DRS: IP 2001(12), Personal Taxes

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been
modified and superseded by
IP 2003(33)

IP 2001(12)

Personal Taxes


Purpose: This Informational Publication is a general guide to Connecticut taxes for individuals. It includes information on the income and alternative minimum taxes, admissions and dues, and sales and use taxes, as well as succession, estate, gift, real estate conveyance, alcoholic beverages, cigarette, motor vehicle fuels, and property taxes. While it does not answer every question about Connecticut taxes, it provides answers to some of the most common inquiries.


Income Tax

The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents with income from Connecticut sources. (See the Connecticut income tax instruction booklets to determine your residency status.) The tax is computed on your Connecticut taxable income.

To compute your Connecticut taxable income, subtract your Connecticut personal exemption from your Connecticut adjusted gross income. If your Connecticut adjusted gross income is less than or equal to the maximum exemption amount for your filing status, you do not owe any Connecticut income tax.

Personal Exemptions:

The maximum personal exemption levels for single filers is being increased annually over a period of eight years, until it reaches $15,000 in taxable year 2007. The following are the changes for the first four years:

Taxable Year
Beginning

Maximum Personal Exemption

$1,000 Reduction in Exemption for
Every $1,000 of CT AGI Over

January 1, 2000

$12,250

$24,500

January 1, 2001

$12,500

$25,000

January 1, 2002

$12,750

$25,500

January 1, 2003

$13,000

$26,000

January 1, 2004

$13,500

$27,000

 
The maximum personal exemption levels for married filing separately filers, head of household filers, and married filing jointly filers have remained unchanged since 1991.
 

Filing Status

Maximum Personal Exemption

$1,000 Reduction in Exemption for
Every $1,000 of CT AGI Over

Married filing separately

$12,000

$24,000

Filing Status

Maximum Personal Exemption

$1,000 Reduction in Exemption for
Every $1,000 of CT AGI Over

Head of household

$19,000

$38,000

Filing Status

Maximum Personal Exemption

$1,000 Reduction in Exemption for
Every $1,000 of CT AGI Over

Married filing jointly

$24,000

$48,000

 
Tax rate: For taxable years after 1998, the tax rate is 3% on the first:
  • $10,000 of Connecticut taxable income for single filers and married taxpayers filing separately;

  • $16,000 of Connecticut taxable income for head of household filers; and

  • $20,000 of Connecticut taxable income for married taxpayers filing jointly.

The remaining income is taxed at 5% effective for taxable years beginning on or after January 1, 2003.

Credits: You may be eligible for a personal tax credit between 1% and 75%, depending on your income level.

A property tax credit is also available to resident individuals for property taxes paid to a Connecticut political subdivision on a primary residence or a motor vehicle, or both. Generally, this credit is allowed for property tax bills first becoming due during a taxable year and paid during the taxable year.

This credit is also allowed for second or later installments of property tax paid during a taxable year, where the first installment first became due during the taxable year. Supplemental property tax bills first becoming due during a taxable year and paid during the taxable year also qualify for this credit. The payment of any delinquent property tax bills or the payment of interest, fees or charges related to the property tax bill does not qualify for this credit.

If you pay more than $100 in qualifying property taxes, you may be subject to a limitation depending on your filing status and your Connecticut adjusted gross income. The maximum credit allowed is $500 per return. See Informational Publication 2000(23), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision.

Estimated Payments: Employers withhold Connecticut income tax from the wages of residents and of nonresidents who work in Connecticut. You must make estimated Connecticut income tax payments if your Connecticut income tax (after tax credits) minus Connecticut income tax withheld is more than $500, and you expect your Connecticut income tax withheld to be less than your required annual payment. Estimated payments are generally made in four equal installments: April 15, June 15, September 15, and January 15. If your income varies throughout the year, however, you may be able to reduce or eliminate the amount of one or more estimated payments by using the annualized installment method. See Informational Publication 99(35), Estimated Connecticut Income Taxes, and Informational Publication 99(33), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheets CT-1040AES.

Your Connecticut income tax return is due on or before the fifteenth day of the fourth month following the end of your taxable year (April 15 if your taxable year is the calendar year).


Alternative Minimum Tax

The Connecticut alternative minimum tax is a tax imposed on certain individuals, estates, and trusts in addition to the regular Connecticut income tax. Taxpayers who are subject to and required to pay the federal alternative minimum tax are subject to the Connecticut alternative minimum tax. The Connecticut alternative minimum tax is the lesser of:

  • 19% of your adjusted federal alternative minimum tax; or
  • 5% of your adjusted federal alternative minimum taxable income.

The tax must be reported on Form CT-6251, Connecticut Alternative Minimum Tax Return — Individual. See Informational Publication 2001(9), Q & A: The Connecticut Alternative Minimum Tax.


Succession Tax

The Connecticut succession tax began to be phased out in 1997 and is scheduled for total repeal in 2005. There is a total exemption from Connecticut succession tax if the entire estate passes to a surviving spouse. For estates of decedents dying on or after January 1, 2001, any part of the net taxable estate passing to Class A beneficiaries is no longer subject to the tax. (A person is a Class A beneficiary of the decedent if he or she is the decedent’s parent, grandparent, adoptive parent, or a natural or adopted descendant of the decedent, such as a daughter, son, grandchild or great-grandchild.) For a resident decedent's estate, the tax applies to all property, except for real property and tangible personal property located outside Connecticut. For a nonresident decedent's estate, the tax applies only to real property and tangible personal property located in Connecticut. The tax rate depends on the relationship of the beneficiary to the decedent and the size of the estate. For information and tax tables for estates of decedents dying after 1996, see Special Notice 95(18), 1995 Legislative Changes Affecting the Succession and Transfer Taxes and the Estate Tax.


Estate Tax

The estate tax is a "sponge" tax that applies only to estates required to file a federal Form-706, Federal Estate Tax Return. The tax is the amount by which the allowable federal credit for state death taxes exceeds the total death taxes actually paid to all states by an estate. It applies to resident and nonresident estates.


Gift Tax

Resident donors are taxed on all gifts of intangible property and on gifts of real property and tangible personal property located in Connecticut. Nonresident donors are taxed on gifts of real and tangible personal property located in Connecticut.

The first $10,000 of gifts of a present interest to any particular donee during the calendar year is excluded from the total amount of gifts made by the donor. (The annual exclusion amount is indexed for inflation after 1998 for federal and Connecticut gift tax purposes. However, there is no adjustment to the annual exclusion amount for 1999, 2000, or 2001.) Transfers of future interests are not covered by the annual exclusion.

The special valuation rules under I.R.C. §§2701 to 2704 (dealing with transfers to or for the benefit of family members) apply for Connecticut gift tax purposes. For example, if a donor delivers a deed transferring title to his home to his children but reserving a life use, the value of the gift equals the sum of the value of the life estate and the value of the remainder interest (that is, the full fair market value of the home). Because this is a transfer of a future interest, no annual exclusion is allowed.

See Informational Publication 99(9), A Guide to the Federal and Connecticut Gift Taxes, and the instruction booklet for Form CT-709, Connecticut Gift Tax Return.


Local Real Estate and Personal Property Taxes

Real estate and personal property are subject to this tax, with some statutory exemptions. Communities levy property tax to fund local government. Neither the state nor its counties levy a property tax. For further information about local real estate and personal property taxes, contact the assessor in the city or town where the property is located, write to the Intergovernmental Policy Division, Office of Policy and Management, 450 Capitol Avenue, Mail Stop 54 FOR, Hartford CT 06106-1308, or visit the Office of Policy and Management Web site at: http://www.opm.state.ct.us

October 1 is the assessment date for all municipalities. All owners of personal property, other than registered motor vehicles, must file a declaration with the assessor on or before November 1.


Homeowner/Renter Tax Credit: An annual property tax credit or rent rebate is available to residents, age 65 or older, or to a surviving spouse, age 50 or older, who meet certain residence and income requirements. Regardless of age, a totally and permanently disabled person is also eligible. Contact the assessor in your town or city for details and forms.


Veteran Exemption: A variable, annual tax exemption on the assessed value of an owner-occupied dwelling or on a motor vehicle is available to any qualified veteran or surviving spouse. Contact the assessor in your town or city for details and forms.


Real Estate Conveyance Tax

A state and municipal real estate conveyance tax is imposed on deeds conveying real estate where the consideration for the interest in property equals or exceeds $2,000. A deed for less than $2,000 in consideration is exempt from this tax, but may be subject to the gift tax. A deed of the principal residence of any person receiving property tax benefits for the elderly is exempt from the state tax but subject to the municipal tax. The state tax rate on the consideration received for the real estate is as follows:

Type of real estate Rate
Unimproved land 0.5%
Residential property (other than residential dwelling) 0.5%
Nonresidential property (other than unimproved land) 1.0%
Residential dwelling (portion not exceeding $800,000) 0.5%
Residential dwelling (portion exceeding $800,000) 1.0%
Property conveyed by a delinquent mortgagor* 0.5%

* If mortgage payments are more than six months delinquent and property is conveyed to a financial institution.

Those conveying the property pay the state and municipal taxes. The grantor/seller must present a separate check to the Town Clerk, payable to the Commissioner of Revenue Services, in payment of the state tax when recording the deed.


Sales and Use Taxes

A 6% tax is imposed on the sale or rental of most goods and the sale of certain services. However, there are exemptions, including food; all purchases made with food stamps; utility charges for residential property; household fuel; prescription drugs; certain nonprescription drugs; clothing under $75; materials for noncommercial sewing used to make clothing; yarn; newspapers; and magazine subscriptions.

The tax on paving, painting or staining, wallpapering, roofing, siding, and exterior sheet metal work to other than industrial, commercial or income-producing real property is being phased out. On and after July 1, 2000, the tax is 2%; on and after July 1, 2001, the services are no longer taxable.

When the seller of goods or provider of taxable services does not collect the sales tax, the buyer must pay use tax at the same rate as the sales tax. Typically, if you purchased goods from mail order or catalog companies or over the Internet and had the goods shipped to Connecticut or you purchased goods at out-of-state locations and brought those goods back into Connecticut, you must pay the Connecticut use tax.

You pay the use tax for purchases you made during the prior calendar year on either your Connecticut income tax return or on Form OP-186, Connecticut Individual Use Tax Return, on or before April 15. See Informational Publication 2000(21), Q & A on the Connecticut Individual Use Tax.


Room Occupancy Tax

A room occupancy tax of 12% applies to the rental of rooms in a hotel or lodging house for 30 consecutive days or less.


Motor Vehicle Fuels Tax

A tax is imposed on motor vehicle fuel used to propel motor vehicles. Effective July 1, 2000, the rate is 25˘ per gallon for gasoline, 24˘ per gallon for gasohol, and 18˘ per gallon for diesel fuel.


Motor Vehicle Fees

There is a two-year registration fee of $70 for passenger cars. Upon renewal, there is an additional $4 Clean Air Act fee for all classes of motor vehicles. Operator licenses are issued every four years for $35.50. For more information, call the Department of Motor Vehicles at 1-800-842-8222 (within Connecticut) or 860-263-5700 (from anywhere).


Boat Registration Fees

There is an annual registration fee for boats in lieu of a local property tax. For information, contact the Department of Motor Vehicles at 1-800-842-8222 (within Connecticut) or 860-263-5700 (from anywhere).


Alcoholic Beverages Tax, Cigarette Taxes, and Tobacco Products Tax

Alcoholic beverages tax, cigarette taxes, and tobacco products tax are included in the retail price of the items. However, 6% sales and use taxes apply at the time of sale.

The tax for alcoholic beverages, imposed on licensed distributors, is:

per wine
gallon
:
distilled liquor $4.50
fortified and sparkling wines $1.50
still wines $0.60
still wines (from licensed farm winery) $0.15
beer $0.20

($3.00 per half barrel, $1.50 per quarter barrel)

liquor coolers $2.05

Alcohol in excess of 100 proof is taxed at $4.50 per proof gallon.

Most alcoholic cider is taxed at the beer rate. See Special Notice 97(6), 1997 Legislative Changes to the Alcoholic Beverages Tax Affecting Wines and Cider.

In Connecticut, the tax on cigarettes is 50˘ per pack of 20, while the tax on most tobacco products (excluding cigarettes) is 20% of the wholesale sales price.


Admissions and Dues Tax

The dues tax is a 10% tax levied on dues and initiation fees of a social, athletic, or sporting club that is either owned or operated by its members. The club is exempt from the dues tax if the annual dues of every member and any initiation fee are each $100 or less. Lawn bowling clubs are exempt from dues tax. On or after October 1, 2000, locker rental charges are exempt from dues tax.

A 10% admissions tax applies to admission charges to any place of amusement, entertainment, or recreation. On and after July 1, 2000, charges to motion picture shows are subject to 8% admissions tax, and on and after July 1, 2001, charges to motion picture shows are subject to 6% admissions tax.

Certain venues are specifically exempt from admissions tax. Productions featuring live entertainment by actors or musicians at non-profit theaters and playhouses exempt under I.R.C. §501 are exempt from the tax. Also exempt from the tax are admission charges of $5.00 or less to motion picture shows and admission charges to carnivals, amusement rides, and establishments that would have been subject to the cabaret tax.


Effect on Other Documents: Informational Publication 2001(12) modifies and supersedes Informational Publication 99(3.1), Personal Taxes.


Effect of This Document: An Informational Publication is a document that addresses frequently asked questions about a current DRS position, policy or practice.


For Further Information: Please call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (toll-free within Connecticut), or
  • 860-297-5962 (from anywhere)

TTY, TDD, and Text Telephone users only may transmit inquiries 24 hours a day by calling
860-297-4911.


Forms and Publications: Forms and publications are available all day, seven days a week:

  • Internet: Preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs
  • Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (toll-free within Connecticut) and select Option 2 from a touch-tone phone.

IP 2001(12)
Various
Personal Taxes
Issued: 04/16/2001