DRS: IP 2008(20), Estimated Connecticut Income Taxes

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 
 
This Informational Publication has been superseded by IP 2009(35)
 
IP 2008(20)
 
Estimated Connecticut Income Taxes
 

Purpose: This Informational Publication explains the requirements for paying estimated Connecticut income tax. Connecticut taxpayers can be charged interest for underpayment of estimated income tax, even if they pay all the Connecticut income tax they owe by the April 15 filing deadline.


Effective Date: Upon issuance.


Statutory Authority: Conn. Gen. Stat. §12-722(j)(1)


Filing Status Options: For taxable year 2008, the Connecticut filing status options are single, filing jointly for federal and Connecticut, filing jointly for Connecticut only, filing separately for federal and Connecticut, filing separately for Connecticut only, head of household, and qualifying widow(er) with dependent child.

The chart below illustrates how the new Connecticut filing status options for the 2008 taxable year relate to the filing status options for the 2007 taxable year.

2007
Filing Status Option

2008
Filing Status Option

Single

Single

Head of household

Head of household

Qualifying widow(er) with dependent child

Qualifying widow(er) with dependent child

Married filing jointly

Filing jointly for federal and Connecticut

Married filing separately

Filing separately for federal and Connecticut

Civil union filing jointly

Filing jointly for Connecticut only

Civil union filing separately

Filing separately for Connecticut only

Parties to a civil union recognized under Connecticut law or spouses in a marriage under Kerrigan v. Commissioner of Public Health, 289 Conn. 135 (2008) (Kerrigan) must file their Connecticut income tax returns as if they were entitled to the same filing status accorded spouses under the Internal Revenue Code (I.R.C). This means that, for purposes of calculating their Connecticut income tax liability, parties to a civil union or spouses in a marriage under Kerrigan must recompute their federal income tax liability as married filing jointly or married filing separately. The filing status for individuals who are parties to a civil union recognized under Connecticut law or in a marriage under Kerrigan is either filing jointly for Connecticut only or filing separately for Connecticut only. Parties to a civil union or spouses in a marriage under Kerrigan may not calculate their Connecticut income tax liability as single or, if applicable, head of household filers although this will be their filing status for federal income tax purposes.


1. What is estimated tax: Connecticut law requires taxpayers to pay Connecticut income tax during the year through withholding or estimated tax payments, or both. Most employees have these taxes withheld automatically from their paychecks. If you are self-employed, receive a pension or annuity, or receive unemployment compensation and have not elected Connecticut income tax withholding, or you receive any other income from which Connecticut income tax is not withheld, you probably should make estimated income tax payments.

Because it is difficult to determine your exact tax liability before the end of the year, you may make estimated tax payments during the year based upon what you expect to earn in the current year or what you actually earned in the prior year.  When you file your annual income tax return, you report your estimated tax payments. If you have overpaid estimated tax during the year, you will receive a refund. If you underpaid your taxes during the year, you will have to pay the tax you owe and you may have to pay interest on the amount of the underpayment.

2. Who should pay estimated tax: You must make estimated Connecticut income tax payments if the Connecticut income tax you owe after tax credits minus Connecticut income tax withheld is $1,000 or more, and you expect your Connecticut income tax withheld to be less than your required annual payment.

3. Your required annual payment: Your required annual payment is the lesser of:

  • 90% of the total income tax shown on your current year Connecticut income tax return; or
  • 100% of the total income tax shown on your preceding year Connecticut income tax return, if you filed a Connecticut income tax return for the preceding taxable year that covered a 12-month period.

You do not have to make estimated income tax payments if you did not file a Connecticut income tax return for the preceding taxable year because you had no Connecticut income tax liability and you were either:

  • A resident of Connecticut for the entire preceding taxable year; or
  • A nonresident or part-year resident of Connecticut for the preceding taxable year with Connecticut-sourced income.

If you were a nonresident or part-year resident and you did not have Connecticut-sourced income in the preceding taxable year, you must use 90% of the income tax shown on your income tax return for the current taxable year as your required annual payment.

4. What types of income may not be subject to withholding and may require estimated tax payments: The list below indicates many (but not all) types of income that may not be subject to Connecticut income tax withholding and may require you to pay estimated tax:

  • Pensions and annuities;
  • Unemployment compensation;
  • Connecticut Lottery winnings less than $600 or less than 300 times the amount of the wager;
  • Gambling winnings (other than Connecticut Lottery winnings);
  • Prize winnings;
  • Alimony;
  • Capital gains;
  • Interest income;
  • Dividend income;
  • Rental income;
  • Self-employment; or
  • Federally taxable Social Security income.

To avoid filing estimated taxes, you may ask that your employer or pension plan payer withhold additional amounts from your wages or pension income to cover the taxes on other income. You can make this change by providing your employer or pension payer with a revised Form CT-W4, Employee’s Withholding Certificate, or Form CT-W4P, Withholding Certificate for Pension or Annuity Payments.

Retired federal civil service employees must contact the U.S. Office of Personnel Management at 1-888-767-6738 to start, stop, or make changes to Connecticut income tax withholding.

5. How do I estimate my tax: You need Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon for Individuals, to calculate your estimated tax payments. The instructions include a worksheet for computing your estimated tax payments, exemption and credit tables, and a coupon to mail with your estimated payments.

If you made estimated Connecticut income tax payments last year, you will receive coupons in mid-January. Each coupon is preprinted with your name, address, and Social Security Number.

Use the preprinted coupons or visit the Department of Revenue Services (DRS) website at www.ct.gov/DRS and click on Taxpayer Service Center (TSC) to make an electronic payment. If you did not make estimated Connecticut income tax payments last year, you may make a payment using the TSC. You may also use the Form CT-1040ES included in your Connecticut income tax booklet, or request one from DRS. (See Forms and Publications.) If you file this form or make a payment using the TSC, additional coupons will be mailed to you.

6. When do I pay my estimated income tax: You must make your first estimated income tax payment on or before April 15. You can pay all of your estimated tax with the first payment or pay the tax in four installments, due April 15, June 15, September 15, and January 15. Taxpayers who are not calendar year filers should use the same filing dates as they do for federal income tax purposes. An estimate is considered timely filed if received on or before the due date, or if the date shown by the U.S. Postal Service cancellation mark is on or before the due date. If the due date falls on a Saturday, Sunday, or legal holiday, the next business day is the due date.

7. How much should I pay with each installment: You must pay 25% of the required annual payment with each installment. Your installments should be made as follows:

 

Due Date
 Percentage Due
April 15
25%
June 15

25% (50% of your required annual
payment must be paid by this date)

September 15 

25% (75% of your required annual
payment must be paid by this date)

January 15 25% (100% of your required annual
payment must be paid by this date)

Special Rules for Farmers and Fishermen: If you are a farmer or fisherman (as defined in I.R.C. §6654(i)(2)) who is required to make estimated income tax payments, you are required to make only one payment. Your installment is due on or before January 15 following the end of the taxable year. The required installment is the lesser of 66 2/3% of the income tax shown on your current year Connecticut income tax return or 100% of the Connecticut income tax shown on your preceding year income tax return.

Farmers and fishermen who file Form CT-1040, Connecticut Resident Income Tax Return; Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return, Form CT-1041, Connecticut Income Tax Return for Trusts and Estates, or Form CT-1065/CT-1120SI, Connecticut Composite Income Tax Return, for the taxable year on or before March 1 of the following year, and pay in full the amount computed on the return as payable for the taxable year, will not incur interest on the underpayment of estimated income tax. For more information, see Informational Publication 2008(19), Farmer’s Guide to Sales and Use Taxes, Motor Vehicle Fuels Tax, Estimated Income Tax, and Withholding Tax.

8. What if my income varies during the year: If you do not earn your income evenly throughout the year, you may benefit from using the annualized income installment method. Instead of paying your required annual payment in four equal installments, you may be able to reduce or eliminate the amount of one or more installments. You make up the difference by making a larger payment for the period or periods when more of your income is earned. For more information about this method, see Informational Publication 2008(27), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040 AES.

You need Form CT-2210, Underpayment of Estimated Income Tax by Individuals, Trusts, and Estates. Check Box A, Part I, of Form CT-2210, attach the form to your income tax return, and check the box for Form CT-2210 on the front of your Connecticut income tax return below the name and address section. This notifies DRS that your estimated income tax is based on the annualized income installment method.

9. What happens if I underestimate my tax: If you are required to make estimated income tax payments and you do not pay enough tax during the year through withholding or estimated tax payments, or both, by the installment due date, you may be charged interest. This is true even if you are due a refund when you file your tax return. Interest is calculated separately for each installment from the due date of that installment until the earlier of April 15 or the date on which the underpayment is paid. Therefore, you may owe interest for an earlier installment even if you paid enough tax with a later installment to make up the underpayment. Interest at 1% per month, or fraction of a month, applies to the underpayment(s). If you file your income tax return for the taxable year on or before January 31 of the following year and pay the amount computed on the return as payable for the taxable year, no interest will be charged for failure to make the fourth required installment. This does not apply to taxpayers paying estimated Connecticut income taxes as farmers and fishermen.

10. May I apply an overpayment in the prior year to the next year's estimate: Yes. When you file your return, you may elect to apply overpayments of Connecticut income tax to your succeeding year estimated tax. If you file your Connecticut income tax return on or before April 15 or if you file a timely request for extension of time to file and your income tax return is filed within the extension period the overpayment will be treated as estimated tax paid on April 15. Your election to apply overpayments to your succeeding year estimated income tax is irrevocable.


Related Forms and Publications:

  • Informational Publication 2009(7), Is My Connecticut Withholding Correct?
  • Informational Publication 2008(27), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040 AES
  • Informational Publication 2008(19), Farmer’s Guide to Sales and Use Taxes, Motor Vehicle Fuels Tax, Estimated Income Tax, and Withholding Tax
  • Form CT-W4, Employee's Withholding Certificate
  • Form CT-W4P, Withholding Certificate for Pension or Annuity Payments
  • Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon for Individuals

Effect on Other Documents: Informational Publication 2006(24) is superseded and may not be relied upon after the date of issuance of this publication.


Effect of This Document: An Informational Publication issued by DRS addresses frequently asked questions about a current position, policy, or practice, usually in a less technical question and answer format.


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

  • 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only), or
  • 860-297-5962 (from anywhere)

Select Option 6 to speak to a representative.

TTY, TDD, and Text Telephone users only may transmit anytime by calling 860-297-4911.


Forms and Publications: Forms and publications are available anytime by:

  • Internet: Visit the DRS website at www.ct.gov/DRS to download and print Connecticut tax forms; or
  • Telephone: Call 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and select Option 2 or call 860-297-4753 (from anywhere)

Paperless Filing Methods (fast, easy, free, and confidential):

Business and individual taxpayers can use the Taxpayer Service Center (TSC) to file a variety of tax returns and extensions, as well as to pay taxes or bills over the Internet. Visit the DRS website at www.ct.gov/DRS and select an option from the list on the TSC image.


DRS E-News Service: Get connected to the latest news from DRS. Receive notification by email of changes to legislation, policies, and procedures. DRS E-Alerts provide information for employer’s withholding tax, TSC-BUS Online Filing Alerts, News – Press Releases, and Top 100 Delinquency List. Visit the DRS website at www.ct.gov/DRS and select e-Alerts from the left navigation bar.


IP 2008(20)

Income Tax

Estimated Income Tax

Issued: 12/10/08