DRS: TSSN-26, State Tax Tips for Senior Citizens

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103

This TSSN is superseded by IP 92(4)

TSSN-26

State Tax Tips for Senior Citizens


STATE TAX TIPS FOR SENIOR CITIZENS

This brochure is designed to acquaint you with the most common tax advantages available to Connecticut residents age 55 or older.


CAPITAL GAINS TAX

There are two exemptions available to Connecticut residents selling their home:

  • If a person, age 55 or older, elects the one-time federal exclusion on the sale of their residence, Connecticut will not tax the first $125,000 of the capital gain.

  • If the seller is age 65 or older and has lived in his or her home at least five of the prior eight years, the capital gain is not taxed regardless of the amount.

  • When a resident, age 65 or older, has any type of capital gain and his or her federal adjusted gross income is below $10,000, not including the gain, the gain is not taxable regardless of the treatment for federal income tax purposes.

    Example:

    Adjustable Gross Income $159,000
    Less: Capital Gain 150,000

    Nontaxable Balance $ 9,000

There is no Connecticut tax on the $150,000 gain in the above example because the balance is less than $10,000.


INTEREST & DIVIDENDS

Residents whose Connecticut adjusted gross income is less than $54,000 do not pay a tax on their interest and dividend income.

To compute Connecticut adjusted gross income, subtract the Social Security or Tier I Railroad Retirement figure on your federal income tax return from your federal adjusted gross income figure.


SALES TAX

Although there are no direct exemptions from the sales tax for senior citizens, many items and services are not taxed.

Some examples are:

  • Clothing, including shoes, overshoes, adult diapers, etc., when each item costs less than $75.

  • Prescription drugs, eyeglasses, dentures, hearing aids, and batteries.

  • Non-prescription (over-the-counter) drugs that are used internally. This includes: vitamins, minerals, food supplements, pain relievers, laxatives, cough syrups, lozenges, cold and allergy products, diabetic supplies, eye care products, nasal sprays, drops and inhalers, and antacids.

  • Oxygen and oxygen equipment, customized trusses and braces, crutches and wheelchairs.

  • Food purchases in super markets. Beer, wine and all alcoholic beverages are taxable. Candy, gum, soda, carbonated water and non-alcoholic beer and wine are taxable unless purchased with food stamps.

  • Fuel for heating residences such as oil, kerosene, wood, electricity and coal.

  • Animal grooming and boarding services, dry cleaning and laundromat, hair styling, towing, tax preparation, real estate and jewelry appraisal and fur storage are a few examples of nontaxable services.

  • Labor for home repairs including plumbing, painting, electricity and carpentry. Private auto repair labor and refuse removal.

  • Seeds, vegetable plants, foodbearing bushes and trees, fertilizers, weed killers, plant insecticides and fungicides.

  • Yarn, fabric, thread ,buttons, zippers, trim, etc., used to make clothing.

  • Meals delivered to homes of elderly persons, such as, "Meals on Wheels".

  • Funeral costs of $2,500 or less.

  • Current United States and Connecticut flags.

  • Newspapers and subscription magazines only.

  • Doctor, dentist, medical laboratory, lawyer and travel agent fees.

  • Instruction classes such as: knitting, sewing, dog obedience, tennis, golf, swimming, music, etc.

When a senior citizen discount is offered, the sales tax is applied to the discounted price.

If you must present a manufacturer's coupon to receive the discount, the coupon is considered to be money and you must pay tax on the original price. However, when a store coupon is presented to that store the tax is applied to the discounted price.

Examples:

Item $3.00 Item $3.00
Manufacturer's

Coupon

-.50

Store

Coupon

-.50

Discounted

Price

$2.50

Discounted

Price

$2.50

$3.00 $2.50
x 8% x 8%

Tax $ .24 Tax $ .20

The sale of "Dine Out" cards and "Entertainment" coupon books are not taxable. However, the free meals received by using such cards or coupons are subject to sales tax using the menu price that would have been paid if it had been purchased without the card or coupon.


INHERITANCE TAXES

Under these tax statutes different exemptions are given depending on relationship:

  • Any transfers to a surviving spouse are exempt. Therefore, if all the estate passes to the spouse, there is no tax.
  • The class composed of children, grandchildren and parents receive a $50,000 exemption.
  • Brothers, sisters, their descendants, etc. receive a $6,000 exemption.
  • All other persons not referred to above, or taxable organizations have a $1,000 exemption.
  • There is only one exemption per class. In other words, if there is one child there is one $50,000 exemption. If there are five children there is still only one $50,000 exemption.
  • Transfers to qualifying charitable, religious, educational, historical, scientific, etc. organizations are tax exempt.


REAL ESTATE CONVEYANCE TAX

A taxpayers who transfers property, for no consideration, to his or her spouse or children is exempt from this tax. A taxpayer receiving Elderly Property Tax benefits is also exempt.


LOCAL PROPERTY TAXES

  • Homeowner/Renter Tax Credit: Annual property tax or rent credit is available to residents, age 65 or older, or to a surviving spouse of a previously approved applicant who is age 50 or older.

  • Veteran Exemption: A varied, 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 local assessor in your town or city hall for details and forms for any of the above.


FREE ASSISTANCE WITH PERSONAL TAXES

The Connecticut Department of Revenue Services will help you fill out your Connecticut Capital Gains, Dividends and Interest Income Tax Return. Call the department's toll-free number 1-800-382-9463 or (860) 297-5962 or contact one of our regional offices.

Bridgeport Hamden Norwich Waterbury
10 Middle Street 2105 State Street 2 Cliff Street 24 Wooster Avenue
Tel. 579-6252 Tel. 789-8003 Tel. 889-2660 & 566-7437 Tel. 596-4311 & 596-4312

Please call us for further information on any state tax.

For federal tax information, call the Internal Revenue Service toll-free at: 1-800-TAX-1040


PLEASE NOTE THE FOLLOWING NEW INFORMATION ABOUT DRS.

FOR FURTHER INFORMATION: To order forms and publications or for further information, call the Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) 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 https://www.ct.gov/drs 

Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.

TSSN-26 (Rev. 7/90)