Instructions for Form CT-1: Employer's Annual Railroad Retirement Tax Return (2020)
Summary
The Internal Revenue Service Instructions for Form CT-1, Employer's Annual Railroad Retirement Tax Return, for the year 2020. Its What's New section describes changes to the form for coronavirus (COVID-19) related employment tax credits and other tax relief. It states that the credit for qualified sick and family leave compensation and the employee retention credit are figured on Worksheet 1, and that employers who requested an advance of those credits would have filed a Form 7200, with advances received reported on line 26. It also states that Notice 2021-11 modifies Notice 2020-65 and refers readers to IRS.gov/CT1 for later developments.
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“Instructions for Form CT-1: Employer's Annual Railroad Retirement Tax Return (2020).”
Original at www.irs.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/internal-revenue-service-form-ct-1-instructions-pdf-www-irs-gov-0b1309-0c3b3be8c0/
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2020 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 amount of deferral is reported on line 22. See the instructions
otherwise noted. for line 22 for more information.
• Employers that requested an advance of the sick and
Future Developments family leave credit and/or the employee retention credit
For the latest information about developments related to would have filed a Form 7200, Advance Payment of
Form CT-1 and its instructions, such as legislation enacted Employer Credits Due to COVID-19. The amount of all
after they were published, go to IRS.gov/CT1. advances received from Forms 7200 filed for the year is
reported on line 26. See the instructions for line 26 for more
What's New information.
• The credit for qualified sick and family leave compensation
Changes to tax rates and compensation bases. For the (reported on lines 16 and 23) and the employee retention
2020 tax rates and compensation bases, see Employer and credit (reported on lines 17 and 24) are figured on Worksheet
Employee Taxes, later. 1.
Changes to Form CT-1 for coronavirus (COVID-19) rela- Notice 2021-11 modifies Notice 2020-65. Notice 2020-65,
ted employment tax credits and other tax relief. The 2020-38 I.R.B. 567, available at IRS.gov/irb/
following significant changes have been made to Form CT-1 2020-38_IRB#NOT-2020-65, is referenced throughout these
to allow for the reporting of new employment tax credits and instructions. In response to section 274 of the COVID-related
other tax relief related to COVID-19. Tax Relief Act of 2020, Notice 2020-65 was modified by
• The new credit for qualified sick and family leave Notice 2021-11. Notice 2021-11 is expected to be published
compensation is reported on line 16 and, if applicable, in Internal Revenue Bulletin 2021-06.
line 23. Qualified sick and family leave compensation isn't
treated as compensation for the Tier 1 Employer tax (line 1). Reminders
The qualified compensation is subject to the Tier 1 Employer
Medicare tax (line 2), Tier 1 Employee tax (line 4), Tier 1 Outsourcing payroll duties. Generally, as an employer,
Employee Medicare tax (line 5), and Tier 1 Employee you’re responsible to ensure that tax returns are filed and
Additional Medicare Tax (line 6). Qualified sick and family deposits and payments are made, even if you contract with a
leave compensation is subject to Tier 2 tax for both the third party to perform these acts. You remain responsible if
employer and employee (lines 3 and 7). Qualified sick leave the third party fails to perform any required action. Before you
compensation and qualified family leave compensation are choose to outsource any of your payroll and related tax
reported on lines 30 and 32, respectively. Qualified health duties (that is, withholding, reporting, and paying over
plan expenses allocable to sick and family leave income taxes and taxes imposed by the Railroad Retirement
compensation are reported on lines 31 and 33, respectively. Tax Act) to a third-party payer, such as a payroll service
See the instructions for line 16 for information about the new provider or reporting agent, go to IRS.gov/
credit for qualified sick and family leave compensation. OutsourcingPayrollDuties for helpful information on this topic.
• The new employee retention credit is reported on line 17 For more information on the different types of third-party
and, if applicable, line 24. Qualified compensation (excluding payer arrangements, see section 16 of Pub. 15.
qualified health plan expenses) for the employee retention Correcting a previously filed Form CT-1. If you discover
credit is reported on line 34. Qualified health plan expenses an error on a previously filed Form CT-1, make the correction
allocable to the qualified compensation for the employee using Form CT-1 X. Form CT-1 X is filed separately from
retention credit are reported on line 35. Qualified Form CT-1. For more information, see the Instructions for
compensation for the employee retention credit is subject to Form CT-1 X or go to IRS.gov/CorrectingEmploymentTaxes.
Tier 1 and Tier 2 taxes reported on lines 1 through 7. See the
instructions for line 17 for information about the new Change of address. Use Form 8822-B to notify the IRS of
employee retention credit. an address change.
• Employers, including government employers, can defer Federal tax deposits must be made by electronic funds
the deposit of the Tier 1 employer taxes reported on lines 1 transfer (EFT). You must use EFT to make all federal tax
and 8 that are due on or after March 27, 2020, and before deposits. Generally, an EFT is made using the Electronic
January 1, 2021, as well as payment due for these taxes on Federal Tax Payment System (EFTPS). If you don't want to
compensation paid on or after March 27, 2020, and before use EFTPS, you can arrange for your tax professional,
January 1, 2021. The amount of deferral is reported on financial institution, payroll service, or other trusted third party
line 21. See the instructions for line 21 for more information. to make electronic deposits on your behalf. Also, you may
• Employers could defer the withholding and payment of the arrange for your financial institution to initiate a same-day
Tier 1 employee taxes reported on lines 4 and 10 on wire payment on your behalf. EFTPS is a free service
compensation paid on or after September 1, 2020, and provided by the Department of the Treasury. Services
before January 1, 2021, but only if the amount of provided by your tax professional, financial institution, payroll
compensation for a biweekly pay period was less than service, or other third party may have a fee.
$4,000 (or an equivalent amount for other pay periods). The
Feb 02, 2021 Cat. No. 16005H
To get more information about EFTPS or to enroll in the credit for qualified sick and family leave compensation
EFTPS, go to EFTPS.gov, or call 800-555-4477 or and/or the employee retention credit. For more information
800-733-4829 (TDD). Additional information about EFTPS is about qualified sick and family leave compensation, see the
also available in Pub. 966. line 1 instructions, later. For more information about these
credits, see the line 16 and line 17 instructions, later.
Paid preparers. If you use a paid preparer to complete
Because these credits are reported when the 2020 Form
Form CT-1, the paid preparer must complete and sign the
CT-1 is filed in 2021, a reduction in deposits of income tax
paid preparer's section of Form CT-1.
withholding as described above may have resulted in the
Additional information. For more information, see one of issuance of a balance due notice and the imposition of
the resources discussed next. penalties and interest when the Form 941 quarterly return
• Pub. 15 contains information for withholding, depositing, was processed.
reporting, and paying over employment taxes. If you reduced your deposits of employment taxes
• Pub. 15-A contains specialized and detailed employment reported on Form 941 in anticipation of the credit for qualified
tax information supplementing the basic information provided sick and family leave compensation and/or the employee
in Pub. 15. retention credit for quarters in 2020, and this resulted in those
• Pub. 15-B contains information about the employment tax amounts being included as a balance due in a notice, contact
treatment of various types of noncash compensation. us as soon as possible by either (1) writing to the address
• Pub. 915 contains the federal income tax rules for social shown on your notice, or (2) calling the telephone number
security benefits and equivalent Tier 1 railroad retirement shown on your notice. If you contact us in writing, include a
benefits. copy of your notice and the amount of employment tax
• The Railroad Retirement Board (RRB) website at RRB.gov deposits reported on Form 941 that you reduced in
contains additional employer reporting information and anticipation of the credit for qualified sick and family leave
instructions. compensation and/or the employee retention credit .
How to get forms and publications. You can download or Whether you owe tax, penalties, and interest will depend
print some of the forms and publications you may need at upon the credits properly claimed on Form CT-1.
IRS.gov/Forms. Otherwise, you can go to IRS.gov/
OrderForms to place an order and have forms mailed to you. Who Must File
The IRS will process your order as soon as possible. Don't For purposes of these instructions, all references to
resubmit requests you've already sent us. You can get forms TIP "sick pay" mean ordinary sick pay, not “qualified sick
and publications faster online. leave compensation.”
Where can you get telephone help? You can call the IRS File Form CT-1 if you paid one or more employees
Business and Specialty Tax Line at 800-829-4933 or compensation subject to tax under RRTA.
800-829-4059 (TDD/TTY for persons who are deaf, hard of
hearing, or have a speech disability) Monday–Friday from A payer of sick pay (including a third party) must file Form
7:00 a.m. to 7:00 p.m. local time (Alaska and Hawaii follow CT-1 if the sick pay is subject to Tier 1 railroad retirement
Pacific time) for answers to your questions about completing taxes. Include sick pay payments on lines 8–11 and, if the
Form CT-1 or tax deposit rules. withholding threshold is met, line 12 of Form CT-1. Follow the
reporting procedures for sick pay reporting in section 6 of
Photographs of Missing Children Pub. 15-A.
The IRS is a proud partner with the National Center for
If a third-party payer of sick pay is also paying qualified
Missing & Exploited Children® (NCMEC). Photographs of
sick leave compensation on behalf of an employer, the third
missing children selected by the Center may appear in
party would be making the payments as an agent of the
instructions on pages that would otherwise be blank. You can
employer. The employer is required to do the reporting and
help bring these children home by looking at the photographs
payment of railroad retirement taxes with respect to the
and calling 1-800-THE-LOST (1-800-843-5678) if you
qualified sick leave compensation and claim the credit for the
recognize a child.
qualified sick leave compensation unless the employer has
an agency agreement with the third-party payer that requires
General Instructions the third-party payer to do the collecting, reporting, and/or
paying or depositing railroad retirement taxes on the qualified
Purpose of Form CT-1 sick leave compensation. If the employer has an agency
These instructions give you some background information agreement with the third-party payer, the third-party payer
about Form CT-1. They tell you who must file Form CT-1, includes the qualified sick leave compensation on the Form
how to complete it line by line, and when and where to file it. CT-1 filed by the third party and claims the sick leave credit
on behalf of the employer on Form CT-1.
Use Form CT-1 to report taxes imposed by the Railroad
Retirement Tax Act (RRTA). Use Form 941, Employer's After you file your first Form CT-1, you must file a return for
QUARTERLY Federal Tax Return, or, if applicable, Form each year, even if you didn’t pay taxable compensation
944, Employer's ANNUAL Federal Tax Return, to report during the year, until you file a final return.
federal income taxes withheld from your employees' wages
Disregarded entities and qualified subchapter S subsid-
and other compensation.
iaries (QSubs). Eligible single-owner disregarded entities
In accordance with Notice 2020-22, 2020-17 I.R.B. 664, and QSubs are treated as separate entities for employment
available at IRS.gov/irb/2020-17_IRB#NOT-2020-22, you tax purposes. Eligible single-member entities that haven’t
may have reduced deposits of employment taxes otherwise elected to be taxed as corporations must report and pay
required to be made that are reported on Form 941 employment taxes on compensation paid to their employees
(generally, income tax withholding) in anticipation of claiming using the entities' own names and employer identification
-2- Instructions for Form CT-1 (2020)
numbers (EINs). See Regulations sections 1.1361-4(a)(7) 1. Certain employee achievement awards under section
and 301.7701-2(c)(2)(iv). 74(c),
Where To File 2. Certain scholarship and fellowship grants under
section 117,
Send Form CT-1 to:
3. Certain fringe benefits under section 132, and
Department of the Treasury 4. Employer payments to an Archer MSA under section
Internal Revenue Service Center 220 or health savings accounts (HSAs) under section 223.
Kansas City, MO 64999-0048 • Stock or stock options.
• Payments made specifically for traveling or other bona fide
and necessary expenses that meet the rules in the
When To File regulations under section 62.
File Form CT-1 by March 1, 2021. • Payments for services performed by a nonresident alien
temporarily present in the United States as a nonimmigrant
Definitions under subparagraphs (F), (J), (M), or (Q) of the Immigration
The terms “employer” and “employee” used in these and Nationality Act.
instructions are defined in section 3231 and in its regulations. • Compensation under $25 earned in any month by an
employee in the service of a local lodge or division of a
Compensation railway-labor-organization employer.
Compensation means payment in money, meaning currency Exceptions for sickness or accident disability
issued by a recognized authority as a medium of exchange, payments. For purposes of employee and employer Tier 1
for services performed as an employee of one or more taxes, compensation doesn't include sickness or accident
employers. It includes payment for time lost as an employee. disability payments made to or on behalf of an employee or
A few exceptions are described later under Exceptions. dependents:
Group-term life insurance. Include in compensation the • Under a workers' compensation law,
cost of group-term life insurance over $50,000 you provide to • Under section 2(a) of the Railroad Unemployment
an employee. This amount is subject to Tier 1 and Tier 2 Insurance Act for days of sickness due to an on-the-job
taxes, but not to federal income tax withholding. Include this injury,
amount on your employee's Form W-2, Wage and Tax • Under the Railroad Retirement Act, or
Statement. • More than 6 months after the calendar month the
employee last worked.
Former employees for whom you paid the cost of
group-term life insurance over $50,000 must pay the For purposes of Tier 2 taxes, compensation doesn't
employee's share of these taxes with their Form 1040, U.S. include payments made to or on behalf of an employee or
Individual Income Tax Return, or Form 1040-SR, U.S. Tax dependents under a sickness or accident disability plan or a
Return for Seniors. You’re not required to collect those taxes. medical or hospitalization plan in connection with sickness or
For former employees, you must include on Form W-2 the accident disability.
part of compensation that consists of the cost of group-term Employer and Employee Taxes
life insurance over $50,000. You must also separately report
on Form W-2 the amount of railroad retirement taxes owed Tax Rates and Compensation Bases
by the former employee for coverage provided after
separation from service. For more information, see section 2 Tax Rates Compensation
of Pub. 15-B and the General Instructions for Forms W-2 and Paid in 2020
W-3.
Tier 1
Timing. Compensation is considered paid when it is actually Employer and Employee: Each pay 6.2%
paid or when it is constructively paid. It is constructively paid of first . . . . . . . . . . . . . . . . . . . . . . . . . . . $137,700
when it is set apart for the employee, or credited to an
account the employee can control, without any substantial Tier 1 Medicare
limit or condition on how and when the payment is to be Employer and Employee: Each pay 1.45% of . . All
made. Tier 1 Employee Additional Medicare Tax
Any compensation paid during the current year that was withholding
earned in a prior year is taxable at the current year's tax Employee: Pays 0.9% on
rates; you must include the compensation with the current compensation exceeding . . . . . . . . . . . . . $200,000
year's compensation on Form CT-1, lines 1–12, as Tier 2
appropriate. An exception applies to nonqualified deferred
compensation that was subject to Tier 1 and Tier 2 tax in a Employer: Pays 13.1% of first . . . . . . . . . . . . $102,300
prior year. See the rules for nonqualified deferred Employee: Pays 4.9% of first . . . . . . . . . . . . $102,300
compensation plans in section 5 of Pub. 15-A.
Exceptions. Compensation doesn't include the following.
• Certain benefits provided to or on behalf of an employee if Employer Taxes
at the time the benefits are provided it is reasonable to Employers must pay both Tier 1 and Tier 2 taxes, except for
believe the employee can exclude such benefits from the Tier 1 Employer tax (line 1) on qualified sick and family
income. For information on what benefits are excludable, see leave compensation and the Tier 1 Employee Additional
Pub. 15-B. Examples of this type of benefit include: Medicare Tax. Tier 1 tax is divided into two parts. The
amount of compensation subject to each tax is different. See
Instructions for Form CT-1 (2020) -3-
the table above for the 2020 tax rates and compensation funds first to the railroad retirement tax and then to federal
bases. income tax. You don't have to pay employer railroad
retirement taxes on tips.
Concurrent employment. If two or more related
corporations that are rail employers employ the same If, by the 10th of the month after the month you received
individual at the same time and pay that individual through a an employee's tip income report, you don't have enough
common paymaster that is one of the corporations, the employee funds available to withhold the employee tax, you
corporations are considered a single employer. They have to may report the excess amount without withholding the
pay, in total, no more in railroad retirement taxes than a related tax. Include the tips your employees report to you on
single employer would. See Regulations section lines 4, 5, 6, and 7, even if you were unable to withhold the
31.3121(s)-1 for more information. employee's share of tax. Then report the uncollected Tier 1
Employee tax, Tier 1 Employee Medicare tax, Tier 1
Successor employers. Successor employers should see Employee Additional Medicare Tax withholding, and Tier 2
section 3231(e)(2)(C) and Pub. 15 to see if they can use the Employee tax on tips on line 14. See section 6 of Pub. 15.
predecessor's compensation paid against the maximum
compensation bases. Depositing Taxes
For Tier 1 and Tier 2 taxes, you’re either a monthly schedule
Employee Taxes depositor or a semiweekly schedule depositor. However, see
You must withhold the employee's part of Tier 1 and Tier 2 the $2,500 Rule and the $100,000 Next-Day Deposit Rule
taxes. See the table under Employer and Employee Taxes, under Exceptions to the Deposit Rules, later. The terms
earlier, for the tax rates and compensation bases. See Tips, “monthly schedule depositor” and “semiweekly schedule
later, for information on the employee tax on tips. depositor” identify which set of rules you must follow when a
Withholding or payment of employee tax by employer. tax liability arises (for example, when you have a payday).
You must collect the employee railroad retirement tax from They don't refer to how often your business pays its
each employee by withholding it from employee employees or to how often you’re required to make deposits.
compensation. If you don't withhold the employee tax, you If you were a monthly schedule depositor for the entire
must still pay the tax. If you withhold too much or too little tax year, complete the Monthly Summary of Railroad Retirement
because you can't determine the correct amount, correct the Tax Liability in Part II of Form CT-1. If you were a semiweekly
amount withheld by an adjustment, credit, or refund schedule depositor during any part of the year or you
according to the applicable regulations. accumulated $100,000 or more on any day during a deposit
If you pay the railroad retirement tax for your employee period, you must complete Form 945-A, Annual Record of
rather than withholding it, the amount of the employee's Federal Tax Liability.
compensation is increased by the amount of that tax. See
Rev. Proc. 83-43,1983-1 C.B. 778, for information on how to Lookback Period
figure and report the proper amounts. Before each year begins, you must determine the deposit
Tips. Your employee must report cash tips to you by the schedule to follow for depositing Tier 1 and Tier 2 taxes for a
10th day of the month following the month the tips are calendar year. This is determined from the total taxes
received. The report should include charged tips you paid reported on your Form CT-1 for the calendar year lookback
over to the employee for charge customers, tips the period. The lookback period is the second calendar year
employee received directly from customers, and tips preceding the current calendar year. For example, the
received from other employees under any tip-sharing lookback period for calendar year 2021 is calendar year
arrangement. Both directly and indirectly tipped employees 2019.
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 2021.
Stop collecting the Tier 1 Employee tax when his or her
compensation and tips for tax year 2020 reach $137,700. IF you reported taxes THEN for 2021 you’re a...
Collect the Tier 1 Employee Medicare tax for the whole year (Form CT-1, line 15) for the
on all compensation and tips. Collect the Tier 1 Employee lookback period (2019) of...
Additional Medicare Tax withholding on compensation and $50,000 or less Monthly schedule depositor
tips that exceed $200,000 for the calendar year.
An employee must furnish you with a written (or electronic) More than $50,000 Semiweekly schedule depositor
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.
Pub. 1244, Employee's Daily Record of Tips and Report to
• 2019 Form CT-1, line 15—$49,000.
Employer, a booklet for daily entry of tips and forms to report
• 2020 Form CT-1, line 19—$52,000.
tips to employers, is available at IRS.gov/Forms. Rose Co. is a monthly schedule depositor for 2021
because its Form CT-1 taxes for its lookback period
Tips are considered to be paid at the time the employee
(calendar year 2019) weren't more than $50,000. However,
reports them to you. You must collect both employee railroad
for 2022, 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 2020).
employee railroad retirement and federal income tax related
to the nontip compensation) or from other funds the New employer. If you’re a new employer, your taxes for
employee makes available. Apply the compensation or other both years of the lookback period are considered to be zero.
Therefore, you’re a monthly schedule depositor for the first
-4- Instructions for Form CT-1 (2020)
and second years of your business. However, see $100,000 Deposits Due on Business Days Only
Next-Day Deposit Rule, later.
If a deposit is required to be made on a day that isn't a
Adjustments and the lookback rule. To determine the business day, the deposit is considered to have been made
amount of taxes paid for the lookback period, use only the timely if it is made by the close of the next business day. A
Form CT-1 taxes reported on your original return. business day is any day other than a Saturday, Sunday, or
Adjustments to a return for a prior period aren't taken into legal holiday. For example, if a deposit is due on a Friday and
account in determining the taxes for that prior period. Friday is a legal holiday, the deposit will be considered timely
Example. Maple Co. originally reported Form CT-1 taxes if it is made by the following Monday (if that Monday is a
of $45,000 for the lookback period (2019). Maple Co. business day). The term “legal holiday” for deposit purposes
discovered in March 2021 that the tax during the lookback includes only those legal holidays in the District of Columbia.
period (2019) was understated by $10,000 and will correct For a list of legal holidays, see section 11 of Pub. 15.
this error with an adjustment on Form CT-1 X filed for 2019.
Maple Co. is a monthly schedule depositor for 2021 Semiweekly schedule depositors will always have at least
because the lookback period Form CT-1 taxes are based on 3 business days following the close of the semiweekly period
the amount originally reported ($45,000), which wasn't more to make a deposit. If any of the 3 weekdays after the end of a
than $50,000. For purposes of the lookback rule, the $10,000 semiweekly period is a legal holiday, you have 1 additional
adjustment doesn't affect either 2019 taxes or 2021 taxes. day to deposit. For example, if you have Form CT-1 taxes
See Treasury Decision 9405, available at IRS.gov/irb/ accumulated for payments made on Friday and the following
2008-32_IRB#TD-9405. Monday is a legal holiday, the deposit normally due on
Wednesday may be made on Thursday (allowing 3 business
When To Deposit days to make the deposit).
Monthly Schedule Depositor
Exceptions to the Deposit Rules
If you’re a monthly schedule depositor, deposit employer and
The two exceptions that apply to the deposit rules are the:
employee Tier 1 and Tier 2 taxes accumulated during a
calendar month by the 15th day of the following month. • $2,500 Rule, and
Example. Spruce Co. is a monthly schedule depositor
• $100,000 Next-Day Deposit Rule.
with seasonal employees. Spruce Co. paid compensation $2,500 Rule. If your total Form CT-1 taxes after adjustments
each Friday during May but didn't pay any compensation and nonrefundable credits (line 19) for the year are less than
during June. Under the monthly schedule deposit rule, $2,500 and the taxes are fully paid with a timely filed Form
Spruce Co. must deposit the combined taxes for the May CT-1, no deposits are required. However, if you’re unsure
paydays by June 15. Spruce Co. doesn't have a deposit that you will accumulate less than $2,500, deposit under the
requirement for June (due by July 15) because no appropriate deposit rules so that you won't be subject to
compensation was paid and, therefore, Spruce Co. doesn't deposit penalties.
have a tax liability for the month. $100,000 Next-Day Deposit Rule. If you accumulate
undeposited taxes of $100,000 or more on any day during a
Semiweekly Schedule Depositor deposit period, you must deposit the taxes by the next
If you’re a semiweekly schedule depositor, use the table business day regardless of whether you’re a monthly or
below to determine when to make deposits. semiweekly schedule depositor. The $100,000 tax liability
threshold requiring a next-day deposit is determined before
Deposit Tier 1 and Tier 2 taxes No later than... you consider any reduction of your liability for nonrefundable
for payments made on... credits. See IRS.gov/ETD for more information.
Wednesday, Thursday, and/or The following Wednesday If you’re a monthly schedule depositor and you
Friday accumulate $100,000 or more on any day during the month,
you become a semiweekly schedule depositor on the next
Saturday, Sunday, Monday, The following Friday day for the remainder of the calendar year and for the
and/or Tuesday
following year.
Once a semiweekly schedule depositor accumulates
$100,000 or more in a deposit period, it must stop
Example. Green, Inc., a semiweekly schedule depositor, accumulating at the end of that day and begin to accumulate
pays compensation on the last Friday of each month. anew on the next day. The following examples explain this
Although Green, Inc., is a semiweekly schedule depositor, rule.
Green, Inc., will deposit just once a month because Green, Example of $100,000 Next-Day Deposit Rule.
Inc., pays compensation only once a month. The deposit, Fir Co. is a semiweekly schedule depositor. On Monday, Fir
however, will be made under the semiweekly deposit Co. accumulates taxes of $110,000 and must deposit this
schedule as follows: Green, Inc.’s taxes for the April 30, 2021 amount by Tuesday, the next business day. On Tuesday, Fir
(Friday), payday must be deposited by May 5, 2021 Co. accumulates additional taxes of $30,000. Because the
(Wednesday). Under the semiweekly deposit rule, taxes $30,000 isn't added to the previous $110,000, Fir Co. must
arising on Wednesday through Friday must be deposited by deposit the $30,000 by Friday using the semiweekly deposit
the following Wednesday. schedule.
The last day of the calendar year ends the Example of $100,000 Next-Day Deposit Rule during
semiweekly deposit period and begins a new one. the first year of business. Elm, Inc., started its business
!
CAUTION
on Monday, May 3, 2021. Because this was the first year of
its business, its Form CT-1 taxes for its lookback period
(2019) are considered to be zero, and Elm, Inc., is a monthly
Instructions for Form CT-1 (2020) -5-
schedule depositor. On Wednesday, May 5, it paid For an EFTPS deposit to be on time, you must
compensation for the first time and accumulated taxes of ! submit the deposit by 8 p.m. Eastern time the day
$40,000. On Friday, May 7, it paid compensation and CAUTION before the date the deposit is due.
accumulated taxes of $60,000, bringing its total accumulated
(undeposited) taxes to $100,000. Because Elm, Inc., Same-day wire payment option. If you fail to submit a
accumulated $100,000 or more on May 7 (Friday), Elm, Inc., deposit transaction on EFTPS by 8 p.m. Eastern time the day
must deposit the $100,000 by May 10 (Monday), the next before the date a deposit is due, you can still make your
business day. Elm, Inc., became a semiweekly schedule deposit on time by using the Federal Tax Collection Service
depositor on May 8. Elm, Inc., will be a semiweekly schedule (FTCS) to make a same-day wire payment. To use the
depositor for the rest of 2021 and for 2022. same-day wire payment method, you will need to make
Example of when $100,000 Next-Day Deposit Rule arrangements with your financial institution ahead of time.
doesn't apply. Oak Co., a semiweekly schedule depositor, Please check with your financial institution regarding
accumulated taxes of $95,000 on a Tuesday (of a availability, deadlines, and costs. Your financial institution
Saturday-through-Tuesday deposit period) and accumulated may charge you a fee for payments made this way. To learn
$10,000 on Wednesday (of a Wednesday-through-Friday more about the information you will need to give your
deposit period). Because the $10,000 was accumulated in a financial institution to make a same-day wire payment, go to
deposit period different from the one in which the $95,000 IRS.gov/SameDayWire.
was accumulated, the $100,000 Next-Day Deposit Rule Accuracy of Deposits Rule. You’re required to deposit
doesn’t apply. Thus, Oak Co. must deposit $95,000 by Friday 100% of your railroad retirement taxes on or before the
and $10,000 by the following Wednesday. deposit due date. However, penalties won't be applied for
Deferring your deposits. Employers can defer the depositing less than 100% if both of the following conditions
deposit of the Tier 1 employer taxes reported on lines 1 and 8 are met.
that are due on or after March 27, 2020, and before January
1. Any deposit shortfall doesn't exceed the greater of
1, 2021, as well as payment due for these taxes for
$100 or 2% of the amount of taxes otherwise required to be
compensation paid on or after March 27, 2020, and before
deposited.
January 1, 2021. The deferral applies before any of the
nonrefundable credits claimed on line 16 or 17. However, the 2. The deposit shortfall is paid or deposited by the
deferral doesn't reduce the amount of the taxes that are used shortfall makeup date for each type of depositor as described
to figure those nonrefundable credits. See the instructions for below.
line 21 for more information about the deferral of these • Monthly schedule depositor. Deposit the shortfall or pay
employer taxes. Employers could also defer the withholding it with your return by the due date of Form CT-1. You may
and payment of the Tier 1 employee taxes reported on lines 4 pay the shortfall with Form CT-1 even if the amount is $2,500
and 10 for compensation paid on or after September 1, 2020, or more.
and on or before December 31, 2020, but only if the amount • Semiweekly schedule depositor. Deposit the shortfall
of compensation for a biweekly pay period was less than by the earlier of the first Wednesday or Friday on or after the
$4,000 (or an equivalent amount for other pay periods). The 15th of the month following the month in which the shortfall
amount of the employee deferral is reported on line 22. See occurred. For example, if a semiweekly schedule depositor
the instructions for line 22 for more information. has a deposit shortfall during May 2021, the shortfall makeup
Reducing your deposits for COVID-19 credits. date is June 16, 2021 (Wednesday).
Employers eligible to claim the credit for qualified sick and
family leave compensation and/or the employee retention Penalties and Interest
credit can reduce their deposits by the amount of their The law provides penalties for failure to file a return, late filing
anticipated credits. Employers won't be subject to a of a return, late payment of taxes, failure to make deposits,
failure-to-deposit (FTD) penalty for reducing their deposits if and late deposits unless filing and/or paying late is due to
certain conditions are met. See the instructions for line 16 reasonable cause and not due to willful neglect. Interest is
and line 17 for more information on these credits. This charged on taxes paid late at the rate set by law. For more
reduction in deposits is in addition to the ability employers information, see Pub. 15. Deposit or pay your taxes when
have to reduce their deposits by the amount of the Tier 1 they are due, unless you meet the requirements discussed in
employer taxes they defer. For more information on reducing Notice 2020-22 or IRS.gov/ETD, or you have chosen to use
deposits, see Notice 2020-22, 2020-17 I.R.B. 664, available the relief provided in Notice 2020-65 and Notice 2021-11.
at IRS.gov/irb/2020-17_IRB#NOT-2020-22, and IRS.gov/
If you receive a notice about a penalty after you file this
ETD. Also see IRS.gov/ERC and IRS.gov/PLC for more
return, reply to the notice with an explanation and we will
information, including examples, about reducing deposits.
determine if you meet reasonable cause criteria. Don't attach
See the instructions for Part II, later, for instructions on how to
an explanation when you file your return.
adjust your tax liabilities reported on Part II or Form 945-A for
nonrefundable credits. Use Form 843 to request abatement of assessed
penalties or interest. Don't request abatement of assessed
Electronic Deposit Requirement penalties or interest on Form CT-1 or Form CT-1 X.
You must use EFT to make all federal tax deposits. Order in which deposits are applied. Generally, tax
Generally, an EFT is made using EFTPS. To get more deposits are applied first to the most recent tax liability within
information about EFTPS or to enroll in EFTPS, go to the specified tax period to which the deposit relates. If you
EFTPS.gov, or call 800-555-4477 or 800-733-4829 (TDD). receive an FTD penalty notice, you may designate how your
Additional information about EFTPS is also available in Pub. payment is to be applied in order to minimize the amount of
966. the penalty. You must respond within 90 days of the date of
the notice. Follow the instructions on the notice you received.
See Rev. Proc. 2001-58 for more information. You can find
-6- Instructions for Form CT-1 (2020)
Rev. Proc. 2001-58 on page 579 of Internal Revenue Bulletin eligible for the credit should not be reported as taxable
2001-50 at IRS.gov/pub/irs-irbs/irb01-50.pdf. compensation on lines 2, 3, 4, 5, 6, and 7. See the Caution
above the line 2 instructions, later, for more information. See
Trust fund recovery penalty. If taxes that must be withheld
the instructions for line 16 for information about the credit for
(that is, trust fund taxes) aren't withheld or aren't deposited or
qualified sick and family leave compensation.
paid to the United States Treasury, the trust fund recovery
penalty may apply. The penalty is 100% of the unpaid trust Emergency Paid Sick Leave Act (EPSLA). Under the
fund tax. If these unpaid taxes can't be immediately collected EPSLA, certain government employers and private
from the employer or business, the trust fund recovery employers with fewer than 500 employees provide paid sick
penalty may be imposed on all persons who are determined leave to employees unable to work or telework. The EPLSA
by the IRS to be responsible for collecting, accounting for, or required such employers to provide leave to such employees
paying over these taxes, and who acted willfully in not doing after March 31, 2020, and before January 1, 2021. The
so. For more information, see Trust Fund Recovery Penalty COVID-related Tax Relief Act of 2020 extended the periods
in section 11 of Pub. 15. The trust fund recovery penalty of leave for which employers may continue to claim tax
won't apply to any amount of trust fund taxes an employer credits for providing such leave starting from January 1, 2021
holds back in anticipation of any credits they are entitled to. It through March 31, 2021, although the requirement that
also won't apply to applicable taxes properly deferred under employers provide the leave still expired on December 31,
Notice 2020-65 and Notice 2021-11 before January 1, 2022. 2020. Employers provide leave under the EPSLA to
employees unable to work or telework because the
employee:
Specific Instructions 1. Is subject to a federal, state, or local quarantine or
isolation order related to COVID-19;
Final Return 2. Has been advised by a health care provider to
If you stop paying taxable compensation and won't have to self-quarantine due to concerns related to COVID-19;
file Form CT-1 in the future, you must file a final return and
3. Is experiencing symptoms of COVID-19 and seeking a
check the final return box at the top of Form CT-1 under
medical diagnosis;
“2020.” The final return should be accompanied by a
statement providing the last date on which you paid 4. Is caring for an individual subject to an order described
compensation that you reported on Form CT-1, the address in (1) or who has been advised as described in (2);
at which the records for your Forms CT-1 will be kept, and 5. Is caring for a child if the school or place of care has
the name of the person keeping the records. If the business been closed, or the childcare provider is unavailable, due to
has been transferred to another person, the statement should COVID-19 precautions; or
include the name and address of the transferee and the date 6. Is experiencing any other substantially similar
of the transfer. If the business wasn't transferred or the condition specified by the U.S. Department of Health and
transferee isn't known, the statement should so state. Human Services.
Processing of your return may be delayed if you don't
Government employers aren't eligible for the credit
! provide the required amounts in the Compensation
CAUTION and Tax columns.
TIP for qualified sick and family leave compensation;
however, government employers still aren't liable for
the Tier 1 Employer tax (line 1) on the qualified sick leave
Line 1—Tier 1 Employer Tax compensation paid to employees.
Don't reduce your Tier 1 Employer compensation or Limits on qualified sick leave compensation. The
! tax by the deferred amount of the Tier 1 Employer tax EPSLA provides different limitations for different
CAUTION reported on line 21. circumstances under which qualified sick leave
Enter the compensation (other than tips and sick pay), compensation is paid. For paid sick leave qualifying under
including qualified compensation (other than qualified health (1), (2), or (3) above, the amount of qualified sick leave
plan expenses) for the employee retention credit, subject to compensation is determined at the employee's regular rate of
Tier 1 Employer tax in the Compensation column. Don't pay, but the compensation may not exceed $511 for any day
include qualified sick leave compensation or qualified family (or portion of a day) for which the individual is paid sick leave.
leave compensation. Multiply by 6.2% and enter the result in For paid sick leave qualifying under (4), (5), or (6) above, the
the Tax column. The total amount listed in the Compensation amount of qualified sick leave compensation is determined at
column for lines 1 and 8 combined may not be more than two-thirds the employee's regular rate of pay, but the
$137,700 per employee. For more information on qualified compensation may not exceed $200 for any day (or portion
compensation for the employee retention credit, see the of a day) for which the individual is paid sick leave. The
instructions for line 17, later. EPSLA also limits each individual to a maximum of up to 80
hours of paid sick leave for the year. Therefore, the maximum
Qualified Sick Leave Compensation and amount of paid sick leave compensation for the year can't
exceed $5,110 for an employee for leave under (1), (2), or
Qualified Family Leave Compensation (3), and it can't exceed $2,000 for an employee for leave
Qualified sick leave compensation. For purposes of the under (4), (5), or (6). For more information from the
credit for qualified sick and family leave compensation, Department of Labor on these requirements and limits, see
qualified sick leave compensation is compensation DOL.gov/agencies/whd/pandemic.
(determined without regard to the exclusions under section For more information about qualified sick leave
3231(e)(1)) paid under the Emergency Paid Sick Leave Act compensation, go to IRS.gov/PLC.
(EPSLA) as enacted under the Families First Coronavirus
Response Act (FFCRA). However, some compensation Qualified family leave compensation. For purposes of
the credit for qualified sick and family leave compensation,
Instructions for Form CT-1 (2020) -7-
qualified family leave compensation is compensation
(determined without regard to the exclusions under section
Line 2—Tier 1 Employer Medicare Tax
3231(e)(1)) paid under the Emergency Family and Medical Enter the compensation (other than tips and sick pay),
Leave Expansion Act as enacted under the FFCRA. including qualified sick leave compensation, qualified family
However, some compensation eligible for the credit should leave compensation, and qualified compensation (other than
not be reported as taxable compensation on lines 2, 3, 4, 5, qualified health plan expenses) for the employee retention
6, and 7. See the Caution above the line 2 instructions, later, credit, subject to Tier 1 Employer Medicare tax in the
for more information. See the instructions for line 16 for Compensation column. Multiply by 1.45% and enter the
information about the credit for qualified sick and family leave result in the Tax column.
compensation.
Emergency Family and Medical Leave Expansion Act.
Line 3—Tier 2 Employer Tax
Under the Emergency Family and Medical Leave Expansion Enter the compensation (other than tips), including qualified
Act, certain government employers and private employers sick leave compensation, qualified family leave
with fewer than 500 employees provide paid family leave compensation, and qualified compensation (other than
under the Family and Medical Leave Act of 1993 to an qualified health plan expenses) for the employee retention
employee who has been employed for at least 30 calendar credit, subject to Tier 2 Employer tax in the Compensation
days and is unable to work or telework. The Emergency column. Don't enter more than $102,300 per employee.
Family and Medical Leave Expansion Act required such Multiply by 13.1% and enter the result in the Tax column.
employers to provide leave to such employees after March
31, 2020, and before January 1, 2021. The COVID-related
Line 4—Tier 1 Employee Tax
Tax Relief Act of 2020 extended the periods of leave for Don't reduce the Tier 1 Employee compensation or
which employers may continue to claim tax credits for ! tax by the deferred amount of the Tier 1 Employee
providing such leave starting from January 1, 2021, through CAUTION tax reported on line 22.
March 31, 2021, although the requirement that employers
provide the leave still expired on December 31, 2020. The Enter the compensation, including tips reported (but
Emergency Family and Medical Leave Expansion Act covers excluding sick pay), qualified sick leave compensation,
periods of leave during which an employee is unable to work qualified family leave compensation, and qualified
or telework due to the need to care for a child because the compensation (other than qualified health plan expenses) for
school or place of care has been closed, or the childcare the employee retention credit, subject to Tier 1 Employee tax
provider is unavailable, due to COVID-19 related reasons. in the Compensation column. Multiply by 6.2% and enter the
The first 10 days for which an employee takes leave may be result in the Tax column. The total amount listed in the
unpaid. During this period, employees may use other forms Compensation column for lines 4 and 10 combined may not
of paid leave, such as qualified sick leave, accrued sick be more than $137,700 per employee.
leave, annual leave, or other paid time off. After an employee Stop collecting the 6.2% Tier 1 Employee tax when the
takes leave for 10 days, the employer provides the employee employee's compensation (including sick pay), tips, qualified
paid leave (that is, qualified family leave compensation) for sick leave compensation, qualified family leave
up to 10 weeks. For more information from the Department of compensation, and qualified compensation (other than
Labor on these requirements, possible exceptions, and the qualified health plan expenses) for the employee retention
limitations discussed later, see DOL.gov/agencies/whd/ credit reach the maximum for the year ($137,700 for 2020).
pandemic. However, your liability for Tier 1 Employer tax on
Government employers aren't eligible for the credit compensation continues until the compensation (including
TIP for qualified sick and family leave compensation; sick pay), and qualified compensation (other than qualified
however, government employers still aren't liable for health plan expenses) for the employee retention credit, but
the Tier 1 Employer tax (line 1) on the qualified family leave not including tips, totals $137,700 for the year.
compensation paid to employees.
Line 5—Tier 1 Employee Medicare
Rate of pay and limit on compensation. The rate of pay
must be at least two-thirds of the employee's regular rate of Tax
pay (as determined under the Fair Labor Standards Act of Enter the compensation, including tips reported (but
1938), multiplied by the number of hours the employee excluding sick pay), qualified sick leave compensation,
otherwise would have been scheduled to work. The qualified qualified family leave compensation, and qualified
family leave compensation can't exceed $200 per day or compensation (other than qualified health plan expenses) for
$10,000 in the aggregate per employee for the year. the employee retention credit subject to Tier 1 Employee
For more information about qualified family leave Medicare tax in the Compensation column. Multiply by 1.45%
compensation, go to IRS.gov/PLC. and enter the result in the Tax column. For information on
reporting tips, see Tips, earlier.
Although qualified sick leave compensation and
! qualified family leave compensation are defined as Line 6—Tier 1 Employee Additional
CAUTION compensation determined without regard to the
exclusions under section 3231(e)(1) for proposes of the Medicare Tax Withholding
credit for qualified sick and family leave compensation, don't Enter the compensation, including tips reported (but
include any compensation otherwise excluded under section excluding sick pay), qualified sick leave compensation,
3231(e)(1) when reporting qualified sick leave compensation qualified family leave compensation, and qualified
and qualified family leave compensation on lines 2, 3, 4, 5, 6, compensation (other than qualified health plan expenses) for
and 7. the employee retention credit, that is subject to Tier 1
Employee Additional Medicare Tax withholding. You’re
required to begin withholding Tier 1 Employee Additional
-8- Instructions for Form CT-1 (2020)
Medicare Tax in the pay period in which you pay tax), make entries on lines 8–12. If you’re subject to only the
compensation in excess of $200,000 to an employee and employer or employee tax, complete only the applicable
continue to withhold it each pay period until the end of the lines. Multiply by the appropriate rates and enter the results
calendar year. Tier 1 Employee Additional Medicare Tax is in the Tax column.
only imposed on the employee. There is no employer share
of Tier 1 Additional Medicare Tax. All compensation Line 13—Total Tax Based on
(including sick pay) that is subject to Tier 1 Medicare tax is
subject to Tier 1 Employee Additional Medicare Tax if paid in
Compensation
excess of the $200,000 withholding threshold. Add lines 1 through 12 and enter the result on line 13.
Go to IRS.gov/ADMT for more information on Tier 1 Line 14—Adjustments to Taxes Based
Employee Additional Medicare Tax. on Compensation
Line 7—Tier 2 Employee Tax Don't use line 14 for prior period adjustments. Make
Enter the compensation, including tips reported, qualified ! all prior period adjustments on Form CT-1 X.
sick leave compensation, qualified family leave CAUTION
compensation, and qualified compensation (other than Enter on line 14:
qualified health plan expenses) for the employee retention • A fractions-of-cents adjustment (see Adjustment for
credit, subject to Tier 2 Employee tax in the Compensation fractions of cents, later);
column. Only the first $102,300 of the employee's • Credits for overpayments of penalty or interest paid on tax
compensation (including tips, qualified sick leave for earlier years; and
compensation, qualified family leave compensation, and • Any uncollected Tier 1 Employee tax, Tier 1 Employee
qualified compensation (other than qualified health plan Medicare tax, Tier 1 Employee Additional Medicare Tax, and
expenses) for the employee retention credit) for 2020 is Tier 2 Employee tax on tips.
subject to this tax. Multiply by 4.9% and enter the result in the
Tax column. For information on reporting tips, see Tips, Enter the total of these adjustments in the Tax column. If
earlier. you’re reporting both an addition and a subtraction, enter
only the difference between the two on line 14. If the net
Any compensation paid during the current year that
adjustment is negative, report the amount on line 14 using a
! was earned in prior years (reported to the Railroad
CAUTION Retirement Board on Form BA-4, Report of
minus sign, if possible. If your computer software doesn't
allow the use of minus signs, you may use parentheses.
Creditable Compensation Adjustments) is taxable at the
current year tax rates, unless special timing rules for Don't include on line 14 any 2019 overpayment that is
nonqualified deferred compensation apply. See Pub.15-A. applied to this year's return (this is included on line 20).
Include such compensation with current year compensation
on lines 1–7, as appropriate. Required statement. Except for adjustments for fractions of
cents, explain amounts entered on line 14 in a separate
Lines 8–12—Tier 1 Taxes on Sick Pay statement. Include your name, EIN, calendar year of the
return, and “Form CT-1” on each page you attach. Include in
Don't include qualified sick leave compensation, the statement the following information.
! qualified family leave compensation, or qualified • An explanation of the item the adjustment is intended to
CAUTION compensation for the employee retention credit on correct showing the compensation subject to Tier 1 and Tier
lines 8 through 12. Don't reduce your Tier 1 Employer 2 taxes and their respective tax rates.
compensation or tax for sick pay on line 8 by the deferred • The amount of the adjustment.
amount of the Tier 1 Employer tax reported on line 21. Don't • The name and account number of any employee from
reduce the Tier 1 Employee compensation or tax for sick pay whom employee tax was undercollected or overcollected.
on line 10 by the deferred amount of the Tier 1 Employee tax • How you and the employee have settled any
reported on line 22. undercollection or overcollection of employee tax.
Enter any sick pay payments during the year that are Adjustment for fractions of cents. If there is a small
subject to Tier 1 taxes, Tier 1 Medicare taxes, and Tier 1 difference between the total employee tax (lines 4–7 and 10–
Employee Additional Medicare Tax withholding in the 12) and the total actually withheld from employee
Compensation column. Multiply by the rate for the line and compensation including tips, it may be caused by rounding to
enter the result in the Tax column for that line. For Tier 1 the nearest cent each time you figured payroll. The
Employer taxes, the total amount listed in the Compensation difference, positive or negative, is your fractions-of-cents
column for lines 1 and 8 combined may not be more than adjustment to be reported on line 14. If the actual amount
$137,700 per employee. For Tier 1 Employee taxes, the total withheld is less, report a negative adjustment in the entry
amount listed in the Compensation column for lines 4 and 10 space. If the actual amount is more, report a positive
combined may not be more than $137,700 per employee. adjustment.
Tier 1 Medicare taxes aren't subject to a dollar limitation. If this is the only entry on line 14, you’re not required
All compensation (including sick pay) that is subject to TIP to attach a statement explaining the adjustment.
Tier 1 Medicare tax is subject to Tier 1 Employee Additional
Medicare Tax if paid in excess of the $200,000 withholding
threshold.
Line 15—Total Taxes After
If you’re a railroad employer paying your employees sick
Adjustments
pay, or a third-party payer who didn't notify the employer of Combine the amounts shown on lines 13 and 14 and enter
the payments (thereby subject to the employee and employer the result on line 15.
Instructions for Form CT-1 (2020) -9-
Line 16—Nonrefundable Portion of You must include the full amount (both the
TIP nonrefundable and refundable portions) of the credit
Credit for Qualified Sick and Family for qualified sick and family leave compensation in
your gross income for the tax year that includes the last day
Leave Compensation of any calendar quarter in which a credit is allowed. You can't
Form CT-1 and these instructions use the terms use the same compensation for the employee retention credit
TIP “nonrefundable” and “refundable” when discussing and the credits for paid sick and family leave.
credits. The term “nonrefundable” means the portion
of the credit which is limited by law to the amount of certain Line 17—Nonrefundable Portion of
Tier 1 employer taxes. The term “refundable” means the
portion of the credit which is in excess of these taxes. Employee Retention Credit
Enter the nonrefundable portion of the employee retention
Businesses and tax-exempt organizations with fewer than credit from Worksheet 1, Step 3, line 3h. For calendar year
500 employees that provide paid sick leave under the EPSLA 2020, the employee retention credit is 50% of the qualified
and/or provide paid family leave under the Emergency Family compensation you paid to your employees between March
and Medical Leave Expansion Act are eligible to claim the 13, 2020, and December 31, 2020. Qualified compensation
credit for qualified sick and family leave compensation for the includes qualified health plan expenses for the employee
period after March 31, 2020, and before April 1, 2021. For retention credit. The nonrefundable portion of the credit is
purposes of this credit, qualified sick leave compensation limited to the Tier 1 Employer tax (line 1) and Tier 1 Employer
and qualified family leave compensation are compensation tax—Sick pay (line 8) after that share is first reduced by any
(determined without regard to the exclusions under section credit claimed for the nonrefundable portion of the credit for
3231(e)(1)) paid under the EPSLA and Emergency Family qualified sick and family leave compensation. Any credit in
and Medical Leave Expansion Act, respectively. Any credit excess of the remaining amount of the Tier 1 Employer tax
claimed on your 2020 Form CT-1 is limited to compensation (line 1) and Tier 1 Employer tax—Sick pay (line 8), is
for the period March 31, 2020, and before January 1, 2021. refundable and reported on Form CT-1, line 24. For more
Credit for compensation for the period beginning after information on the employee retention credit, go to IRS.gov/
December 31, 2020, will be claimed on your 2021 Form ERC.
CT-1. Enter the nonrefundable portion of the credit for
qualified sick and family leave compensation from Worksheet Qualified compensation for the employee retention
1, Step 2, line 2j. The credit for qualified sick and family leave credit. For calendar year 2020, the tax credit is equal to
compensation consists of the qualified sick leave 50% of qualified compensation paid to employees between
compensation, the qualified family leave compensation, the March 13, 2020, and December 31, 2020. Qualified
qualified health plan expenses allocable to that compensation, including qualified health plan expenses, is
compensation, and the Tier 1 Employer Medicare tax limited to a maximum of $10,000 for each employee for the
allocable to that compensation. The nonrefundable portion of cumulative total of 2020. Qualified compensation is
the credit is limited to the Tier 1 Employer tax (line 1) and Tier compensation paid to certain employees during any period in
1 Employer tax—Sick Pay (line 8). a quarter in which your operations are fully or partially
suspended due to a government order or in which you have
Any credit in excess of the remaining amount of the Tier 1 had a significant decline in gross receipts. For calendar year
Employer tax (line 1) and Tier 1 Employer tax—Sick Pay 2020, the law provides that the significant decline in gross
(line 8) is refundable and reported on Form CT-1, line 23. For receipts is the period beginning with any quarter in which
more information on the credit for qualified sick and family your gross receipts are less than 50% of what they were in
leave compensation, go to IRS.gov/PLC. the same calendar quarter in 2019 and ending with the
Qualified health plan expenses allocable to qualified quarter that follows the first quarter beginning after the
sick leave and family leave compensation. The credit for quarter in which your gross receipts were greater than 80%
qualified sick leave compensation and qualified family leave of what they were in the same calendar quarter in 2019.
compensation is increased to cover the qualified health plan For calendar year 2020, the compensation and qualified
expenses that are properly allocable to the qualified leave health plan expenses considered in calculating your credit
compensation for which the credit is allowed. These qualified depend on the size of your workforce. Eligible employers that
health plan expenses are amounts paid or incurred by the had an average number of 100 or fewer full-time employees
employer to provide and maintain a group health plan but during 2019 count compensation paid to all their employees
only to the extent such amounts are excluded from the and the qualified health plan expenses paid or incurred for all
employees’ income as coverage under an accident or health employees during any period in the quarter in which
plan. The amount of qualified health plan expenses generally operations are fully or partially suspended due to a
includes both the portion of the cost paid by the employer government order or during a quarter in which there has been
and the portion of the cost paid by the employee with pre-tax a significant decline in gross receipts. Eligible employers that
salary reduction contributions. However, the qualified health had an average number of more than 100 full-time
plan expenses shouldn't include amounts that the employee employees in 2019 may count only compensation paid to
paid for with after-tax contributions. For more information, go employees for time that the employees weren't working, and
to IRS.gov/PLC. qualified health plan expenses paid or incurred by the
employer allocable to the time those employees weren't
working, due to the suspension or significant decline in gross
receipts; these eligible employers can count only
compensation that doesn't exceed what the employer would
have paid that employee for working for the same amount of
-10- Instructions for Form CT-1 (2020)
time during the prior 30 days. More information on the The deferred amount of the Tier 1 employer taxes
employee retention credit is available at IRS.gov/ERC. TIP from lines 1 and 8 is a deferral of deposits and
payments, not a deferral of liability. You won't receive
Qualified health plan expenses for the employee reten-
a refund or credit of any amount of these taxes already
tion credit. Qualified compensation for the employee
deposited or paid for the year. However, in determining
retention credit includes qualified health plan expenses.
whether any amount of these taxes was already deposited
Qualified health plan expenses are amounts paid or incurred
for this purpose, you can consider prior deposits on or after
by the employer to provide and maintain a group health plan
March 27, 2020, as first being deposited for taxes other than
but only to the extent such amounts are excluded from the
the Tier 1 employer taxes from lines 1 and 8. Although
employees' income as coverage under an accident or health
employers depositing taxes using EFTPS can identify the
plan. The amount of qualified health plan expenses taken
subcategory of separate deposits for the different taxes,
into account in determining the amount of qualified
those entries are for informational purposes only. The IRS
compensation generally includes both the portion of the cost
doesn't use that information in comparing liabilities reported
paid by the employer and the portion of the cost paid by the
on your return and the total deposits made.
employee with pre-tax salary reduction contributions.
However, the qualified health plan expenses shouldn't Paying the deferred amount of the Tier 1 employer tax-
include amounts that the employee paid for with after-tax es. One-half of the Tier 1 employer taxes deferred is due by
contributions. Generally, the qualified health plan expense is December 31, 2021, and the remainder is due by December
the amount that is allocable to the hours for which the 31, 2022. Any payments or deposits you make before
employees receive qualified compensation for the employee December 31, 2021, are first applied against your payment
retention credit. However, qualified health plan expenses for due on December 31, 2021, and then applied against your
purposes of the employee retention credit may include health payment due on December 31, 2022. For example, if your
plan expenses allocable to the applicable periods even if the Tier 1 employer taxes reported on lines 1 and 8 for 2020 are
employer isn’t paying any qualified compensation to the $20,000 and you deposited $5,000 of the $20,000 and defer
employee. For more information, see the frequently asked $15,000 on line 21, then you must pay $5,000 by December
questions for qualified health plan expenses, available at 31, 2021, and $10,000 by December 31, 2022. However, if
IRS.gov/ERC. those taxes for 2020 were $20,000 and you deposited
Line 18—Total Nonrefundable Credits $15,000 of the $20,000 and defer $5,000 on line 21, then you
don’t need to pay any deferred amount by December 31,
Add lines 16 and 17. Enter the total on line 18. 2021, because 50% of the amount that could have been
Line 19—Total Taxes After deferred ($10,000) has already been paid and is first applied
against your payment that would be due on December 31,
Adjustments and Nonrefundable 2021. Accordingly, you must pay the $5,000 deferral by
December 31, 2022.
Credits
If you initially deferred (that is, didn’t deposit) these taxes
Subtract line 18 from line 15 and enter the result on line 19. and later decided to pay or deposit in 2020, see Adjusting tax
Line 20—Total Deposits for the Year liability for the deferred amount of taxes that you pay or
deposit in 2020, later. For additional information, go to
Enter the total Form CT-1 deposits for the year, including any IRS.gov/ETD.
overpayment that you applied from filing Form CT-1 X and
any overpayment that you applied from your 2019 return. How to pay the deferred amount of Tier 1 employer tax-
es. You may pay the amount you owe electronically using
Line 21—Deferred Amount of the Tier EFTPS, by credit or debit card, or by a check or money order.
The preferred method of payment is EFTPS. For more
1 Employer Tax information, visit EFTPS.gov, or call 800-555-4477 or
Enter the amount of the Tier 1 Employer tax (line 1) and Tier 800-733-4829 (TDD). To pay the deferred amount, select
1 Employer tax—Sick pay (line 8) that you’re deferring. Form CT-1 and the option for payment due on an IRS notice.
Employers, including government employers, can defer the
To pay by credit or debit card, go to IRS.gov/PayByCard.
deposit of these taxes due on or after March 27, 2020, and
If you pay by check or money order, include a 2020 Form
before January 1, 2021, as well as payment due for these
CT-1(V), Payment Voucher. Make the check or money order
taxes on compensation paid on or after March 27, 2020, and
payable to “United States Treasury.” Enter your EIN, “Form
before January 1, 2021. The taxes that can be deferred are
CT-1,” and “2020” on your check or money order.
included on lines 1 and 8. However, you determine the
amount that can be deferred by only considering tax on Where to send payments. Payments should be sent to:
compensation related to deposits and payments due on or
after March 27, 2020. Don’t reduce the amount reported on Department of the Treasury
line 21 by any credits claimed on lines 16 and 17. However, Internal Revenue Service
you can’t defer tax that you have already paid; therefore, the Cincinnati, OH 45999-0030
maximum amount that can be deferred for the year is the
lesser of (1) the total of your Tier 1 employer taxes on lines 1
and 8 along with the total of Tier 1 Employee taxes on lines 4 Line 22—Deferred Amount of the Tier
and 10 (if you deferred employee taxes; see the instructions
for line 22), or (2) the excess of (a) line 15 over (b) line 20. 1 Employee Tax
For more information about the deferral of these deposits, Enter the amount of the Tier 1 Employee tax (line 4) and Tier
including limitations on the maximum amount you can defer, 1 Employee tax—Sick pay (line 10) that you’re deferring for
go to IRS.gov/ETD. the year. On August 8, 2020, the President issued a
Presidential Memorandum directing the Secretary of the
Instructions for Form CT-1 (2020) -11-
Treasury to use his authority pursuant to section 7508A of tax on those amounts. For more information about the
the Internal Revenue Code to defer the withholding, deposit, deferral of the Tier 1 employee taxes, see Notice 2020-65
and payment of certain payroll tax obligations. In Notice and Notice 2021-11. For information on paying the deferred
2020-65, the Secretary made relief available under section taxes, see How to pay the deferred amount of Tier 1
7508A to employers required to withhold certain Tier 1 employer taxes, earlier.
employee taxes from compensation paid to employees. In If you initially deferred (that is, didn’t deposit) these taxes
response to section 274 of the COVID-related Tax Relief Act and later decided to pay or deposit in 2020, see Adjusting tax
of 2020, requiring additional tax relief, Notice 2020-65 was liability for the deferred amount of taxes that you pay or
modified by Notice 2021-11. Specifically, under Notice deposit in 2020, later.
2020-65 and Notice 2021-11, the due date for withholding
and payment of the Tier 1 Employee tax (line 4) and Tier 1 Line 23—Refundable Portion of Credit
Employee tax—Sick pay (line 10) on applicable
compensation is postponed until the period beginning on for Qualified Sick and Family Leave
January 1, 2021, and ending on December 31, 2021. Compensation
Applicable compensation is total compensation included on
Businesses and tax-exempt organizations with fewer than
lines 4 and 10 of less than $4,000 in any biweekly pay period
500 employees that provide paid sick leave under the EPSLA
(or the equivalent threshold amount for other pay periods),
and/or provide paid family leave under the Emergency Family
paid on a pay date during the period beginning on
and Medical Leave Expansion Act are eligible to claim the
September 1, 2020, and ending on December 31, 2020. The
credit for qualified sick and family leave compensation. For
determination of whether the deferral of withholding or
purposes of this credit, qualified sick leave compensation
payment of these taxes is available is made on a pay
and qualified family leave compensation are compensation
period-by-pay period basis. Nothing prohibits employers from
(determined without regard to the exclusions under section
getting employee input on whether to apply the relief to
3231(e)(1)) paid under the EPSLA and Emergency Family
postpone the due date for the withholding and payment of
and Medical Leave Expansion Act, respectively. Enter the
these taxes on applicable compensation paid to the
refundable portion of the credit for qualified sick and family
employee.
leave compensation from Worksheet 1, Step 2, line 2k. The
You can’t defer tax that you have already paid; therefore, credit for qualified sick and family leave compensation
the maximum amount that can be deferred for the year is the consists of the qualified sick leave compensation, the
lesser of (1) the total of your Tier 1 employer taxes on lines 1 qualified family leave compensation, the allocable qualified
and 8 (if you deferred employer taxes, see the instructions for health plan expenses, and the Tier 1 Employer Medicare tax
line 21) along with the total of Tier 1 employee taxes on lines allocable to that compensation. The refundable portion of the
4 and 10), or (2) the excess of (a) line 15 over (b) line 20. credit is allowed after the Tier 1 employer taxes from lines 1
If you paid an employee supplemental compensation and 8 are reduced to zero by nonrefundable credits.
TIP (for example, a bonus or commission) and included
the supplemental compensation with the employee’s
Line 24—Refundable Portion of
regular compensation in a single payment (that is, in a single Employee Retention Credit
paycheck) for a pay period, but you didn’t specifically identify Enter the refundable portion of the employee retention credit
the amount of each, then the entire amount of the payment from Worksheet 1, Step 3, line 3i. The employee retention
must be below $4,000 (or equivalent amount for pay periods credit is 50% of the qualified compensation you paid to your
other than a biweekly pay period) to be eligible for the employees between March 13, 2020, and December 31,
deferral of the withholding and payment of the Tier 1 2020. The refundable portion of the credit is allowed after the
employee taxes. If the entire amount is below $4,000, then Tier 1 employer taxes from lines 1 and 8 are reduced to zero
you may defer the withholding and payment of the Tier 1 by nonrefundable credits.
employee taxes on the entire payment of the compensation.
If you paid the supplemental compensation separately from Line 25—Total Deposits, Deferrals,
the employee’s regular compensation (that is, in a separate
check), or you combined the compensation in a single and Refundable Credits
payment but you specifically identified the amount of each, Add lines 20, 21, 22, 23, and 24. Enter the total on line 25.
then the supplemental compensation is disregarded for
purposes of determining whether the regular compensation Line 26—Total Advances Received
was below $4,000 (or equivalent amount), but the from Filing Form(s) 7200 for the Year
supplemental compensation isn’t eligible for the deferral of
Enter the total advances received from filing Form(s) 7200 for
the withholding and payment of the Tier 1 employee taxes.
the year. If you filed Form 7200 but you haven’t received the
Paying the deferred amount of the Tier 1 employee tax- advance before filing Form CT-1, don’t include that amount.
es. The due date for the withholding and payment of the Tier Employers were eligible to file Form 7200 if they paid
1 employee taxes included on lines 4 and 10 is postponed qualified sick leave compensation, qualified family leave
until the period beginning on January 1, 2021, and ending on compensation, and/or qualified compensation for the
December 31, 2021. The employer must withhold and pay employee retention credit and the amount of deposits they
the total deferred Tier 1 employee taxes ratably from retained wasn’t sufficient to cover the cost of qualified sick
compensation paid to the employee between January 1, and family leave compensation and the employee retention
2021, and December 31, 2021. If necessary, the employer credit.
may make arrangements to otherwise collect the total Form 7200 may be filed up to the earlier of March 1,
deferred taxes from the employee. The employer is liable to TIP 2021, or the filing of Form CT-1 for the year.
pay the deferred taxes to the IRS and must do so before However, if you file Form 7200 after the end of the
January 1, 2022, to avoid interest, penalties, and additions to
-12- Instructions for Form CT-1 (2020)
year, it's possible that it may not be processed prior to the
processing of the filed Form CT-1. Advance payment
Line 30—Qualified Sick Leave
requests on Form 7200 won't be paid after your Form CT-1 is Compensation
processed. When the IRS processes Form CT-1, we will Enter the qualified sick leave compensation you paid to your
correct the amount reported on line 26 to match the amount employees during the year. Qualified sick leave
of advance payments issued or contact you to reconcile the compensation reported on this line is compensation
difference before we finish processing Form CT-1. (determined without regard to the exclusions under section
3231(e)(1)) paid under the EPSLA as enacted under the
Line 27—Total Deposits, Deferrals, FFCRA. This amount is also entered on Worksheet 1, Step
2 , line 2a. See the instructions for line 16 for information
and Refundable Credits Less about the credit for qualified sick and family leave
Advances compensation. For more information about qualified sick
Subtract line 26 from line 25 and enter the result on line 27. leave compensation, go to IRS.gov/PLC.
Line 28—Balance Due Line 31—Qualified Health Plan
If line 19 is more than line 27, enter the difference on line 28. Expenses Allocable to Compensation
Otherwise, see Line 29—Overpayment, later. You don't have
to pay if line 28 is under $1. Generally, you should show a
Reported on Line 30
balance due on line 28 only if your total railroad retirement Enter the qualified health plan expenses allocable to qualified
taxes based on compensation for the year (line 19) are less sick leave compensation. This amount is also entered on
than $2,500. However, see Accuracy of Deposits Rule, Worksheet 1, Step 2, line 2b.
earlier, regarding payments made under the accuracy of
deposits rule.
Line 32—Qualified Family Leave
If you were required to make federal tax deposits, pay the Compensation
amount shown on line 28 by EFT. If you weren't required to Enter the qualified family leave compensation you paid to
make federal tax deposits or you're a monthly schedule your employees during the year. Qualified family leave
depositor making a payment under the accuracy of deposits compensation reported on this line is compensation
rule, you may pay the amount shown on line 28 by EFT, (determined without regard to the exclusions under section
check, or money order. For more information on electronic 3231(e)(1)) paid under the Emergency Family and Medical
payment options, go to IRS.gov/Payments. Leave Expansion Act as enacted under the FFCRA. This
amount is also entered on Worksheet 1, Step 2, line 2e. See
If you pay by EFT, file your return using the address under the instructions for line 16 for information about the credit for
Where To File, earlier. Don't file Form CT-1(V), Payment qualified sick and family leave compensation. For more
Voucher. If you pay by check or money order, make it information about qualified family leave compensation, go to
payable to “United States Treasury.” Enter your EIN, “Form IRS.gov/PLC.
CT-1,” and “2020” on your check or money order. Complete
Form CT-1(V) and enclose with Form CT-1. Line 33—Qualified Health Plan
Line 29—Overpayment Expenses Allocable to Compensation
If line 27 is more than line 19, enter the difference on line 29. Reported on Line 32
Never make an entry on both lines 29 and 28. If line 29 is
Enter the qualified health plan expenses allocable to qualified
less than $1, we will send you a refund or apply it to your next
family leave compensation. This amount is also entered on
return only if you ask us in writing to do so.
Worksheet 1, Step 2, line 2f.
If you deposited more than the correct amount for the
year, you can have the overpayment refunded or applied to Line 34—Qualified Compensation for
your next return by checking the appropriate box on line 29. the Employee Retention Credit
Check only one box on line 29. If you don't check either box
Enter the qualified compensation for the employee retention
or if you check both boxes, generally we will apply the
credit (excluding the amount of any qualified health plan
overpayment to your next return. Regardless of any boxes
expenses allocable to the compensation). This amount is
you check or don't check, we may apply your overpayment to
also entered on Worksheet 1, Step 3, line 3a. See the
any past due tax account that is shown in our records under
instructions for line 17 for information about the employee
your EIN.
retention credit. For more information about qualified
Lines 30 Through 35 compensation for the employee retention credit, go to
IRS.gov/ERC.
The amounts entered on lines 30 through 35 are
! amounts that you use on Worksheet 1 to figure the Line 35—Qualified Health Plan
CAUTION credit for qualified sick and family leave
compensation and the employee retention credit. If you’re
Expenses Allocable to Compensation
claiming these credits, you must enter the applicable Reported on Line 34
amounts. Enter the qualified health plan expenses for the employee
retention credit. These expenses are generally allocable to
the compensation reported on Form CT-1, line 34. However,
in some circumstances, qualified health plan expenses for
purposes of the employee retention credit are treated as
Instructions for Form CT-1 (2020) -13-
allocable to qualified compensation for the employee Nonrefundable portion of employee retention credit
retention credit even if no compensation is paid to the (line 17). The nonrefundable portion of the employee
employees during the applicable period (for example, when retention credit is limited to the Tier 1 employer taxes
you furlough an employee because your operations are fully reported on Form CT-1, lines 1 and 8, on compensation paid
or partially suspended due to a government order but you in the year that is remaining after that share is first reduced
continue to pay qualified health plan expenses). For more by any credit claimed on Form CT-1, line 16, for the
information, go to IRS.gov/ERC. The amount from line 35 is nonrefundable portion of the credit for qualified sick and
also entered on Worksheet 1, Step 3, line 3b. family leave compensation. In completing Part II or Form
945-A, you take into account the nonrefundable portion of the
Part II. Record of Railroad Retirement employee retention credit against the liability for the first
Tax Liability payroll payment of the year, but not below zero. Then reduce
the liability for each successive payroll payment of the year
This is a summary of your yearly tax liability, not a summary until the nonrefundable portion of the credit is used. Any
of deposits made. If line 15 is less than $2,500, don't employee retention credit that is remaining at the end of the
complete Part II or Form 945-A. year because it exceeds the Tier 1 employer taxes reported
If you’re a monthly schedule depositor, enter your tax on Form CT-1, lines 1 and 8, is claimed on line 24 as a
liability for each month and figure the total liability for the refundable credit. The refundable portion of the credit doesn’t
year. If you don't enter your tax liability for each month, the reduce the liability reported on Part II or Form 945-A.
IRS won't know when you should have made deposits and Example. Maple Co. is a monthly schedule depositor that
may assess an “averaged” FTD penalty. See section 11 of pays employees every Friday. In 2020, Maple Co. had pay
Pub. 15. If your tax liability for any month is negative, don't dates every Friday of 2020 starting January 3, 2020. Maple
enter a negative amount for the month. Instead, enter zero for Co. paid qualified wages for the employee retention credit on
the month and subtract that negative amount from your tax May 1 and May 8. The nonrefundable portion of the
liability for the next month. employee retention credit for the year is $3,000. On Part II,
Adjusting tax liability for nonrefundable credits claimed Maple Co. will use the $3,000 to reduce the liability for the
on lines 16 and 17. Monthly schedule depositors and January 3 pay date, but not below zero. If any nonrefundable
semiweekly schedule depositors must account for portion of the credit remains, Maple Co. applies it to the
nonrefundable credits claimed on lines 16 and 17 when liability for the January 10 pay date, then the January 17 pay
reporting their tax liabilities on Part II or Form 945-A. The total date, and so forth until the entire $3,000 is used.
tax liability for the year must equal the amount reported on You may reduce your deposits by the amount of the
line 19. Failure to account for the nonrefundable credits on TIP nonrefundable and refundable portions of the credit
Part II or Form 945-A may cause Part II or Form 945-A to for qualified sick and family leave compensation, the
report more than the total tax liability reported on line 19. nonrefundable and refundable portions of the employee
Don't reduce your monthly tax liability reported on Part II or retention credit, and any deferred taxes, as discussed earlier
your daily tax liability reported on Form 945-A below zero. under Reducing your deposits for COVID-19 credits.
Nonrefundable portion of credit for qualified sick and
family leave compensation (line 16). The nonrefundable Adjusting tax liability for the deferred amount of taxes
portion of the credit for qualified sick and family leave that you pay or deposit in 2020. If you defer the Tier 1
compensation is limited to the Tier 1 employer taxes reported employer taxes reported on lines 1 and 8 and/or the Tier 1
on Form CT-1, lines 1 and 8, on compensation paid in the employee taxes reported on lines 4 and 10 and subsequently
year. In completing Part II or Form 945-A, you take into pay or deposit that deferred amount during 2020, you should
account the nonrefundable portion of the credit for qualified report the amount of the payment or deposit on Part II or
sick and family leave compensation (including the qualified Form 945-A on the date of the payment or deposit and not
health plan expenses allocable to that compensation) against the date of liability. You shouldn’t include any portion of the
the liability for the first payroll payment of the year, but not deferred amount of taxes already paid or deposited by
below zero. Then reduce the liability for each successive December 31, 2020, on Form CT-1, line 21 or 22.
payroll payment of the year until the nonrefundable portion of For example, if you're a monthly schedule depositor that
the credit is used. Any credit for qualified sick and family has an RRTA liability of $500 every month in 2020 and you
leave compensation that is remaining at the end of the year defer $100 of the Tier 1 employer taxes on your June liability,
because it exceeds the Tier 1 employer taxes reported on but deposit your deferred amount of $100 together with your
Form CT-1, lines 1 and 8, is claimed on line 23 as a $500 deposit for your November tax liability, you would report
refundable credit. The refundable portion of the credit doesn’t $400 for your June tax liability ($500 minus $100) and $600
reduce the liability reported on Part II or Form 945-A. for your November liability ($500 plus $100) on Part II. Don’t
include the $100 deferral on Form CT-1, line 21.
Example. Maple Co. is a monthly schedule depositor that
pays employees every Friday. In 2020, Maple Co. had pay The amount shown on line V must equal the amount
dates every Friday of 2020 starting January 3, 2020. Maple ! shown on line 19.
Co. paid qualified sick and family leave compensation on CAUTION
May 1 and May 8. The nonrefundable portion of the credit for
qualified sick and family leave compensation for the year is If you’re a semiweekly schedule depositor or if you
$3,000. On Part II, Maple Co. will use the $3,000 to reduce accumulate $100,000 or more in tax liability on any day in a
the liability for the January 3 pay date, but not below zero. If deposit period, you must complete Form 945-A and file it with
any nonrefundable portion of the credit remains, Maple Co. Form CT-1. Don't complete lines I–V if you file Form 945-A.
applies it to the liability for the January 10 pay date, then the The $100,000 tax liability threshold requiring a next-day
January 17 pay date, and so forth until the entire $3,000 is deposit is determined before you consider any reduction of
used. your liability for nonrefundable credits. See IRS.gov/ETD for
more information.
-14- Instructions for Form CT-1 (2020)
Third-Party Designee responsible and duly authorized partner, member, or officer
having knowledge of its affairs.
If you want to allow an employee of your business, a return • Single-member LLC treated as a disregarded entity
preparer, or another third party to discuss your 2020 Form for federal income tax purposes—The owner of the LLC
CT-1 with the IRS, check the “Yes” box in the Third-Party or a principal officer duly authorized to sign.
Designee section. Also, enter the designee's name, phone • Trust or estate—The fiduciary.
number, and any five digits that person chooses as his or her
personal identification number (PIN). Form CT-1 also may be signed by a duly authorized agent
of the taxpayer if a valid power of attorney has been filed.
By checking “Yes” you authorize the IRS to talk to the
person you named (your designee) about any questions we Alternative signature method. Corporate officers or duly
may have while we process your return. You also authorize authorized agents may sign Form CT-1 by rubber stamp,
your designee to do all of the following. mechanical device, or computer software program. For
• Give us any information that is missing from your return. details and required documentation, see Rev. Proc. 2005-39,
• Call us for information about processing your return. 2005-28 I.R.B. 82, available at IRS.gov/irb/
• Respond to certain IRS notices that you have shared with 2005-28_IRB#RP-2005-39.
the designee about math errors and return preparation. The
IRS won't send notices to your designee. Paid Preparer Use Only
A paid preparer must sign Form CT-1 and provide the
You’re not authorizing the designee to receive any refund information in the Paid Preparer Use Only section of Part I if
check, bind you to anything (including additional tax liability), the preparer was paid to prepare Form CT-1 and isn't an
or otherwise represent you before the IRS. If you want to employee of the filing entity. The preparer must give you a
expand the designee's authority, see Pub. 947. copy of the return in addition to the copy to be filed with the
The authorization will automatically expire 1 year from the IRS.
due date (without regard to extensions) for filing your 2020
If you're a paid preparer, enter your Preparer Tax
Form CT-1. If you or your designee wants to revoke this
Identification Number (PTIN) in the space provided. Include
authorization, send the revocation or withdrawal to the IRS
your complete address. If you work for a firm, enter the firm's
office at which you file your Form CT-1.
name and the EIN of the firm. You can apply for a PTIN
Who Must 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
The following persons are authorized to sign the return for your PTIN in place of the EIN of the tax preparation firm.
each type of business entity.
• Sole proprietorship—The individual who owns the Generally, you’re not required to complete this section if
business. you’re filing the return as a reporting agent and have a valid
• Corporation (including a limited liability company Form 8655 on file with the IRS. However, a reporting agent
(LLC) treated as a corporation)—The president, vice must complete this section if the reporting agent offered legal
president, or other principal officer duly authorized to sign. advice, for example, by advising the client on determining
• Partnership (including an LLC treated as a whether its workers are employees or independent
partnership) or unincorporated organization—A contractors for federal tax purposes.
Instructions for Form CT-1 (2020) -15-
Worksheet 1. Credit for Qualified Sick and Family Leave Compensation and the Employee Retention
Credit
Determine how you will complete this worksheet
• If you paid both qualified sick and family leave compensation and qualified compensation for purposes of the employee retention credit this
year, complete Step 1, Step 2, and Step 3.
• If you paid qualified sick and family leave compensation this year but you didn't pay any qualified compensation for purposes of the employee
retention credit this year, complete Step1 and Step 2 only.
• If you paid qualified compensation for purposes of the employee retention credit this year but you didn't pay any qualified sick and family
leave compensation this year, complete Step 1, and then Step 3 only.
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. 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.
Subtract line 2j from line 2i and enter this amount on Form CT-1, line 23 . . . . . . . . . . 2k
Step 3. Figure the employee retention credit
3a Qualified compensation for the employee retention credit reported on Form CT-1,
line 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3a
3b Qualified health plan expenses allocable to qualified compensation for the employee
retention credit reported on Form CT-1, line 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b
3c Add lines 3a and 3b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3c
3d Retention credit. Multiply line 3c by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3d
3e Enter the Tier 1 Employer tax from Step 1, line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . 3e
3f Enter the amount of the nonrefundable portion of the credit for qualified sick and family
leave compensation from Step 2, line 2j . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3f
3g Subtract line 3f from line 3e. If zero or less, enter zero. . . . . . . . . . . . . . . . . . . . . . . . . 3g
3h Nonrefundable portion of employee retention credit. Enter the smaller of line 3d
or line 3g. Enter this amount on Form CT-1, line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . 3h
3i Refundable portion of employee retention credit. Subtract line 3h from line 3d and
enter this amount on Form CT-1, line 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3i
-16- Instructions for Form CT-1 (2020)
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