 2021, enter the
amount from Worksheet 3, Step 1, line 1c, and go to Step 2. If you’re not claiming a credit
for qualified sick and family leave compensation for leave taken after March 31, 2021, and
before October 1, 2021, continue by completing lines 1b–1d below and then go to Step
2 ................................................................ 1a
1b Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
1c Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c
1d Tier 1 Employer Medicare tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . . 1d
Step 2. Figure the employee retention credit for qualified compensation paid after June 30, 2021, and before January 1, 2022
Caution: Under the Infrastructure Act, you must be a recovery startup business to claim
the employee retention credit for qualified compensation paid after September 30, 2021,
and before January 1, 2022 (fourth quarter 2021). The total amount included on lines 2a
and 2b is limited to a maximum of $10,000 per employee in each of the third quarter and
the fourth quarter of 2021 ($20,000 in total for purposes of this worksheet).
2a Qualified compensation (excluding qualified health plan expenses) for the employee
retention credit for qualified compensation paid after June 30, 2021, and before January 1,
2022 (this qualified compensation is included in the total reported on Form CT-1,
line 34) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
2b Qualified health plan expenses allocable to qualified compensation for the employee
retention credit for qualified compensation paid after June 30, 2021, and before January 1,
2022 (these qualified health plan expenses are included in the total reported on Form
CT-1, line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
2c Add lines 2a and 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
2d Retention credit. Multiply line 2c by 70% (0.70). If you qualify for the employee retention
credit solely because your business is a recovery startup business, don't enter more than
$50,000 for each of the third quarter and the fourth quarter of 2021 ($100,000 in total for
the year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
2e Enter the amount of the Tier 1 Employer Medicare tax from Step 1, line 1a, or, if applicable,
Step 1, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
2f Enter the amount of the nonrefundable portion of the credit for qualified sick and family
leave compensation for leave taken after March 31, 2021, and before October 1, 2021,
from Worksheet 3, Step 2, line 2r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
2g Subtract line 2f from line 2e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2g
2h Nonrefundable portion of employee retention credit. Enter the smaller of line 2d or
line 2g. Enter this amount on Form CT-1, line 17a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2h
2i Refundable portion of employee retention credit. Subtract line 2h from line 2d and
enter this amount on Form CT-1, line 24a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2i
-26- Instructions for Form CT-1 (2021)
Worksheet 5. COBRA Premium Assistance Credit Keep for Your Records
Determine how you will complete this worksheet.
If you provided COBRA premium assistance, complete Step 1 and Step 2. If you’re claiming the credit for qualified sick and family leave compensation
for leave taken after March 31, 2021, and before October 1, 2021, complete Worksheet 3 before starting this worksheet. If you’re also claiming an
employee retention credit for qualified compensation paid after June 30, 2021, and before January 1, 2022, complete Worksheet 4 before starting this
worksheet.
Step 1. Figure the Tier 1 Employer Medicare Tax
1a If you completed Worksheet 3 or Worksheet 4, enter the amount from Worksheet 3, Step
1, line 1c, or Worksheet 4, line 1a or 1d (as applicable). If you’re not claiming either of
these credits this year, continue by completing lines 1b–1d below and then go to Step
2 ................................................................ 1a
1b Enter the amount from Form CT-1, line 2 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1b
1c Enter the amount from Form CT-1, line 9 (Tax Column) . . . . . . . . . . . . . . . . . . . . . . . . . 1c
1d Tier 1 Employer Medicare tax. Add lines 1b and 1c . . . . . . . . . . . . . . . . . . . . . . . . . . 1d
Step 2. Figure the COBRA premium assistance credit
2a Enter the COBRA premium assistance that you provided for periods of coverage beginning
on or after April 1, 2021, through periods of coverage beginning on or before September
30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
2b Enter the amount of the Tier 1 Employer Medicare tax from Step 1, line 1a, or, if applicable,
Step 1, line 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
2c Enter the amount of the nonrefundable portion of the credit for qualified sick and family
leave compensation for leave taken after March 31, 2021, and before October 1, 2021,
from Worksheet 3, Step 2, line 2r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
2d Enter the amount of the nonrefundable portion of the employee retention credit from
Worksheet 4, Step 2, line 2h . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
2e Other nonrefundable credits used against the Tier 1 Employer Medicare tax. Add
lines 2c and 2d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e
2f Subtract line 2e from line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f
2g Nonrefundable portion of the COBRA premium assistance credit. Enter the smaller
of line 2a or line 2f. Enter this amount on Form CT-1, line 17c . . . . . . . . . . . . . . . . . . . . . 2g
2h Refundable portion of the COBRA premium assistance credit. Subtract line 2g from
line 2a and enter this amount on Form CT-1, line 24c . . . . . . . . . . . . . . . . . . . . . . . . . . . 2h
Instructions for Form CT-1 (2021) -27-
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- 373,789 bytes
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