| “I am trying to enter the W-2 information onto a 1040. It asks for any items listed in Box 14, which there are- Tier I and Tier II. When entering this information onto the 1040 (mind you this is an online program), I list the Tier II taxes, but get a warning that Tier II taxes cannot exceed the wages, which they clearly do not. Where do I enter this information, and do I need to list this information? I am preparing the tax returns for my brother who currently works for the Railroad.’========> Tier II tax rates for the employer are high in comparison to Social Security benefits, which is why there is an incentive for employers to classify themselves as non-railroad businesses or as independent contractors. For instance, the railroad retirement tier II tax rate on employees remained at 3.9 percent in 2012, and the rate on employers will stay at 12.1 percent. The maximum amount of earnings subject to railroad retirement tier II taxes will increase from $79,200 to $81,900 in 2012. If you have monitored the base tax rate of your railroad retirement Tier II contributions throughout the years, you may have noticed they vary widely from one year to another. This is because they are determined annually based on the fund levels of the railroad retirement account. Tier II employer contributions may vary from 8.2 percent to 22.1 percent, while employee contributions may vary from 0 to 4.9 percent.I am not sure why you get a warning that Tier II taxes cannot exceed the wages, which they clearly do not. Perhaps you can get some technical help from the software vendor.For employees covered by RRTA tax, his ER also must report the Tier I and Tier II taxes withheld in box 14 of Form W-2.
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