General Instructions:Understanding Form CT-1 X

What Is the Purpose of Form CT-1 X?

Use Form CT-1 X to correct errors on a previously filed Form CT-1. Use Form CT-1 X to correct:

  • Tier I Employee tax, Tier I Employee Medicare tax, Tier I Employee Additional Medicare Tax, and Tier II Employee tax;

  • Tier I Employer tax, Tier I Employer Medicare tax, and Tier II Employer tax.

Use Form 843, Claim for Refund and Request for Abatement, to request a refund or abatement of assessed interest or penalties. Do not request abatement of assessed interest or penalties on Form CT-1 or Form CT-1 X.

We use the terms “correct” and “corrections” on Form CT-1 X and in these instructions to include interest-free adjustments under sections 6205 and 6413 and claims for refund and abatement under sections 6402, 6414, and 6404. See Rev. Rul. 2009-39 for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. You can find Rev. Rul. 2009-39, 2009-52 I.R.B. 951 at www.irs.gov/irb/2009-52_IRB/ar14.html.

When you discover an error on a previously filed Form CT-1, you must:

  • Correct that error using Form CT-1 X,

  • File a separate Form CT-1 X for each Form CT-1 that you are correcting, and

  • File Form CT-1 X separately. Do not file Form CT-1 X with Form CT-1.

If you did not file a Form CT-1 for one or more years, do not use Form CT-1 X. Instead, file Form CT-1 for each of those years. See also When Should You File Form CT-1 X, later. However, if you did not file Forms CT-1 because you improperly treated workers as independent contractors or nonemployees and are now reclassifying them as employees, see the instructions for line 22, later.

Report the correction of underreported and overreported amounts for the same tax period on a single Form CT-1 X, unless you are requesting a refund or abatement. If you are requesting a refund or abatement and are correcting both underreported and overreported amounts, file one Form CT-1 X correcting the underreported amounts only and a second Form CT-1 X correcting the overreported amounts.

You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to Form CT-1 for the period during which you file Form CT-1 X. However, see the Caution under Is There a Deadline for Filing Form CT-1 X, later, if you are correcting overreported amounts during the last 90 days of a period of limitations. You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. Follow the chart on the back of Form CT-1 X for help in choosing whether to use the adjustment process or the claim process. Be sure to provide a detailed explanation on line 23 for each correction that you show on Form CT-1 X.

Continue to report current year adjustments on Form CT-1, line 14.

You have additional requirements to complete when filing Form CT-1 X, such as certifying that you filed (or will file) all applicable Forms W-2, Wage and Tax Statements, and Forms W-2c, Corrected Wage and Tax Statements, with the Social Security Administration (SSA). For corrections of overreported Tier I and Tier II taxes, you must make any certifications that apply to your situation.

Be sure to give us a detailed explanation on line 23 for each correction you show on Form CT-1 X.

Do not use Form CT-1 X to correct Form 941, 941-SS, 943, 944, or 945. Instead, use the "X" form that corresponds to those forms (Form 941-X, 943-X, 944-X, or 945-X).

Where Can You Get Help?

For help filing Form CT-1 X or for questions about RRTA taxes and tax corrections, you can:

  • Call the IRS Business and Specialty Tax Line toll free at 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) Monday–Friday from 7:00 a.m. – 7:00 p.m. local time (Alaska and Hawaii follow Pacific time).

  • Visit the IRS website at www.irs.gov/businesses and click on the Employment Taxes link under Businesses Topics, or

  • See Pub. 15 (Circular E), Employer's Tax Guide.

See also How Can You Order Forms, Instructions, and Publications from the IRS, later.

When Should You File Form CT-1 X?

File Form CT-1 X when you discover an error on a previously filed Form CT-1.

However, if your only errors on Form CT-1 relate to RRTA tax liabilities reported in Part II of Form CT-1 or on Form 945-A, Annual Record of Federal Tax Liability, do not file Form CT-1 X. To correct federal tax liabilities reported in Part II of Form CT-1, file Form 945-A, but only enter the monthly totals. The daily entries are not required. For more information about correcting RRTA tax liabilities reported on Form 945-A, see the Form 945-A instructions.

Due dates.   The due date for filing Form CT-1 X depends on when you discover an error and if you underreported or overreported tax. If you underreported tax, see Underreported tax, later. For overreported amounts, you may choose to either make an interest-free adjustment or file a claim for refund or abatement. If you are correcting overreported amounts, see Overreported tax—adjustment process or Overreported tax—claim process, later.

  If any due date falls on a Saturday, Sunday, or legal holiday, you may file Form CT-1 X on the next business day. If we receive Form CT-1 X after the due date, we will treat Form CT-1 X as filed on time if the envelope containing Form CT-1 X is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service on or before the due date, or sent by an IRS-designated private delivery service on or before the due date. If you do not follow these guidelines, we will consider Form CT-1 X filed when it is actually received. See Pub. 15 (Circular E) for more information on legal holidays and IRS-designated private delivery services.

Underreported tax.   If you are correcting underreported tax, you must file Form CT-1 X by the due date of the return for the return period in which you discovered the error and pay the amount you owe by the time you file. Filing and paying on time generally will ensure that your correction is interest free and not subject to failure-to-pay or failure-to-deposit penalties. See What About Penalties and Interest, later. For details on how to make a payment, see the instructions for line 20, later.

  If Form CT-1 X is filed late (after the due date of the return for the return period in which you discovered the error), you must attach an amended Form 945-A to Form CT-1 X. Otherwise, the IRS may assess an “averaged” failure-to-deposit penalty. The total tax reported on Form 945-A, line M, must match the corrected total tax (Form CT-1, line 15 (line 13 for years ending before January 1, 2013), combined with any correction reported on Form CT-1 X, line 20) for the year, less any previous abatements and interest-free tax assessments.

  

Example—You owe tax.

On March 11, 2013, you discovered that you underreported $1,000 of RRTA compensation on your 2012 Form CT-1. File Form CT-1 X and pay the amount you owe by February 28, 2014, because you discovered the error in 2013, and February 28, 2014, is the due date for that year. If you file Form CT-1 X before February 28, 2014, pay the amount you owe by the time you file.

  

Overreported tax—adjustment process.   If you overreported tax and choose to apply the credit to Form CT-1, file an adjusted return on Form CT-1 X as soon as possible after you discover the error but more than 90 days before the period of limitations on the credit or refund for Form CT-1 expires. See Is There a Deadline for Filing Form CT-1 X, later.

  
Form CT-1 X cannot be used to correct overreported amounts of Tier I Employee Additional Medicare Tax unless the amounts were not withheld from employee compensation.

  

Example—You want your credit applied to Form CT-1.

You filed your 2013 Form CT-1 on February 25, 2014, and payments were timely made. On May 2, 2014, you discover that you overreported tax on your 2013 Form CT-1. You file Form CT-1 X on June 3, 2014. The IRS treats your credit as a tax deposit made on January 1, 2014. When you file your 2014 Form CT-1, include the amount from Form CT-1 X, line 20, on the “Total railroad retirement tax deposits” line of your 2014 Form CT-1.

Overreported tax—claim process.   If you overreported tax on Form CT-1, you may choose to file a claim for refund or abatement on Form CT-1 X any time before the period of limitations on credit or refund expires on Form CT-1. If you also need to correct any underreported amounts, you must file another Form CT-1 X reporting only corrections to the underreported amounts. See Is There a Deadline for Filing Form CT-1 X, later.

  
You may not file a refund claim to correct Tier I Employee Additional Medicare Tax actually withheld from employees.

Is There a Deadline for Filing Form CT-1 X?

Generally, you may correct overreported taxes on a previously filed Form CT-1 if you file Form CT-1 X within 3 years of the date Form CT-1 was filed or 2 years from the date you paid the tax reported on Form CT-1, whichever is later. You may correct underreported taxes on a previously filed Form CT-1 if you file Form CT-1 X within 3 years of the date the Form CT-1 was filed. We call each of these time frames a “period of limitations.” For purposes of the period of limitations, Form CT-1 is considered filed on the last day in February of the succeeding year if filed before that date.

Example.

You filed your 2013 Form CT-1 on January 28, 2014, and payments were timely made. The IRS treats the return as if it were filed on February 28, 2014. On January 13, 2017, you discover that you overreported RRTA compensation on that form by $10,000. To correct the error you must file Form CT-1 X by February 28, 2017, which is the end of the period of limitations, and use the claim process.

If you file Form CT-1 X to correct overreported amounts in the last 90 days of a period of limitations (after November 30, 2016, in the example above), you must use the claim process. You cannot use the adjustment process. If you also are correcting underreported amounts, you must file another Form CT-1 X to correct the underreported amounts using the adjustment process and pay any tax due.

Where Should You File Form CT-1 X?

Send your completed Form CT-1 X to:

Department of the Treasury 
Internal Revenue Service Center 
Cincinnati, OH 45999-0007

How Should You Complete Form CT-1 X?

Use a Separate Form CT-1 X for Each Year You Are Correcting

Use a separate Form CT-1 X for each Form CT-1 that you are correcting. For example, if you found errors on your Forms CT-1 for 2012 and 2013, file one Form CT-1 X to correct the 2012 Form CT-1. File a second Form CT-1 X to correct the 2013 Form CT-1.

EIN, RRB Number, Name, and Address

Enter your EIN, RRB number, name, and address in the spaces provided. Also enter your name and EIN on the top of pages 2 and 3, and on any attachments. If your address has changed since you filed your Form CT-1, enter the corrected information and the IRS will update your address of record.

Return You Are Correcting

Enter the calendar year of the Form CT-1 you are correcting at the top of page 1. Enter the calendar year on pages 2 and 3 and on any attachments. Be sure to write your name, EIN, “Form CT-1 X,” and calendar year on the top of any attachments.

Enter the Date You Discovered Errors

You must enter the date you discovered errors. You discover an error when you have enough information to be able to correct it. If you are reporting several errors that you discovered at different times, enter the earliest date you discovered an error here. Report any subsequent dates and related errors on line 23.

Must You Make an Entry on Each Line?

You must provide all of the information requested at the top of page 1 of Form CT-1 X. You must check one box (but not both) in Part 1. In Part 2, you must check the box on line 3 and any applicable boxes on lines 4 and 5. In Part 3, if any line does not apply, leave it blank. Complete Parts 4 and 5 as instructed.

How Should You Report Negative Amounts?

Form CT-1 X uses negative numbers to show reductions in tax (credits) and positive numbers to show additional tax (amounts you owe).

When reporting a negative amount in columns 3 and 4, use a minus sign instead of parentheses. For example, enter “-10.59” instead of “(10.59).” However, if you are completing the return on your computer and your software only allows you to use parentheses to report negative amounts, you may use them.

How Should You Make Entries on Form CT-1 X?

You can help the IRS process Form CT-1 X timely and accurately if you follow these guidelines.

  • Type or print your entries.

  • Use Courier font (if possible) for all typed or computer-generated entries.

  • Omit dollar signs. You may use commas and decimal points, if desired. Enter dollar amounts to the left of any preprinted decimal point and cents to the right of it.

  • Always show an amount for cents. Do not round entries to whole dollars.

  • Complete all three pages and sign Form CT-1 X on page 3.

  • Staple multiple sheets in the upper-left corner.

What About Penalties and Interest?

Generally, your correction of an underreported amount will not be subject to a failure-to-pay penalty, failure-to-deposit penalty, or interest if you:

  • File on time (by the due date of the year in which you discover the error),

  • Pay the amount shown on line 20 by the time you file Form CT-1 X,

  • Enter the date you discovered the error, and

  • Explain in detail the grounds and facts relied on to support the correction.

No correction will be eligible for interest-free treatment if any of the following apply.

  • The underreported amounts relate to an issue that was raised in an examination of a prior period.

  • You knowingly underreported your employment tax liability.

  • You received a notice and demand for payment.

  • You received a Notice of Determination of Worker Classification.

If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. Do not attach an explanation when you file your return.

Overview of the Process

The process to correct a previously filed Form CT-1 or file a claim is outlined below.

If you underreported the tax.

If you underreported the tax on a previously filed Form CT-1, check the box on line 1 and pay any additional amount you owe by the time you file Form CT-1 X. For details on how to make a payment, see the instructions for line 20, later.

Example—You underreported RRTA taxes.

On June 21, 2013, you discovered an error that results in additional tax on your 2012 Form CT-1. File Form CT-1 X by February 28, 2014, and pay the amount you owe by the time you file. See When Should You File Form CT-1 X, earlier. Do not attach Form CT-1 X to your 2013 Form CT-1.

If you overreported the tax.

If you overreported the tax on a previously filed Form CT-1, choose one of the following options.

  • Use the adjustment process. Check the box on line 1 to apply any credit (negative amount) from line 20 to Form CT-1 for the year during which you file Form CT-1 X.

  • Use the claim process. Check the box on line 2 to file a claim on Form CT-1 X requesting a refund or abatement of the amount shown on line 20.

To ensure that the IRS has enough time to process a credit for an overreporting adjustment in the year during which you file Form CT-1 X, you are encouraged to file Form CT-1 X correcting the overreported amount in the first 11 months of a year. For example, if you discover an overreported amount in December, you may want to file Form CT-1 X in the first 11 months of the next year. However, there must be 90 days remaining on the period of limitations when you file Form CT-1 X. See the Caution under Is There a Deadline for Filing Form CT-1 X, earlier. This should ensure that the IRS will have enough time to process the Form CT-1 X so that the credit will be posted before you file Form CT-1, thus avoiding an erroneous balance due notice from the IRS. See the example next.

Example—You want your overreported tax applied as a credit on Form CT-1.

On December 18, 2014, you discover you overreported your tax on your 2013 Form CT-1 and want to choose the adjustment process. To allow the IRS enough time to process the credit, you file Form CT-1 X on February 6, 2015, and take the credit on your 2015 Form CT-1.


More Online Instructions