Look for '' Railroad Retirement Tier 1 Tax '' and below that is '' Railroad Retirement Tier 2 tax ''. TurboTax will properly report and apply these amounts on your tax return. ADD another line 14 entry with the same amount as in Box 1 Wages. Select code - "Railroad Compensation."
Full Answer
Is there a taxable Tier 1 Tier 2 for railroad retirement?
Form W-2 - Tier I Medicare Railroad Retirement. Railroad employees have five possible entries in Box 14 of Form W-2: RRTA Compensation. Tier I. Tier II. Medicare Tax. Additional Medicare Tax. If you’re a railroad employee covered by the Railroad Retirement Act (RRTA), these amounts are located in Box 14 with the above descriptions.
How do I add railroad retirement compensation to box 14?
RRTA Compensation; Tier I ; Tier II ; Medicare Tax; Additional Medicare Tax; For railroad employees covered by The Railroad Retirement Act (RRTA), the these amounts are in Box 14 with the above descriptions. Enter the above amounts on Form W-2 in the section for Employees covered by the Railroad Retirement Tax Act (RRTA).
What are the Medicare benefits for railroad employees?
90% of $816 ($734.40); plus 32% of $4,101 ($1312.32); plus 15% of $185 ($27.75). For retired employees who attained age 62 in prior years, the bend points will be different and the PIA is increased to reflect cost-of-living adjustments between the year of attainment of age 62 and the year of retirement.
What are Tier I and Tier II contributions on a W-2?
· Look for '' Railroad Retirement Tier 1 Tax '' and below that is '' Railroad Retirement Tier 2 tax ''. TurboTax will properly report and apply these amounts on your tax return. ADD another line 14 entry with the same amount as in Box 1 Wages. Select code - "Railroad Retirement Compensation." Code RR.
What is railroad tier1 compensation?
What is Tier I Compensation? Tier I is the railroad retirement equivalent of social security wages and benefit amounts. Employees and employers pay taxes based on the employee's earnings.
What part of my railroad retirement is taxable?
If the sum of a recipient's adjusted gross income, tax-exempt interest, and half of either Social Security benefits or Social Security-equivalent Tier I Railroad Retirement benefits exceeds $25,000 for single taxpayers or $32,000 for couples who file jointly, up to 50 percent of the benefits are taxable.
How do I fill out a box 12 on my taxes?
In each box 12 line, select the capital letter code from the drop-down list and enter the corresponding amount....In this fictitious (and somewhat unrealistic) example, the W-2 shows these box 12 amounts:$5,000 in box 12a with code D.$5,000 in box 12b with code DD.$5,000 in box 12c with code W.Box 12d is blank.
Do railroad employees pay Medicare tax?
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.
How do I report railroad retirement benefits?
To report Railroad Retirement Benefits in the TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:Income Menu.IRA/Pension Distributions (1099R,RRB-1099-R)New.Choose either Taxpayer or Spouse, as needed.At the top right of the Form 1099R entry window, click the check box next to RRB-1099-R.
How do I report railroad retirement?
To report the BLUE portion of Railroad Retirement, go to:Federal Section.Income (Select My Forms)1099-R, RRB-1099, RRB-1099-R, SSA-1099 - Distributions from pensions, annuities, retirement, IRA's, social security, etc.Social Security Benefits/RRB-1099.
What is Box 12a and 12b on W-2 form?
Box 12 codes A: Uncollected social security or RRTA tax on tips reported to your employer. AA: Designated Roth contributions under a section 401(k) plan. B: Uncollected Medicare tax on tips reported to your employer (but not Additional Medicare Tax) BB: Designated Roth contributions under a section 403(b) plan.
What is box 12b on W-2 code DD?
Box 12 amounts with the code DD signify the total cost of what you and your employer paid for your employer-sponsored health coverage plan. Code DD amounts are for informational purposes only—they don't affect the numbers in your tax return.
What does Box 12b DD mean on W-2?
Box 12 with code DD of the W-2 is the amount that your company paid for health care that it provided for you. You report the amount but it will not have any affect on your tax return.
What is railroad retirement payee code?
2. Payee Code. 6. Do you want Federal Income Tax withheld from your railroad retirement payment? Yes => Go to item 7.
Is there a difference between Medicare and railroad Medicare?
A: The only difference is that retired railroad beneficiaries have their Part B benefits administered by the Palmetto GBA Railroad Retirement Board Specialty Medicare Administrative Contractor (RRB SMAC) regardless of where they live. Members should be certain to advise providers of this when they receive treatment.
How are railroad Tier II benefits treated?
Tier 2 payments are based solely on the retired employee's railroad service. Like NSSEB, Tier 2 is treated like a contributory pension for Federal income tax purposes, and is also referred to as a “contributory amount” paid.
Tier I Contributions
Tier I taxes are a railroad retirement benefit that is similar to Social Security payroll tax. As of the time of publication, the Tier I tax withholding rate for employees is 6.2 percent and the rate for employers is also 6.2.
Tier II Contributions
Tier II taxes are withheld for the benefit of the private railroad pension system. Like payroll taxes, these taxes are obligatory. The current withholding rate for Tier II taxes is 4.9 percent for employees and 13.1 percent for employers. Tier II taxes are only levied on the first $87,000 of your annual earnings.
Tier I and II Overwithholding
Because these taxes are only levied on a certain portion of your income, railroad employees with two or more employers are at risk of overpaying into the system. The IRS notes that railroad employees who overpaid into Tier I can claim the excess as a tax credit on their income tax return.
How much is Tier 1 tax?
Tier 1 taxes the first $113,700 of your income at 6.2 percent, with your employer matching it, while Tier 3 is unlimited and carries a 1.45 percent rate paid by you and your employer.
What are the tiers of RRTA?
Tiers 1 and 3 of RRTA tax are roughly equivalent to Social Security and Medicare withholding. In addition, as a railroad employee, you also make contributions to a railroad employee pension system through your Tier 2 taxes. Tier 1 taxes the first $113,700 of your income at 6.2 percent, with your employer matching it, while Tier 3 is unlimited and carries a 1.45 percent rate paid by you and your employer. The Tier 2 pension benefit taxes your first $84,300 of earnings at 4.4 percent, with your employer paying a 12.6 percent rate.
What is RRTA tax?
RRTA Taxes. Tiers 1 and 3 of RRTA tax are roughly equivalent to Social Security and Medicare withholding. In addition, as a railroad employee, you also make contributions to a railroad employee pension system through your Tier 2 taxes.
Is RRTA taxable?
Tier 1, 2 and 3 of your RRTA tax normally aren't taxable. Like Social Security and Medicare tax, tiers 1 and 3 essentially don't matter when it comes to your taxes -- you pay tax on the income you used to pay your share of the taxes. Tier 2 is also not taxable, much like how your contributions to a workplace 401 (k) aren't taxed.
What to do if you paid too much RRTA?
It should correct the error in your next paycheck. If it doesn't, you can attach Form 843 to your tax return and request a refund from the IRS.
Who is Steve Lander?
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate.".