Railroad employers are subject to a separate system of employment taxes administer by the Railroad Retirement Board (RRB) and the IRS. Payments subject to railroad retirement taxes are specifically excepted from FICA, FUTA, and the Self-Employment Contributions Act (SECA).
Railroad employers operate under the Railroad Retirement Tax Act (RRTA) and must withhold Tier 1 RRTA tax and Tier 2 RRTA tax. Tier 1 provides Social Security and Medicare-equivalent benefits, while Tier 2 provides a private pension benefit.
A RRB Form W-2 is similar to a standard W-2, however RRTA taxes are shown in Box 14, and Boxes 3 through 6 related to FICA and Medicare tax are blank.
To enter a RRB W-2 in TaxSlayer ProWeb, from the Federal Section of the tax return select:
- From W-2 - If this isn't the first W-2, click +Add a W-2 Wage Statement
- If filing MFJ, click the button for the taxpayer or spouse as appropriate.
- Check the This is a railroad W-2 check box.
- Enter all the W-2 information as needed. Be sure to remove the amounts that ProWeb autofills in boxes 3-6.
- In the drop down menu for box 14, select the RRTA Tier 2 codes as needed and enter their amounts.
Depending on the amount of wages in the return, ProWeb will autocomplete Form 8959 if any additional Medicare tax is owed.