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Connecticut Tax

FULL List to Connecticut Tax Forms

Individual Income Tax Forms 

Form CT-1040 Connecticut Resident Income Tax Return

Form CT-1040NR/PY Connecticut Nonresident and Part-Year Resident Income Tax Return

Form CT-1040X Amended Connecticut Income Tax Return for Individuals

Form OP-186 Connecticut Individual Use Tax Return 

Corporate Income Tax Forms

Form CT-1120 Corporation Business Tax Return 

Form CT-1120X Amended Corporation Business Tax Return

Sales Tax Forms

Form OP-186 Individual Use Tax Return

Form OS-114 Business Sales and Use Tax Return

Form OS-114 Sales and Use Tax Return

Property Tax Forms

Form Personal Property Declaration

Form Personal Property Declaration Short Form

Primary Concerns:

Connecticut, like most states, has felt the burden of recent economic hardships, and this has caused a fierce battle over whether the state’s current policies of taxation will have to be amended to allow increases in taxes and even new taxes.  At the heart of this debate is Connecticut’s complicated economic history, which has been fraught with disputes between different income classes.

Connecticut’s image has always been one based on wild variations between great affluence and relative poverty, without much of a middle class in between.  Decades ago, Connecticut had very low sales taxes and no tax on earned income, which allowed for many people who worked in New York City (and Boston) to commute to work from their home in Connecticut.

To make up for this budget shortfall, stocks, bank accounts, dividends, and other accounts would be taxed exorbitantly, between 11 and 13% of their yearly interest income.  Since this discouraged financial investment in Connecticut, the burden was taken up by property taxes, which meant that only the truly affluent could afford to own property and states, which cause devaluation of lower income properties that became unsellable.

After this was revised in 1991 to allow for lower income rates of dividends and bonds, Connecticut has become a major location for financial institutions, especially hedge fund groups, many of whom have relocated to Connecticut.  As a result, Connecticut has more millionaires than any state save California, and the largest amount of over million dollar properties.  Simultaneously, there is still a lower and middle income class who presently share much of the burden of the state’s revenue, especially through flat sales taxes.

Recent legislation proposed in Connecticut has sought to amend the sales tax to 7% or higher and also provide for higher taxation of higher income individuals and corporations to account for budget shortfalls in the local economy.  This has naturally led to a culture clash with many of the state’s higher income professionals and corporations, who dislike the idea of being, taxed more.

At present, the two sides are in something of standoff, one that will likely only be resolved the closer Connecticut’s economy comes to a crisis.  While the decision is still uncertain, what is certain is that it is a decision that will likely determine the income and economic balance in Connecticut for years to come.

Income Taxes:

Connecticut’s income taxation for individual taxpayers is determined through a very complicated set of tables where an income amount must be determined within a category of within fifty dollars.  For instance, someone who makes $20,075 in year will fall on the table between $20,050 and $20,100, which will tell them that they owe $138 if there are a single filed, $0 if they are a couple filing jointly, $170 if married filing jointly, and $8 if filing as the head of a household.

Those with an income under $12,050 are not required to pay income taxes, while single or married couples filing jointly are not required to pay if they make under $13,050.  The table tops out at $102,000, and above that level of income generally requires calculation of taxes using a specific rate, which can generally lie between 4.5 to 5%, and is determined by Connecticut’s Department of Revenue Services.

Connecticut also taxes wages made by residents who work outside of the state, save in situations where the income tax is higher in that state than in Connecticut (which mean that many people who work in New York or Massachusetts but live in Connecticut are exempt from having their wages taxed).

Connecticut’s taxes on dividends from bonds, trusts, savings, and so forth used to astronomically high, the highest in the nation, but legislation passed in 1991 deflated this amount to around 3 to 5% statewide, depending on municipality.

Corporate Income Taxes:

Every business in Connecticut is required to pay a flat Business Entity Tax of $250 for each year of existence.  Connecticut otherwise has a flat corporate income tax of 7.5%, which is slightly higher than the average, but the state remains very corporation friendly due to numerous incentives it gives to corporations based on start-up costs and job creation.  Its revised taxes on income from dividends and bonds have made it a popular location for many financial companies, especially in the Greenwich area, which has become the hedge fund capital of the country.

Property Taxes:

Property taxes in Connecticut are determined on a municipal basis, meaning each city and town collects their own property taxes.  The regulation of property tax collection statewide is under the auspices of the Office of Policy and Management instead of the Department of Revenue Services, which oversees all other tax services.

All real and personal property in Connecticut in subject to property taxes, usually at 70% of its assessed value, though that can become higher based on the city or town’s taxation policy.  Most towns and municipalities determine their property taxes by determining the mill rate (where a mill equals 0.1% per dollar spent) based on the town’s budget needs for a year.

Connecticut’s property taxes can be fairly erratic from municipality to municipality because Connecticut’s economic climate and property values can vary considerably.  Connecticut has more homes value over a million dollars than any state in the country save California, yet the median home value is fairly low, only around $200,000.  This means that certain areas may charge a higher mill rate than others based on the value of homes in that district.

Sales Taxes:

Sales tax in Connecticut is a flat 6% across the entire state, with no adjustments allowed on the municipal or country level.  The sales tax is also very limited in scope, as all non-prepared foods are untaxed, as are prescription and nonprescription drugs.

Magazines and newspapers are also untaxed, as are student textbook purchases, and most articles of clothing prices under $50.  The state also implements one week late each summer where sales tax is rescinded on many item and articles of clothing as an allowance for families with children who are attending school (thought the one week clemency is available to everyone).

Use tax in Connecticut is basically the same, although shipping delivery charges on items that are subject to taxation in the state are themselves subject to taxation.

Tax Forms: 

Connecticut’s income tax returns are called the CT 1040, and it takes on many different forms based on residency, length, and payment schedules.


Connecticut Tax: A Comprehensive Guide to the State’s Tax System

Taxes. They are an inevitable part of life, and the American taxpayer is no stranger to them. There are federal taxes, state taxes, and local taxes. One may argue that the state taxes are the most confusing because they can vary vastly depending on your location. Today, we’ll take a deep dive into Connecticut tax and what it entails.

A Brief Overview of Connecticut Tax

The Connecticut Department of Revenue Services (DRS) is responsible for administering state taxes. Connecticut’s tax system relies on three primary sources of revenue: personal income tax, sales and use tax, and corporate business tax.

Personal Income Tax

Connecticut has a progressive personal income tax system, which means that your tax rate increases as your income increases. The current tax rates are as follows:

– 3% on the first $10,000 earned
– 5% on income between $10,001 and $50,000
– 5.5% on income between $50,001 and $100,000
– 6% on income between $100,001 and $200,000
– 6.5% on income between $200,001 and $250,000
– 6.99% on income over $250,000.

Connecticut residents must file income tax returns by April 15th of each year. The state also offers several credits and deductions to help lower your overall taxable income. Some of the deductions that Connecticut residents can claim include:

– Medical and dental expenses
– College savings plan contributions
– Retirement plan contributions
– Charitable contributions

Sales and Use Tax

Connecticut has a sales and use tax of 6.35%. The state also has a use tax, which is a tax on goods and services that were purchased outside of Connecticut but are used within the state. The use tax rate is the same as the sales tax rate.

The sales tax applies to most retail purchases, such as clothing, electronics, and furniture. However, there are several exemptions, such as groceries, prescription drugs, and heating fuel. Additionally, there are lower tax rates on some items, such as motor vehicles and boats.

Corporate Business Tax

Connecticut has a corporate business tax that is based on a corporation’s net income earned in the state. The tax rate is 7.5% for corporations with less than $100,000 in taxable income. For corporations with taxable income over $100,000, the tax rate is 9%.

Connecticut Tax Credits and Deductions

In addition to the standard deductions and credits mentioned above, Connecticut offers several tax credits and deductions that can help lower your tax bill even further. Here are some examples:

Earned Income Tax Credit

Connecticut’s Earned Income Tax Credit (EITC) is a refundable tax credit for low to moderate-income working families and individuals. The amount of the credit is based on your income and the number of dependents you have. In 2020, the maximum credit amount is $6,660.

Property Tax Credit

Connecticut residents who own or rent property are eligible for a property tax credit that can help offset their state income tax liability. The credit is equal to a percentage of the property taxes you paid during the year, up to a maximum of $200 for renters and $300 for homeowners.

Child Tax Credit

Connecticut offers a child tax credit of $110 per child for families with children under the age of 18. To be eligible, your income must be less than $200,000 if filing jointly or $100,000 if filing as single or head of household.

College Savings Plan Deductions

Connecticut allows residents to deduct up to $10,000 ($5,000 for single taxpayers) in contributions to the state’s Qualified Higher Education Savings Program from their state income tax. The program allows families to save for college expenses tax-free.

Connecticut Tax Filing Information

Connecticut taxpayers must file their state income tax returns by April 15th of each year. The state accepts both paper and electronic filings for individual income tax returns.

If you need more time to file your Connecticut tax return, you can request a six-month extension. However, you must still pay any taxes owed by the April 15th deadline to avoid penalties and interest.

Connecticut Tax Penalties and Interest

Failure to file a Connecticut tax return on time can result in a penalty of 5% per month, up to a maximum of 25% of the total tax owed. Additionally, failure to pay the full amount of taxes owed can result in a penalty of 1.5% per month, up to a maximum of 12% of the total tax owed.

The state also charges interest on unpaid taxes. The interest rate is the federal short-term rate plus 3%.

Connecticut Tax Audits

If you are ed for a Connecticut tax audit, you will receive a notice from the DRS. The notice will explain the reason for the audit and provide instructions on how to respond.

During the audit, the DRS will review your tax returns and supporting documentation to verify that you have reported all income and claimed all deductions and credits correctly. If the auditor finds errors, you may be required to pay additional taxes, interest, and penalties.

Connecticut Tax Resources

If you need help filing your Connecticut tax return or have questions about your state taxes, there are several resources available to you.

DRS Website

The Connecticut DRS website (https://portal.ct.gov/DRS) offers a wealth of information about the state’s tax system. There, you can find information on tax forms, filing requirements, credits and deductions, and more.

DRS Phone Support

If you have questions about your Connecticut taxes or need help with your tax return, you can call the DRS at 1-800-382-9463. Phone support is available Monday-Friday, 8:30 am-4:30 pm.

Connecticut Taxpayer Service Centers

The DRS operates taxpayer service centers throughout the state where you can get help with your tax return, make payments, and ask questions. To find a service center near you, visit https://portal.ct.gov/DRS/Individuals/Taxpayer-Service-Center.

Conclusion

In conclusion, Connecticut tax is a comprehensive system that includes income tax, sales and use tax, and corporate business tax. Connecticut offers several deductions and tax credits to help offset your tax liability. However, failure to file on time or pay the full amount of taxes owed can result in penalties and interest. If you need help with your Connecticut taxes, be sure to take advantage of the resources provided by the DRS.