DRS: IP 92(9.5), Is My Connecticut Withholding Correct?

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication is replaced by IP 99(1)

IP 92(9.5)

Is My Withholding Correct?


The following information is included in this booklet.

Why Should I Check My Income Tax Withholding?
When Should I Check My Withholding?
How Can I Check My Withholding?
How Do I Increase My Withholding?
What If I Have Nonwage Income or Income Not Subject to Withholding?
How Do I Decrease My Withholding?
Table A - Exemptions
Table B - Connecticut Income Tax
Table C - Personal Tax Credits
Form CT-W4, Employee's Withholding or Exemption Certificate and Supplemental Withholding Table for Married Couples Filing Jointly.
Form CT-1040, Schedule 1 Modifications to Federal Adjusted Gross Income
Form CT-1040 NR/PY, Schedule 1 Modifications to Federal Adjusted Gross Income.
 

PURPOSE

The purpose of this publication is to remind employees to check the amount of Connecticut income tax being withheld from their wage income. If too little tax is withheld, you may be subject to interest in addition to any tax that is due. If too much tax is withheld, you lose the use of that money until you file your return and get your refund.


WHY SHOULD I CHECK MY INCOME TAX WITHHOLDING?

You should check your withholding each year to ensure that you will have enough tax withheld from your wages by the end of the year. Even if you have previously completed Form CT-W4, Employee’s Withholding or Exemption Certificate, you should check to see if you will have enough tax withheld for the year.

You are expected to pay Connecticut income tax as income is earned or received during the year. In order to have Connecticut income tax withheld from wages, you must complete Form CT-W4, and issue it to your employer(s). Form CT-W4 provides your employer with the necessary information to withhold the correct amount of Connecticut income tax from your wages to insure that you will not be underwithheld. If you owe more than $500 in Connecticut income tax over and above what has been withheld from your income for the 1998 taxable year, you may be subject to interest on the underpayment at the rate of 1% per month or fraction thereof.


WHEN SHOULD I CHECK MY WITHHOLDING?

You should check your withholding early in the year and compare the total tax to be withheld from your pay for the year with what you expect your Connecticut income tax liability will be for the year. You should check your withholding again during the year if the tax law changes or if any of the following apply to you:

  • you are married filing jointly and both you and your spouse work (See "Note" below);
  • you have more than one job at a time;
  • you have income that is not subject to Connecticut income tax withholding (such as nonwage income including interest, dividends, and capital gains); or
  • you or your spouse were not employed or had substantially less wage income during the first six months of 1998.
NOTE: Spouses who are both employed and select Filing Status "A"on Form CT-W4 may refer to the Supplemental Table on Page 9 for a quick and easy guide to adjust their withholding. For a more precise calculation, follow the directions provided in the following sections.

HOW CAN I CHECK MY WITHHOLDING?

You will need a pay statement for a full pay period showing the amount of Connecticut income tax withheld and a copy of your most recently filed Form CT-W4. (Your employer has your Form CT-W4 on file and can provide you with a copy.)

Step 1: Refer to Line 1 of your most recently filed Form CT-W4 to review your current filing status. (See  New Hires, below.)

  • If your filing status for 1998 remains the same, skip to Step 2.
  • If your filing status is different, complete a new Form CT-W4 using your correct filing status.

Read all instructions for Form CT-W4 carefully to ensure that your withholding is correct. File this form with your employer. (It is not necessary to go on to Step 2.)

Step 2: Complete Worksheet 1 on Page 5 to estimate your total 1998 Connecticut tax liability. Then complete Worksheet 2 to compare your estimated total 1998 Connecticut tax liability with your expected 1998 withholding.

Important: If you are married filing jointly, you must include you and your spouse’s combined income and you and your spouse’s combined withholding when completing the worksheets.

New Hires

Contact your employer's payroll officer to obtain the amount of Connecticut income tax to be withheld from your wages based upon your correct filing status.


HOW DO I INCREASE MY WITHHOLDING?

If you wish to increase your withholding to include any additional amount on Line 8 of Worksheet 2, you should complete a new Form CT-W4  by following the steps below.

  1. Enter your filing status on Line 1 of the new Form CT-W4. (The filing status should be the same as the filing status on your most recently filed Form CT-W4.);
  2. Enter the amount from Line 8 of Worksheet 2 on Line 2 of the new Form CT-W4;
    • If there was an amount on Line 2 of your most recently filed Form CT-W4, add that amount to the amount on Line 8 of Worksheet 2 and enter the total on Line 2 of your new Form CT-W4.
    • If there was an amount on Line 3 of your most recently filed Form CT-W4, subtract that amount from the amount on Line 8 of Worksheet 2 and enter the new amount on Line 2 (if a positive amount) or enter on Line 3 (if a negative amount).
  3. Enter all other required information on Form CT-W4; and
  4. Give the new Form CT-W4 to your employer right away so that the additional amount will be withheld as soon as possible.
Example: If Line 8 of Worksheet 2 shows an additional amount to be withheld of $5.00, and your most recently filed Form CT-W4 showed $3.00 on Line 2, enter $8.00 as a net addition to withholding on Line 2 of your new Form CT-W4.

More Than One Job

If you have more than one job, (or you are married filing jointly and your spouse also works), you can adjust your withholding for one or more of the jobs. You can apply the amount on Line 7 of Worksheet 2 to only one job or divide it between the jobs any way you wish. Then divide the amount you apply to a job by the number of paydays remaining in 1998 for that job. This will give you the additional amount to enter on Line 2 (or Line 3, if a reductional amount) of the new Form CT-W4 that you will file for that job.


WHAT IF I HAVE NONWAGE INCOME OR INCOME NOT SUBJECT TO WITHHOLDING?

If you have income that is not subject to withholding, you may wish to make estimated income tax payments instead of increasing your withholding. IP 92(5.7), Estimated Connecticut Income Taxes, explains this option. Estimated income tax payments are made by using Form CT-1040ES, 1998 Estimated Connecticut Income Tax Payment Coupon for Individuals.

CAUTION

If you owe more than $500 in Connecticut income tax after subtracting Connecticut income tax withheld, you may be subject to interest on the underpaid amount. Generally, if you do not prepay (in timely estimates or withholding, or both) the lesser of 100% of the income tax shown on your 1997 Connecticut income tax return, (if you filed a 1997 Connecticut income tax return that covered a 12 month period), or 90% of the income tax shown on your 1998 Connecticut income tax return, you may owe interest at the rate of 1% per month or fraction thereof of the underpaid amount. To avoid interest charges, be sure your withholding is as accurate as possible.

 

HOW DO I DECREASE MY WITHHOLDING?

If too much Connecticut income tax will be withheld in 1998, you will receive a refund when you file your 1998 Connecticut income tax return. You may, however, decide to decrease your Connecticut income tax withholding by following the steps listed below.

Important: Before decreasing the amount to be withheld, be sure you have enough Connecticut income tax withheld to meet your Connecticut income tax liability. Underwithholding may result in interest charges. For further information, request IP 92(5.7).

If you wish to decrease your withholding by the amount on Line 8 of Worksheet 2, you should complete a new Form CT-W4 as follows.

  1. Enter your filing status on Line 1 of the new Form CT-W4 (The filing status should be the same as the filing status on your most recently filed Form CT-W4.);
  2. Enter the amount from Line 8 of Worksheet 2 on Line 3 of the new Form CT-W4;
    • If there was an amount on Line 2 of your most recently filed Form CT-W4, subtract that amount from the amount on Line 8 of Worksheet 2 and enter the difference on Line 2 (if a positive amount) or on Line 3 (if a negative amount).
    • If there was an amount on Line 3 of your most recently filed Form CT-W4, add that amount to the amount on Line 8 of Worksheet 2 and enter the total on Line 3 of your new Form CT-W4.
  3. Enter all other required information on Form CT-W4; and
  4. Give the new Form CT-W4 to your employer right away so that less Connecticut income tax will be withheld as soon as possible.
Example: If your previously filed Form CT-W4 showed $3.00 on Line 2 and Line 8 of Worksheet 2 indicates that you should reduce your current withholding by $5.00, enter $2.00 as the net reduction on Line 3 of your new Form CT-W4.
 


Line 1
Enter the amount you estimate to be your 1998 federal adjusted gross income. You may use federal Form 1040ES as a worksheet to determine federal adjusted gross income.

Line 2
Enter the total of your estimated allowable Connecticut modifications. (See Form CT-1040 or Form CT-1040NR/PY, Schedule 1, Modifications to Federal Adjusted Gross Income for information about allowable Connecticut modifications.)

Line 3
Nonresidents and Part-Year Residents Only: If your Connecticut source income is greater than your Connecticut adjusted gross income, enter your Connecticut source income on this line.

Line 4
To calculate your estimated Connecticut income tax, complete Lines 4a through 4f. Enter your Connecticut income tax on Line 4.

Line 5
Nonresidents and Part-Year Residents Only: If your Connecticut source income is greater than or equal to your Connecticut adjusted gross income, enter 1.0000. If your Connecticut source income is less than your Connecticut adjusted gross income, complete the following calculation and enter the result on Line 5.

Income from Connecticut Sources

--------------------------------------------------

=

Line 5

CT. Adjusted Gross Income (Line 3)

Do not enter a number that is less than zero or greater than 1. If the result is less than zero, enter 0; if greater than 1, enter 1.0000. Round to four decimal places.

Line 7
Residents and Part-Year Residents Only: Enter estimated allowable credit for income taxes paid to other jurisdictions. Enter 0, if not applicable. (See instructions for Form CT-1040 or Form CT-1040NR/PY, Credit for Income Taxes Paid to Other Jurisdictions.)

Line 9
If you expect to owe federal alternative minimum tax in 1998, you may also owe Connecticut alternative minimum tax. Enter your estimated Connecticut alternative minimum tax liability. (See instructions for Form CT-6251, Connecticut Alternative Minimum Tax Return - Individuals.)

Line 11
Enter your estimated allowable adjusted net Connecticut minimum tax credit. If you are not entitled to a credit, or if you entered an amount on Line 9, enter 0. (See instructions for Form CT-8801, Credit for Prior Year's Connecticut Minimum Tax for Individuals, Trusts and Estates.)

Line 12
Subtract Line 11 from Line 10. Use this amount to complete Worksheet 2.


EFFECT OF THIS DOCUMENT:  An Informational Publication (IP) is a document that addresses frequently-asked questions about a current Department position, policy or practice, usually in a less technical, question-and-answer format.


EFFECT ON OTHER DOCUMENTS

IP 92(9.4) is modified and superseded.


Related Forms and Publications:

Form CT-1040

Connecticut Resident Income Tax Return

Form CT-1040NR/PY

Connecticut Nonresident or Part-Year Resident Income Tax Return

IP 92(5.7)

Estimated Income Taxes

Form CT-1040ES

1998 Estimated Income Tax Payment Coupon for Individuals

Form CT-W4

Employee's Withholding or Exemption Certificate
 

1998 INCOME TAX AND WITHHOLDING WORKSHEET

(Line Instructions)

WORKSHEET 1
1998 INCOME TAX WORKSHEET
(See Instructions)
1. Federal adjusted gross income you expect in 1998 (See instructions) 1. _______________
2. Allowable Connecticut modifications:  Additions or subtractions (See instructions) 2. _______________
3. Connecticut adjusted gross income (Combine Lines 1 and Line 2)
Nonresidents and part-year residents: Enter your income from Connecticut sources if greater than your Connecticut adjusted gross income. (See instructions)
3. _______________
4. Connecticut income tax  (See instructions)
a.Enter the amount from Line 3, above 4a.________________
b.Enter Personal Exemption (From Table A - Exemptions) 4b.________________
c.Connecticut Taxable Income (Subtract Line 4b from Line 4a - If less than zero,  enter 0) 4c.________________
d.Connecticut Income Tax (From Table B - Connecticut Income Tax) 4d.________________
e.Enter Credit Percentage (From Table C - Personal Tax Credits) 4e_________________
f. Multiply the amount on Line 4d by the percentage on Line 4e 4f._________________
CONNECTICUT INCOME TAX (Subtract Line 4f from Line 4d) 4. _______________
5. Nonresidents and part-year residents only: (See instructions)
    Residents:     Enter 1.0000
5. _______________
6. Multiply Line 5 by Line 4 6. _______________
7. Credit for income taxes paid to other jurisdictions    (See instructions) 7. _______________
8. Subtract Line 7 from Line 6 8. _______________
9. Estimated Connecticut alternative minimum tax (See instructions) 9. _______________
10. Add Line 8 and Line 9 10. _______________
11. Adjusted net Connecticut minimum tax credit (See instructions) 11. _______________
12. Subtract Line 11 from Line 10.  This is your expected Connecticut income tax liability for 1998. 12. _______________

WORKSHEET 2
1998 WITHHOLDING AND ESTIMATED PAYMENT WORKSHEET
1.  Enter your expected Connecticut income tax liability for 1998 from Line 12 of Worksheet 1. 1. ______________
2.  Total Connecticut income tax withheld to date during 1998.  Include Connecticut income tax withheld from all jobs. 2. ______________
3.  Connecticut income tax withholding expected during the rest of 1998.   For each job, multiply the amount of Connecticut income tax now being withheld each payday by the number of paydays remaining in 1998 and enter the combined amount for all jobs.  New Hires:  Multiply the amount of Connecticut income tax withheld for each payday by the number of paydays remaining in 1998. 3. ______________
4.  Total expected Connecticut income tax withholding for all paydays in 1998.   (Add line 2 and Line 3) 4. ______________
5.  Enter estimated Connecticut income tax paid or expected to be paid for 1998 with Form CT-1040ES and any overpayment applied form your 1997 Connecticut income tax return. 5. ______________
6.  Total Connecticut withholding and estimated payments.  (Add Line 4 and Line 5) 6. ______________
7.  Subtract Line 6 form Line 1 7. ______________
8.  Divide the amount on Line 7 by the number of paydays remaining in 1998 and enter the result.  If the amount on Line 7 is a positive amount, you may be underwithheld.  See How Do I Increase My Withholding?.   If the amount on Line 7 is a negative amount, you may be overwithheld.  See How Do I Decrease My Withholding?. 8. ______________
 

Form CT-1040 or Form CT-1040NR/PY, Schedule 1
Modifications to Federal Adjusted Gross Income

Enter all amounts as positive numbers. For more complete information, refer to the instructions to Form CT-1040 or Form CT-1040NR/PY.

Interest on State and Local Government Obligations Other than Connecticut

Enter as an addition the total amount of interest income derived from state and municipal government obligations, other than obligations of the State of Connecticut or its municipalities, which interest income is not taxed for federal income tax purposes. Do not enter interest income derived from government obligations of Puerto Rico, Guam, American Samoa and U.S. Virgin Islands.

Exempt-Interest Dividends From a Mutual Fund Derived From State or Municipal Governments Obligations Other than Connecticut

Enter as an addition the total amount of exempt-interest dividends received from a mutual fund that are derived from state and municipal government obligations, other than obligations of the State of Connecticut or its municipalities. If the exempt-interest dividends are derived from obligations of Connecticut and other states, enter only the percentage derived from non-Connecticut obligations. Do not enter exempt-interest dividends derived from government obligations of Puerto Rico, Guam, American Samoa and U.S. Virgin Islands.

Shareholder's Pro Rata Share of S Corporation Nonseparately Computed Income or Loss

If you are a shareholder of an S corporation that is subject to the Connecticut corporation business tax, multiply 75% of your pro rata share of the S corporation’s nonseparately computed income or loss by the S corporation’s Connecticut corporation business tax apportionment percentage and enter this amount as an addition (if loss) or as a subtraction (if income). Your pro rata share of the S corporation’s nonseparately computed income or loss will be reported on federal Form 1120S, Schedule K-1. This form and the Connecticut corporation business tax apportionment percentage are furnished to you by the S corporation.

Important: If you have a loss, and any federal limitations apply, add back only 75% of the net loss included on federal Schedule E apportioned as provided above. If you have deductible losses from a prior year or other adjustments, subtract only 75% of the net income included on the federal Schedule E, apportioned as provided above.

Taxable Amounts of Lump-Sum Distributions From Qualified Plans Not Included In Federal AGI

If you filed federal Form 4972, Tax On Lump-Sum Distributions, with your federal Form 1040 to compute the tax on any part of a distribution from a qualified plan, enter as an addition that part of the distribution. Do not enter any part of the distribution reported on Line 11a of federal Form 1040A or Line 16a of federal Form 1040 or on Schedule D of federal Form 1040.

Beneficiary's Share of Connecticut Fiduciary Adjustment

If you have any income from an estate or trust, any Connecticut modifications (that is, the Connecticut fiduciary adjustment) that apply to such income will be shown on Form CT-1041, Connecticut Income Tax Return for Trusts and Estates, Schedule B, Column 5. Your share of these modifications should be provided to you by the fiduciary. If your share of these modifications is an amount greater than zero, enter the amount as an addition. If the amount is less than zero, enter the amount as a subtraction.

If you are a beneficiary of more than one trust or estate, enter the net amount of all such modifications, if greater than zero, as an addition.

Loss on Sale of Connecticut State and Local Government Bonds

Enter as an addition the total losses from the sale or exchange of notes, bonds or other obligations of the State of Connecticut or its municipalities used in determining gain (loss) for federal income tax purposes, whether or not the entire loss is used in computing federal adjusted gross income.

Interest on United States Government Obligations

Enter as a subtraction the total amount of interest income (to the extent includible in federal adjusted gross income) derived from U.S. government obligations, which federal law prohibits states from taxing. (For example: U.S. government bonds such as Savings Bonds Series EE and Series HH, and U.S. Treasury bills and notes.)

For Series EE U.S. Savings Bonds, you may include only the amount of interest subject to federal income tax after exclusion of the amounts reported on federal Form 8815. In general, the net taxable amount will be reported by you on Schedule B of federal Form 1040 or Schedule 1 of federal Form 1040A.

Important: Do not enter the amount of interest income derived from Federal National Mortgage Association (Fannie Mae) bonds, Government National Mortgage Association (Ginnie Mae) bonds, and Federal Home Loan Mortgage Corporation (Freddie Mac) securities. Federal law does not prohibit states from taxing interest income derived from these obligations, and this interest income is taxable for Connecticut income tax purposes.

Do not enter the amount of interest paid to you on any federal income tax refund.

Exempt Dividends From Qualifying Mutual Funds Derived From U.S. Government Obligations

Enter as a subtraction the total amount of exempt dividends received from a qualifying mutual fund that are derived from U.S. government obligations. A mutual fund is a qualifying fund if, at the close of each quarter of its taxable year, at least 50% of the value of its assets consists of U.S. government obligations. The percentage of dividends that are exempt dividends should be reported to you by the mutual fund.

Important: Do not enter the amount of income derived from Federal National Mortgage Association (Fannie Mae) bonds, Government National Mortgage Association (Ginnie Mae) bonds and Federal Home Loan Mortgage Corporation (Freddie Mac) securities. Federal law does not prohibit states from taxing income derived from these obligations, and this income is taxable for Connecticut income tax purposes.

Social Security Benefit Adjustment

You may be able to reduce the amount of federally taxable social security benefits that is subject to Connecticut income tax. Complete the Social Security Benefit Adjustment Worksheet included with Form CT-1040 or Form CT-1040NRPY and enter the result as a subtraction.

Refunds of State and Local Income Taxes

Enter as a subtraction the amount of taxable refunds of state and local income taxes reported on Line 10 of your federal Form 1040. If an amount is not reported on Line 10 of your federal Form 1040, or if you filed federal Forms 1040A, 1040EZ or TeleFile Tax Record, enter 0.

Tier 1 and Tier 2 Railroad Retirement Benefits and Supplemental Annuities

If you received Tier 1 or Tier 2, or both Tier 1 and Tier 2 railroad retirement benefits and supplemental annuities during 1998, you may deduct the amount included in your federal adjusted gross income. Enter as a subtraction the total amount of Tier 1 and Tier 2 railroad retirement benefits reported on federal Form 1040, Line 16b or Line 20b, or federal Form 1040A, Line 11b or Line 13b. Likewise, enter the amount of railroad unemployment benefits, including sickness benefits paid in lieu of unemployment benefits, to the extent included in your federal adjusted gross income.

If you have deductible losses from a prior year or other adjustments, subtract only 90% of the net income included on the federal Schedule E, apportioned as provided above.

Gain on Sale of Connecticut State and Local Government Bonds

Enter as a subtraction the total of all gains from the sale or exchange of notes, bonds or other obligations of the State of Connecticut or its municipalities used in determining gain (loss) for federal income tax purposes.


For Further Information: To order forms and publications or for further information, call the Department of Revenue Services at 860-297-5962 or 1-800-382-9463 (in-state). Forms and publications may be ordered through voice-mail 24-hours a day by choosing Option 3 on your touch tone telephone.

Electronic Delivery Options: You can also obtain tax forms and publications 24 hours a day from our Web home page at http://www.ct.gov/drs. Telecommunications Device for the Deaf (TTD/TT) users only call 860-297-4911 during business hours.


Created: 11/25/98 Updated: 11/27/98