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Sickness benefits paid under the Railroad Unemployment Insurance Act, with
the exception of sickness benefits paid for an on-duty injury, are considered
income for Federal income tax purposes. Each year, the RRB sends railroad
employees Form W-2, Wage and Tax Statement, showing the amount of sickness
benefits paid during the preceding calendar year. The amount shown on Form W-2
is the amount of benefits payable before deduction of Tier I railroad retirement
tax. The amount includes benefits payable but withheld to offset a debt to the
RRB. A Form W-2 is not issued if all benefits paid to an employee were for an
on-the-job injury. A Form W-2 is also not issued if all benefits paid to an
employee in a tax year are repaid in the same year.
You may file Form W-4s, Voluntary Tax Withholding, with the nearest
RRB office if you want the RRB to
withhold Federal income tax from your benefits. To change or end withholding you
must file another Form W-4s with the RRB. Form W-4s is available upon request
from the Internal Revenue Service.
The Railroad Unemployment Insurance Act specifically exempts railroad
sickness benefits from State income taxes.
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