DRS: IP 92(4.4), State Tax Tips for Senior Citizens

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been superseded by IP 99(2)

IP 92(4.4)

State Tax Tips for Senior Citizens


INTRODUCTION: This publication is designed to acquaint you with Connecticut state taxes and to indicate tax advantages that may be available. For information on how to order forms or publications or to obtain assistance from our staff, follow the instructions below.


INCOME TAX: The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents who have income from Connecticut sources. (To determine your residency status refer to the instructions contained in the Connecticut income tax instruction booklets.) The tax is computed on your Connecticut taxable income.

Income Tax Return: The Connecticut income tax return for calendar year filers is due on or before April 15 for the preceding taxable year. You may be required to file an income tax return even if you do not owe any tax. Information on filing requirements is included in all Connecticut income tax instruction booklets. Residents must file Form CT-1040 or Form CT-1040EZ. Nonresidents and part-year residents must file Form CT-1040NR/PY.

To compute your Connecticut taxable income, subtract your 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.

Maximum exemption amounts are:

$12,000 - single filers (or married filing separate) with adjusted gross income up to $24,000.

$19,000 - head of household with adjusted gross income up to $38,000.

$24,000 - married filing jointly with adjusted gross income up to $48,000.

Exemptions are reduced by $1,000 for every additional $1,000 of adjusted gross income over the maximum exemption amounts.

Credits: Personal tax credits of between 1% and 75% may also be available to you depending upon your income level.

A nonrefundable property tax credit is also available to Connecticut residents for property taxes paid to a Connecticut political subdivision on their primary residence or privately owned or leased motor vehicle. To qualify for the credit, property taxes must first become due and be actually paid during the taxable year. The maximum credit allowed for the 1997 taxable year is $215 per return. The maximum credit increases to $285 per return for taxable years beginning in 1998 and thereafter. If you paid more than $100 in qualifying property taxes, you may be subject to a limitation based upon your filing status and your Connecticut adjusted gross income. Request IP 97(9), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision, for further information.

Example: The following example shows how to compute the tax for the 1997 taxable year. The taxpayers are married, filing jointly. Tax is rounded to the nearest whole dollar.

$40,000 CT Adjusted Gross Income
- 24,000 Personal Exemption
$16,000 CT Taxable Income

Calculation of Tax

$12,500

$3,500

x.03

x.045

$375

$158

$533 Tax
-187 Personal Tax Credit ($533 x 35%)
$346 Tax Due (Prior to deduction for Property Tax Credit, if any)

Income subject to tax: In general, income that is included in your federal adjusted gross income is subject to Connecticut income tax and income excluded from your federal adjusted gross income is not subject to Connecticut income tax. For example, interest from Connecticut state or local bonds is not subject to federal or Connecticut income tax. Likewise, the gain from the sale of your primary residence is subject to Connecticut income tax only to the extent that it is subject to federal income tax.

Modifications to federal adjusted gross income: Certain income is treated differently for Connecticut income tax purposes than it is for federal income tax purposes. If you have such income, you must make modifications (additions or subtractions) to your federal adjusted gross income when you complete your Connecticut income tax return. These modifications are explained fully in the instructions to Schedule 1, Form CT-1040, Connecticut Resident Income Tax Return or Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return. If you have income from U.S. government obligations, such as U.S. Savings Bonds or Treasury Notes, or income from bonds issued by another state, you must complete Schedule 1 to make the appropriate modification. Remember: You cannot use Form CT-1040EZ or Form CT-1040EZ Telefile if you are required to make a modification to federal adjusted gross income. You must use Form CT-1040 or Form CT-1040NR/PY.

Social Security Benefit Adjustment: If you receive social security benefits that are taxable for federal income tax purposes, you may be able to reduce the portion of those benefits that are taxable for Connecticut income tax purposes by completing the Social Security Benefit Adjustment Worksheet that is included with Form CT-1040 or Form CT-1040NR/PY. For taxable year 1997, Connecticut income taxation of social security benefits is limited to 50% of benefits received, even if a greater percentage of the benefits is taxable for federal income tax purposes. For taxable years beginning in 1998 or thereafter, Connecticut taxation of social security benefits will be limited to 25% of the benefits received.

Estimated income tax filing requirements: If you expect to owe, after subtracting your Connecticut income tax withholding, more than $500 for the taxable year after tax credits, if any, are taken into account, and you expect your withholding to be less than your required annual payment, you must make timely payments of estimated income tax. 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. Request IP 92(5.7), Estimated Connecticut Income Taxes, and IP 93(6.4), A Guide to Calculating Your Annualized Estimated Income Tax Installments, for more information.

Withholding from your pension: If you are a resident who is receiving a pension, you may be able to have Connecticut income tax withheld from your pension payments. Contact your pension payer and ask for Form CT-W4P, Withholding Certificate for Pension or Annuity Payments, to request Connecticut income tax withholding from your payments. Retired federal civil service employees must contact the United States Office of Personnel Management (U.S.O.P.M.) to start, stop or change Connecticut income tax withholding. Call U.S.O.P.M at 1-800-409-6528 to use the automated request system or 1-202-606-0500 to speak with a representative.

NOTE: Nonresidents of Connecticut are not subject to Connecticut income tax on their pension income, even if the pension is paid by a former employer located in Connecticut.


SALES TAX: Although there are no special exemptions from the sales tax for senior citizens, many items and services are not subject to the sales or use tax.

  • Some examples of nontaxable items and services are:
  • clothing and footwear items costing under $50;
  • adult diapers and disposable pads for incontinency;
  • current United States and Connecticut flags;
  • diabetic supplies (test strips and tablets, lancets and glucose monitoring equipment);
  • doctor, dentist, medical laboratory, lawyer and travel agent fees;
  • eyeglasses, dentures, hearing aids, and hearing aid 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, eye care products, nasal sprays, drops and inhalers, and antacids;
  • oxygen and oxygen equipment, customized trusses and braces, crutches and wheelchairs;
  • prescription drugs, syringes and needles;
  • repair services to artificial limbs, artificial eyes and other equipment used to support vital life function;
  • repair services to crutches, walkers and wheelchairs;
  • electricity and gas for residential use;
  • fuel for residential heating or cooking such as oil, kerosene, wood, coal and charcoal;
  • fabric, thread, buttons, zippers, trim, yarn for noncommercial use, and similar materials, for noncommercial sewing used to make clothing;
  • food purchased in supermarkets. (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);
  • food products sold through coin-operated vending machines;
  • instruction classes, such as knitting, sewing, dog obedience, music, dance etc;
  • labor for many home repairs and services including plumbing, electrical, refuse removal, and septic cleaning services. However, the following renovation services are subject to sales or use tax: painting, paving, staining, roofing, wallpapering, siding, and exterior sheet metal work;
  • landscaping and horticultural services, window cleaning, and maintenance services when rendered at the residence of a person eligible to receive total disability benefits under the Social Security Act;
  • meals provided by special programs that are delivered to homes of elderly persons, such as "Meals on Wheels";
  • newspapers and magazines purchased by subscription;
  • other nontaxable services, including animal grooming and boarding services, laundromat, hair styling, health and athletic services, towing, real estate and jewelry appraisal;
  • vegetable seeds;
  • personal property used in a burial or cremation with a value of up to $2,500.

Discounts: When a senior citizen discount or other discount is offered on a taxable item, the sales tax is applied to the discounted price.

Coupons: If you must present a coupon to receive the discount, sales tax will apply to the reduced price of the item if the retailer does not receive reimbursement for the coupon from the manufacturer or a third party.

Example:

Item #1 $3.00 $2.50
Non-reimbursable Coupon - 0.50 x 6%
Discounted Price $2.50 $0.15 Tax
Total price including tax $2.65

However, if the retailer will receive reimbursement from the manufacturer or a third party, tax applies to the discounted price plus the value of the coupon.

Example:

Item # 2 $3.00 $3.00
Reimbursable Coupon - 0.50 x 6%
Discounted Price $2.50 $0.18 Tax
Total price including tax $2.68

Request PS 98(1), Sales Tax Treatment of Coupons, Scan Cards, Cash Equivalents, Promotional Items and Rebates.


SUCCESSION TAX: The Connecticut succession tax is being phased out beginning in 1997 and is scheduled for total repeal effective in 2005. For a Connecticut resident, the tax applies to all property, except for real property and tangible personal property which is located outside Connecticut. For nonresidents, it 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. There is a total exemption from tax if the entire estate passes to a surviving spouse. For information and tax tables for estates of decedents dying during 1997 and thereafter, request SN 95(18), 1995 Legislative Changes Affecting the Succession and Transfer Taxes and the Estate Tax.


GIFT TAX: In general, residents are taxed on all gifts of intangible property and of real property and tangible personal property located in Connecticut. Nonresidents are taxed on gifts of real and tangible personal property located in Connecticut. Gifts to any particular donee during the calendar year are not subject to the Connecticut gift tax unless the value of all such gifts to such donee during the calendar year exceeds $10,000.


REAL ESTATE CONVEYANCE TAX: A state real estate conveyance tax is imposed on deeds conveying an interest in realty where the consideration for the interest in property equals or exceeds $2,000. A deed for no consideration or less than $2,000 in consideration is exempt from this tax, but may be subject to the gift tax. A taxpayer receiving property tax benefits for the elderly is also exempt.


LOCAL PROPERTY TAXES: 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 of a previously approved applicant who is age 50 or older. Regardless of age, totally disabled persons are also eligible. Income parameters apply.

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.


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(4.4) modifies and supersedes IP 92(4.3). IP 91(1.4), Connecticut Income Tax Information for Senior Citizens, is obsoleted.


FOR FURTHER INFORMATION: If you have questions about Connecticut taxes, please call the Department of Revenue Services during business hours, Monday through Friday:

  • 860-297-5962 (Hartford calling area or from out-of-state); or
  • 1-800-382-9463 (toll-free from within Connecticut)

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


FORMS AND PUBLICATIONS:

You may obtain forms and publications at any hour, seven days a week:

  • Telephone: use the phone numbers listed above and select Option 3 from a touch-tone phone;
  • Internet: preview and download forms from the DRS Web site: http://www.ct.gov/drs

IP 92(4.4)
Issued: 1/23/98
Replaces: IP 92(4.3), Issued 12/5/96