Get 1999 Form CT-1. Employer's Annual Railroad Retirement Tax Return

Simplified Method: Go to Income, Pensions, IRAs (1099-R), and select the Annuities tab. In the Cost in plan at annuity starting date (plus death benefit exclusion) field, enter the RRB 1099-R box 3 amount. Enter the Annuity starting date. Enter the recipient's Age at annuity starting date.

On the federal return: Tier 1 and tier 2 railroad retirement income are both treated the same as pension income. Both are taxable on the California return. Tier 1 and tier 2 railroad retirement income are both treated the same as social security benefits.

If no after-tax contributions were made to the pension plan before distribution, the entire amount is generally included in taxable income. However, in cases where after-tax contributions were made to an annuity or pension, only a portion of the distribution will usually be taxed.

Use Form CT-1 to report taxes imposed by the Railroad Retirement Tax Act (RRTA).

The Medicare total is normally shown on Form RRB-1099. However, if Form RRB-1099 is not required for the tax year indicated, then the Medicare total will be shown on Form RRB-1099-R.

The railroad retirement tier I tax rate is the same as the social security tax and for withholding and reporting purposes is divided into 6.20 percent for retirement and 1.45 percent for Medicare hospital insurance.

Form RRB-1099-R reports the taxable amounts paid, repaid, and the related U.S. Federal income tax withheld from, the Non-Social Security Equivalent Benefit (NSSEB) portion of the tier 1, tier 2, vested dual benefit (VDB), and supplemental annuity payments. These payments are treated as private pensions.

Only employee and survivor annuitants may have an employee contribution amount shown in Item 3 of their Form RRB-1099-R. The contributory amount paid (NSSEB portion of tier I and/or tier II) is considered income and is reported to the IRS.