Railroad Tier 1 and Tier II

[thomtax]

As I understand it, Tier I deduction is for the equivalent of social security and medicare deduction. To clarify, this is for a W2 railroad employee.

Tier II is for railroad retirement deduction.

As such, these would not be deductible on an income tax return.

If I am wrong, please correct me and tell me if there is anything special that should be done other than putting them in Box 14, as they are listed on the W2.

Thanks all.

LT

[Kram BergGold]

What I do

I have one client with RRB-1099.
I put box 3 on line 20a just like SS.
I put box 7 on line 16b. My client has recovered his contribution so I do not need to adjust this number. You may need to adjust.

[thomtax]

Thanks for the info. I see from your reply and going back over my post, I left out that this was for a W2 from a railroad employee. I edited the original to show this.

However, I do appreciate you taking the time to provide the information.

LT

[Roland Slugg]

Although it was not particularly clear in your post, I gathered that you were asking about the deductibility of the Tier I and Tier II taxes that are withheld from a railroad worker's wages. Neither is deductible. The Tier I tax is the exact equivalent of the social security (FICA) tax that's withheld from non-RR workers' wages. The Tier II tax goes to partially fund a separate pension fund that's similar to the pension of federal civil service employees administered by OPM. RR workers also pay the 1.45% Medicare tax.