DRS: IP 2004(8), Circular CT - Employer's Tax Guide

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

25 Sigourney Street
Hartford CT 06106-5032
 
 
 
 
 
 

 
 

This Informational Publication has been modified and superseded by IP 2005(7)

IP 2004(8), CIRCULAR CT


Connecticut Income Tax Withholding Requirements with Tables and Forms

Employer's Tax Guide

Effective January 1, 2004


Keep and use this booklet until a new edition of Circular CT is issued.


Frequently Used Telephone Numbers 

Related Websites

Connecticut Forms Referenced in this booklet


Frequently Used Telephone Numbers:

Connecticut Department of Revenue Services

Toll-free from within Connecticut 1-800-382-9463
From anywhere 860-297-5962
Accounts Receivable/Billing 860-297-4771
Collection & Enforcement 860-297-5909
Electronic Funds Transfer 860-297-4973
Forms Unit 860-297-4753
TTY, TDD, and Text Telephone users only 860-297-4911
DRS Tax Fax (call from the handset attached to your fax machine) 860-297-5698

Connecticut Department of Labor

Employer Registration 860-263-6550
Form CT-W4 reporting for new employees 860-263-6310

Internal Revenue Service

Tax Assistance 1-800-829-1040
Tax Forms and Publications 1-800-829-3676

Related Websites

Connecticut Department of Revenue Services (DRS) www.ct.gov/DRS
Connecticut Department of Labor (DOL) www.ctdol.state.ct.us
Internal Revenue Service (IRS) www.irs.gov

Connecticut Forms Referenced in This Booklet

CT-WH, Connecticut Withholding Tax Payment Form
CT-941, Connecticut Quarterly Reconciliation of Withholding
CT-W3, Connecticut Annual Reconciliation of Withholding
CT-8109, Connecticut Withholding Tax Payment Form for Nonpayroll Amounts
CT-945, Connecticut Annual Reconciliation of Withholding for Nonpayroll Amounts
CT-1096, Connecticut Annual Summary and Transmittal of Informational Returns
CT-CTC, Withholding Correction/Reorder Form
REG-1, Application for Tax Registration Number
CT-W4, Employee's Withholding Certificate
CT-W4NA, Employee's Withholding Certificate – Nonresident Apportionment
CT-W4P, Withholding Certificate for Pension or Annuity Payments
CT-941X, Amended Connecticut Reconciliation of Withholding
CT-8809, Request for Extension of Time to File Informational Returns

TABLE OF CONTENTS

Calendar of Duties

Important Information for Connecticut Employers and Payers

Instructions

Who is Required to Withhold Connecticut Income Tax?

How to Register for Withholding Tax 
    Employers 
    Payers of Nonpayroll Amounts 
    Household Employers 
    Agricultural Employers
    Professional Athletes and Entertainers
    Seasonal Employers

Voluntary Registration to Withhold Tax 
   Voluntary Registration by Persons Other Than Employers to Withhold Tax

What Income Is Subject to Connecticut Income Tax Withholding
   Wages 
   Nonpayroll Amounts    

What Payments Are Not Subject to Connecticut Income Tax Withholding
   Payments Not Subject to Federal Withholding 
   Self-Employed Individuals 
   Interstate Commerce 
   Interstate Air Carriers
   Nonresident Seaman

Wages Paid by the United States to Armed Forces Personnel

Withholding for Military Retirees

 How to Withhold Connecticut Income Tax 
   Employee's Withholding Certificate (Form CT-W4) 
   Determining How Much Connecticut Income Tax to Withhold From Employees
   How to Use the Withholding Tables 
   Employees Who Do Not Return a Completed Form CT-W4
   Withholding for Daily/Miscellaneous Amounts
   Determining How Much to Withhold From Nonresident Employees Who Work
   Partly Within and Partly Outside Connecticut
   Alternate to Using Form CT-W4NA 
   Supplemental Compensation

How to Report and Remit Taxes Withheld 
   Employers
   Payers of Nonpayroll Amounts
   Withholding of Less Than $500 
   Quarterly Reconciliation (Form CT-941) 
   Amended Reconciliation of Withholding (Form CT-941X)
   Wage and Tax Statement
   Annual Reconciliation (Forms CT-W3 and CT-1096)
   Amended Annual Reconciliation
   Corrections to Your Magnetic Media or W-2 Informational Returns

Payment by Electronic Funds Transfer

Liability for Taxes Withheld

Penalties and Interest 
   Late Payment Penalty
   Late Filing Penalty 
   Interest 
   Required Informational Returns
   Willful Evasion 
   Fraud
   Criminal Penalties

How To Advise Employees To Have Enough Tax Withheld

What Records To Keep

How To Cancel Registration for Withholding Connecticut Income Tax

Related Publications

Samples of Remittance Forms (CT-WH, CT-941, CT-W3, CT-8109, CT-945, CT-1096, and CTC)

Frequently Asked Questions

AN 2004(1), Information for Married Individuals Who Are Both Employed and Are Filing a Joint Connecticut Income Tax Return 

Form CT-W4, Employee's Withholding Certificate (.pdf format)

Form CT-W4NA, Employee's Withholding Certificate–Nonresident Apportionment  (.pdf format)

Withholding Calculation Rules  

Withholding Tables A and B (.pdf format)

Withholding Tables (.pdf format)

Comparison of Federal and Connecticut Filing Rules  (.pdf format)

Connecticut Tax Assistance  (.pdf format)


Calendar of Duties

If the due date falls on a Saturday, Sunday, or legal holiday, the next business day is the due date.

Each Time a Deposit of Federal Income Tax is Made:

Employers must use the same deposit schedule for Connecticut withholding purposes that is followed for federal withholding purposes.* However, an employer who is required to withhold less than $500 of Connecticut income tax in a calendar quarter may pay the tax quarterly with Form CT-941, Connecticut Quarterly Reconciliation of Withholding.

File Form CT-WH, Connecticut Withholding Tax Payment Form, with a deposit of Connecticut withholding tax by using Fast-File or mail to:

Department of Revenue Services
PO Box 5055
Hartford CT 06102-5055

Do not file Form CT-WH if no payment is due.

*Special rules apply for household employers.

Payers of nonpayroll amounts must use the same deposit schedule for Connecticut withholding purposes that is followed for federal withholding purposes.** However, a payer of nonpayroll amounts who is required to withhold less than $500 of Connecticut income tax in a calendar year may pay the tax annually with Form CT-945, Connecticut Annual Reconciliation of Withholding for Nonpayroll Amounts.

File Form CT-8109, Connecticut Withholding Tax Payment Form for Nonpayroll Amounts, with a deposit of Connecticut withholding tax by using Fast-File or mail to:

Department of Revenue Services
PO Box 5055
Hartford CT 06102-5055

Do not file Form CT-8109 if no payment is due.

**Special rules apply for designated withholding agents making payments to athletes or entertainers.

On or Before April 30, July 31, October 31, and January 31

Employers must file Form CT-941 (even if no tax is due or has been withheld for the quarter), together with required copies of Forms CT-W4, Employee’s Withholding Certificate, claiming exempt status from the tax and given to you by employees during that quarter. Send copies of Form CT-W4 to DRS only as required. (See Employee’s Withholding Certificate.)

On or Before January 31

Employers must give federal Form W-2, Wage and Tax Statement to each employee to whom Connecticut wages were paid during the preceding calendar year.

Payers of nonpayroll amounts must file Form CT-945 (even if no tax is due or has been withheld for the year).

Payers of nonpayroll amounts must give federal Form 1099-MISC, Miscellaneous Income; 1099-R, Distributions From Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; 1099-S, Proceeds From Real Estate Transactions; or W-2G, Certain Gambling Winnings, for each payment, distribution, or transaction made during the preceding calendar year.

On or Before February 15

Employers must obtain a new Form CT-W4 from each employee who claimed exempt status (Withholding Code "E") from Connecticut withholding in the prior year.

On or After February 16

Employers must begin withholding at a flat rate of 5% (.05), without allowance for exemption, from each employee who claimed exempt status from Connecticut income tax withholding in the prior year and who did not provide a new Form CT-W4 on or before February 15. The Form CT-W4 previously filed by the employee claiming exemption has now expired.

On or Before the Last Day of February

Employers must file Form CT-W3, Connecticut Annual Reconciliation of Withholding, together with every "state copy" of federal Form W-2 reporting Connecticut wages paid to employees during the prior calendar year.

Note: State copies of federal Form W-2 are required for all employees to whom Connecticut wages were paid during the prior calendar year, even if no Connecticut income tax was withheld during the calendar year.

Payers of nonpayroll amounts must file Form CT-1096, Connecticut Annual Summary and Transmittal of Informational Returns, and the "state copy" of federal Forms 1099 and W-2G.


Important Information for Connecticut Employers and Payers


Effect of IP 2004(8) on Other Documents:  All withholding requirements, tables, and forms effective January 1, 2004, are included in Informational Publication 2004(8), Connecticut Circular CT - Employer's Tax Guide. The withholding tables and Tables A and B for single filers only will be revised again for January 1, 2005.


Use Fast-File to Speed Filing of Certain Withholding Tax Forms

Fast-File is a fast, convenient, and easy-to-use method of filing your withholding tax returns over the Internet or by touch-tone telephone. Fast-File simplifies your filing, whether your return shows no tax due or a tax payment is required. Employers may use Fast-File to file Forms CT-WH and CT-941 by using the Internet or a touch-tone phone. Payers of nonpayroll amounts may use Fast-File to file Forms CT-8109 and CT-945 by using the Internet. If you owe tax, it may be paid directly from your bank account, or by electronic funds transfer (EFT). Returns are accepted 7 days a week, 24 hours a day, 365 days a year, and you get immediate confirmation from DRS that your return was received.

To Fast-File by Internet: Visit the DRS Web site at www.ct.gov/DRS and click on File Returns On-Line.

To Fast-File by Telephone: Call 860-947-1988 and follow the instructions.

For more information about Fast-File, see DRS 2001(3), Fast-File Booklet (available from the DRS Web site or from the DRS Forms Unit at 860-297-4753).


New Forms and Instructions for Payers of Nonpayroll Amounts

New forms have been developed for payers of nonpayroll amounts to use for reporting and remitting Connecticut income tax withholding to the Connecticut Department of Revenue Services (DRS). These new forms are contained in the Withholding Remittance Coupon Book for Payers of Nonpayroll Amounts mailed to each payer of nonpayroll amounts. Payers must use these new forms in reporting and remitting Connecticut income tax withheld from nonpayroll amounts during calendar years beginning on or after January 1, 2004.

Where payers were formerly required to use Form CT-WH, they will now use Form CT-8109, in remitting Connecticut income tax withheld from nonpayroll amounts.

Where payers were formerly required to use Form CT-941, they will now use Form CT-945, to report nonpayroll amounts paid during the calendar year. Payers who are semi-weekly schedule depositors for federal income tax withholding purposes will be required to complete and attach Schedule CT-945-A, to their Form CT-945.

Payers of nonpayroll amounts will continue to use Form CT-1096, to report: the total Connecticut income tax withheld from nonpayroll amounts; the total of nonpayroll amounts; and the number of federal Forms 1098, 1099, and W-2G being submitted.

Payers of nonpayroll amounts will continue to use Form CT-941X, to correct errors made on Form CT-945.


When to Submit Exempt Forms CT-W4 to DRS

Employers are only required to submit Forms CT-W4 to DRS in certain circumstances. Do not send exempt Forms CT-W4 to DRS unless the conditions are met.


Employers May Use Certain Private Delivery Services and Satisfy Timely Filing/Payment Rule

When sending forms, returns, or payments to DRS, employers may use certain private delivery services in addition to the U.S. Postal Service and satisfy the "timely mailing as timely filing/payment" rule. See Policy Statement 2002(4), Designated Private Delivery Services and Designated Types of Service.


Supplemental Tables for Joint Filers Where Both Spouses Work

Employees who file a joint income tax return where both spouses work and choose Withholding Code "A" on Form CT-W4, should refer to the supplemental tables on Form CT-W4, effective January 1, 2004, to ensure the correct amount of tax is withheld. Employers should post Announcement 2004(1), Information for Married Individuals Who Are Both Employed and Are Filing a Joint Connecticut Income Tax Return.


INSTRUCTIONS

Who is Required to Withhold Connecticut Income Tax?

Anyone who maintains an office or transacts business in Connecticut and who is considered an employer for federal withholding purposes must withhold Connecticut income tax, whether or not the payroll department is located in Connecticut. Special rules apply to payers of nonpayroll amounts and payers of compensation to professional athletes and entertainers.

Any employer or payer who is required to withhold Connecticut income tax must register for withholding tax with DRS.


How to Register for Withholding Tax

Employers

An employer who is not already registered with DRS, including an employer starting a new business, must register to withhold Connecticut income tax by completing Form REG-1, Business Taxes Registration Application. Form REG-1 is also used to register a business for most other state taxes, including sales and use taxes and corporation business tax.

An employer who is already registered with DRS for other state taxes is still required to register to withhold Connecticut income tax and must complete Form REG-1 to register for withholding as an additional tax.

An employer who acquires an existing business must also complete Form REG-1 to obtain a Connecticut tax registration number. The new owner cannot use the previous owner’s tax registration number or withholding tax coupons.

The DRS tax registration number and federal employer identification number must appear on all Connecticut withholding forms and on all correspondence with DRS. Do not use the registration number issued by DOL on DRS forms.

Payers of Nonpayroll Amounts

A new payer who is required to deduct and withhold Connecticut income tax from nonpayroll amounts must complete Form REG-1. See Nonpayroll Amounts for the requirements to withhold Connecticut tax.

A payer of nonpayroll amounts who is not already registered with DRS, including a payer starting a new business, must register to withhold Connecticut income tax by completing Form REG-1, Business Taxes Registration Application. Form REG-1 is also used to register a business for most other state taxes, including sales and use taxes and corporation business tax.

A payer of nonpayroll amounts who is already registered with DRS for other state taxes is still required to register to withhold Connecticut income tax and must complete Form REG-1 to register for withholding as an additional tax.

A payer of nonpayroll amounts who acquires an existing business must also complete Form REG-1 to obtain a Connecticut tax registration number. The new owner cannot use the previous owner’s tax registration number or withholding tax coupons.

The DRS tax registration number and federal employer identification number must appear on all Connecticut withholding forms and on all correspondence with DRS. Do not use the registration number issued by the Connecticut Department of Labor (DOL) on DRS forms.

Household Employers

A household employer is not required to withhold Connecticut income tax from the wages of household employees but may do so voluntarily by agreement between the employer and the employee. A household employer who agrees to withhold Connecticut income tax must register with DRS for withholding by submitting a completed Form REG-1 with a written request stating that the employer is a household employer and is asking for annual filer status.

A household employer already registered to withhold Connecticut income tax may request annual filer status by submitting a written request which states that the employer is a household employer who prefers annual filer status. The request should be sent to the registration address.

This request must be received on or before March 31 of the calendar year in order to be effective for that calendar year. A new request is not required to be made for succeeding calendar years, as long as the household employer remains an annual filer.

Every household employer is required to file federal Form(s) W-2, Wage and Tax Statement, with Form CT-W3, Connecticut Annual Reconciliation of Withholding, whether or not the employer is registered with DRS and whether or not the employer has withheld any Connecticut income tax. Form CT-W3 is due on or before the last day of February to report Connecticut wages paid during the preceding year. Unregistered household employers should enter the words "HOUSEHOLD EMPLOYER" in the space reserved for the Connecticut tax registration number on Form CT-W3.

Agricultural Employers

An agricultural employer must register by completing Form REG-1, and withhold Connecticut income tax from the wages of agricultural workers if:

The employer is required to withhold federal income tax from the worker’s wages (see NOTE below); or
The employer and employee voluntarily agree to have Connecticut income tax withheld.

An agricultural employer may request annual filer status by submitting a written request with a completed Form REG-1 which states that the employer is an agricultural employer who will file federal Form 943 and employs farm workers only.

An agricultural employer who is already registered to withhold Connecticut income tax may request annual filer status by submitting a written request which contains the information listed above. The request should be sent to the registration address in the next column.

Every agricultural employer is required to file federal Form(s) W-2, with Form CT-W3, whether or not the employer is registered with DRS, and whether or not the employer has withheld any Connecticut income tax. Form CT-W3 is due on or before the last day of February to report Connecticut wages paid in the preceding year. Unregistered agricultural employers should enter the words "AGRICULTURAL EMPLOYER" in the space reserved for the Connecticut tax registration number on Form CT-W3.

NOTE: In general, an agricultural employer is required to withhold federal income tax (and Connecticut income tax) from an agricultural worker receiving cash wages, if those cash wages are subject to FICA (social security) tax withholding. Refer to the IRS Circular A, Agricultural Employer's Tax Guide, for information on federal income tax withholding for agricultural workers. To obtain a copy of Circular A, Agricultural Employer's Tax Guide, call the IRS at 1-800-829-3676.

Professional Athletes and Entertainers

Certain payers of compensation to professional athletes and entertainers must register for Connecticut withholding.

Seasonal Employers

A new employer whose liability for Connecticut withholding will occur seasonally and in the same one or more quarters each year must complete Form REG-1. The employer may request seasonal filer status by submitting a written request with a completed Form REG-1 which states the quarters that the employer will be active.

This request must be received on or before the last day of a calendar quarter to be effective for that calendar quarter. A new request is not required for succeeding calendar years as long as the employer remains a seasonal filer.

Seasonal employers who are already registered to withhold Connecticut income tax may request seasonal filer status by submitting a written request which states the quarters during which their business is active to the following address:

Department of Revenue Services
State of Connecticut
Registration Unit
PO Box 2937
Hartford CT 06104-2937


Voluntary Registration to Withhold Tax

Any employer who is not required to register to withhold Connecticut income tax may register solely for the purpose of withholding Connecticut income tax if both the employer and the employee voluntarily agree to have Connecticut income tax withheld.

Upon registration, the employer will be treated as an employer required to withhold Connecticut income tax while the agreement remains in effect.

Voluntary Registration by Persons Other Than Employers to Withhold Tax

Any person (other than an employer) who is not required to register to withhold Connecticut income tax may register solely for the purpose of withholding Connecticut income tax if both the payer and the payee voluntarily agree that Connecticut income tax will be withheld.

Upon registration, the payer will be treated as an employer required to withhold Connecticut income tax while the agreement remains in effect.


What Income Is Subject to Connecticut Income Tax Withholding?

In general, Connecticut law follows the federal law in determining what income is subject to withholding. Employers should consult the IRS Circular E, Employer’s Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide, to determine federal withholding rules for specific types of income.

Wages

In general, all amounts that are wages and subject to federal withholding are also wages for Connecticut income tax withholding purposes. Such amounts include, but are not limited to, fringe benefits, supplemental compensation, golden parachutes, sick pay, moving expenses, and severance pay.

Resident wages subject to Connecticut withholding: All wages of a Connecticut resident are subject to Connecticut income tax withholding, even if the resident works outside of Connecticut. If an employer is required to withhold income tax for services performed in other states or their political subdivisions, or the District of Columbia, from the resident’s wages, the employer is required to withhold Connecticut income tax as follows:

For an employee who is a resident individual and works for an employer in one or more qualifying jurisdictions, but not in Connecticut, and the employer maintains an office or transacts business both in Connecticut and in the same qualifying jurisdiction(s) in which the employee works for the employer, the employer shall first determine the Connecticut income tax that would otherwise be required to be deducted and withheld from the employee's total wages, and prorate such amount between the qualifying jurisdictions in which the employee works for the employer. If the prorated tax amount for a qualifying jurisdiction exceeds the income tax required to be deducted and withheld from such wages for such qualifying jurisdiction, the employer would withhold from such wages the difference and pay over that difference to DRS as Connecticut income tax withholding.

For an employee who is a resident individual and works for an employer in one or more qualifying jurisdictions and in Connecticut, the employer shall first determine the Connecticut income tax that would otherwise be required to be deducted and withheld from the employee's total wages, and prorate such amount between the qualifying jurisdictions in which the employee works for the employer. If the prorated tax amount for a qualifying jurisdiction exceeds the income tax required to be deducted and withheld from such wages for such qualifying jurisdiction, the employer would withhold from such wages the difference and pay over that difference to DRS. The employer shall also deduct and withhold from the employee's wages the prorated tax amount for Connecticut, and pay over that amount to DRS. The prorated tax amount for Connecticut shall be calculated by subtracting the prorated tax amount for each qualifying jurisdiction in which the employee works for the employer from the Connecticut income tax that would otherwise be required to be deducted and withheld from the employee's total wages.

Example 1: A Connecticut resident is employed in State X by an employer maintaining an office or transacting business both in Connecticut and in State X. State X income tax payable on the employee’s wages is $100. The Connecticut income tax that would otherwise be required to be withheld from such wages is $160. The amount of Connecticut income tax required to be withheld is $60.

Example 2: A Connecticut resident works in State Y for an employer maintaining an office or transacting business both in Connecticut and in State Y. The income tax payable to State Y on the employee’s wages is $200. The Connecticut income tax that would otherwise be required to be withheld from such wages is $200. No Connecticut income tax is required to be withheld.

Example 3: A Connecticut resident works in State Z for an employer maintaining an office or transacting business both in Connecticut and in State Z. The income tax payable to State Z on the employee's wages is $300. The Connecticut income tax that would otherwise be required to be withheld from such wages is $250. No Connecticut income tax is required to be withheld.

Example 4: A resident individual is employed in New York and New Jersey by an employer maintaining an office or transacting business in Connecticut, New York, and New Jersey. Assume that the Connecticut income tax that would be required to be deducted and withheld from the employee's total wages for work performed in New York and New Jersey is $500, and that half of the employee's wages are for work performed in New York and the other half are for work performed in New Jersey. Therefore, the prorated tax amount for New York is $250, and the prorated tax amount for New Jersey is $250. Assuming that the New York income tax that would be required to be deducted and withheld from the employee's New York wages is $300, no Connecticut income tax would be required to be deducted and withheld from the employee's New York wages, because the New York income tax required to be deducted and withheld from the employee's wages exceeds the prorated tax amount for New York. Assuming that the New Jersey income tax that would be required to be deducted and withheld from the employee's New Jersey wages is $210, the amount of Connecticut income tax that would be required to be deducted and withheld from the employee's New Jersey wages is $40. (This is the amount by which the prorated tax amount for New Jersey ($250) exceeds the New Jersey income tax required to be deducted and withheld from the employee's wages.) Therefore, the amount of Connecticut income tax that would be required to be deducted and withheld from the employee's total wages is $40.

Nonresident wages subject to Connecticut withholding: Wages of a nonresident are subject to Connecticut income tax withholding if the wages are paid for services rendered in Connecticut. Wages of a nonresident are not subject to Connecticut income tax withholding if the wages are paid for services performed entirely outside of Connecticut.

Example 5: Working solely within Connecticut: A resident of State X works in Connecticut for an employer that is doing business in Connecticut and in State X. The employer is required to withhold Connecticut income tax because the services are performed in Connecticut. The employer should contact State X for withholding requirements in that state.

Example 6: Working solely outside Connecticut: A resident of State Y works in State Y for an employer whose main office, including the payroll department, is located in Connecticut. The employer is not required to withhold Connecticut income tax even though payment is made from a point in Connecticut, since the employee is a nonresident and performs all his services outside Connecticut. The employer should contact State Y for withholding requirements in that state.

Example 7: Working partly within and partly outside Connecticut: A resident of State Z works partly in Connecticut and partly in State Z for an employer who is doing business in Connecticut and State Z. The employer is required to withhold Connecticut income tax on wages paid to the nonresident employee in the same proportion that the employee’s wages derived from or connected with sources within Connecticut relate to the employee’s total wages. See Determining How Much to Withhold From Nonresident Employees Who Work Partly Within and Partly Outside Connecticut.

Nonpayroll Amounts

Certain nonpayroll income (also known as nonpayroll amounts) is subject to withholding.

Pension and Annuity Distributions if the recipient is a Connecticut Resident and Has Requested Connecticut Income Tax Withholding. Payers of pensions and annuities, both public and private, that maintain an office or transact business in Connecticut, are required to notify Connecticut resident recipients of the availability of Connecticut income tax withholding and withhold Connecticut income tax from payments if the Connecticut resident recipient submits a request in writing. This requirement applies to all pension and annuity payments from qualified or nonqualified plans, including lump sum distributions, whether or not payments are made from a Connecticut location.

Payers must provide recipients with Form CT-W4P, Withholding Certificate for Pension or Annuity Payments (or a reasonable facsimile). A written request for withholding (Form CT-W4P or a written request providing the same information) must be on file with the payer before withholding begins. The request to deduct and withhold Connecticut income tax must be made in specific whole dollar amounts. The minimum amount that a recipient can request to be withheld is $10 per payment. No maximum limit is placed on the amount that can be withheld, but it must be an even dollar amount.

The written request for withholding or a request for a change in the amount to be withheld takes effect with the first payment made on or after the date which occurs:

    1. In a case in which no previous request is in effect, three calendar months after the date the request is furnished to the payer; or
    2. In a case in which a previous request is in effect, the first status determination date (January 1, May 1, July 1, and October 1 of each year) which occurs at least 30 days after the date the request is furnished to the payer.

Form CT-W4P remains in effect until terminated by the payee. The payee may terminate the request by furnishing the payer with a signed written notice of termination.

Any payer who receives a request to withhold Connecticut income tax must register by filing Form REG-1. (See How to Register for Withholding Tax.) In general, the payer will follow the instructions in the section entitled How to Report and Remit Taxes Withheld, except as follows:

    1. Informational Return: Federal Form 1099-R, showing the amount of Connecticut income tax withheld in the prior year, must be given by payers of pension and annuity plans to their recipients on or before the succeeding January 31.
    2. Annual Reconciliation: Form CT-1096 is due from all payers who are required to be registered for Connecticut income tax withholding on the last day of February even if no Connecticut income tax was withheld. No payment is to be made with this form. Payers must file the "state copy" of federal Form 1099-R, only if Connecticut income tax was withheld.

Military Retirement Pay if the Recipient is a Connecticut Resident and Has Requested Connecticut Income Tax Withholding.

Unemployment Compensation, if the Recipient has Requested Connecticut Income Tax Withholding.

Gambling Winnings Other Than Connecticut Lottery Winnings if the Payment is Subject to Federal Income Tax Withholding, and the Payment is Made to a Resident or to Someone Receiving the payment on Behalf of a Resident. A payer of gambling winnings maintaining an office or transacting business in Connecticut must withhold Connecticut income tax from winnings if the winnings are paid to a Connecticut resident, or to someone receiving them on behalf of a Connecticut resident, and the winnings are subject to federal income tax withholding. See Informational Publication 2001(29), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings, for more information.

Connecticut Lottery Winnings if Reportable for Federal Income Tax Withholding Purposes, Whether or not Federal Income Tax Withholding is Required. On or after September 1, 2003, the Connecticut Lottery Corporation will withhold Connecticut income tax at the rate of 5% (.05) from payments of reportable Connecticut Lottery winnings whether or not federal income tax withholding is required. See Informational Publication 2003(21), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut, for more information.

Gambling winnings include both cash and noncash winnings. The value of noncash winnings is fair market value.

Any payer of gambling winnings that are subject to Connecticut withholding and who is not otherwise required to register with DRS, must register by filing Form REG-1, Business Taxes Registration Application. (See How to Register for Withholding Tax.)

Connecticut income tax must be deducted and withheld at a flat rate of 5% (.05), without allowance for exemption, and is computed on the same amount that is subject to withholding for federal income tax purposes. If the winnings are a noncash prize, the payer of the prize must collect the required withholding, in cash, from the winner before awarding the noncash prize.

In general, payers will follow the instructions in the section entitled How to Report and Remit Taxes Withheld, except as follows:

    1. Statement for Gambling Winnings: Federal Form W-2G, showing the gambling winnings paid and any Connecticut income tax withheld during the preceding year, must be given by payers of gambling winnings to recipients who are resident individuals on or before the succeeding January 31.
    2. Annual Reconciliation: Form CT-1096 is due from all payers of gambling winnings on or before the last day of February. No payment is to be made with this form. Payers must file every "state copy" of federal Form W-2G, for winnings paid to resident individuals, even if no Connecticut income tax was withheld.

Payments Made to Athletes or Entertainers if the Payments are not Wages for Federal Income Tax Withholding Purposes, but Connecticut Income Tax Withholding is Required.

Compensation for personal services performed in Connecticut by a professional athlete or entertainer, paid in cash or otherwise, in connection with sporting events or with the preparation or presentation of entertainment, whether as a participant, performer or otherwise, is subject to Connecticut income tax withholding. The person making payment to the athlete or entertainer, or to the athlete or entertainer’s agent for rendering such services, is required to withhold Connecticut income tax even if the athlete or entertainer is not considered an employee for federal withholding purposes.

See Policy Statement 2004(1), Income Tax Withholding for Athletes and Entertainers, for more information.


What Payments Are Not Subject to Connecticut Income Tax Withholding?

In general, income that is not subject to federal withholding is not subject to Connecticut income tax withholding.

Payments Not Subject to Federal Withholding

Other than the exceptions noted in the previous section, Connecticut income tax withholding is not required for any compensation paid to an employee if the compensation is not subject to federal withholding. Employers should consult the IRS Circular E, Employer’s Tax Guide, for federal withholding rules for specific types of income.

Self-Employed Individuals

The owner of a business that has no employees is not required to register for Connecticut income tax withholding. The owner of a business, other than the sole shareholder of an S corporation, is not an employee for federal or Connecticut withholding purposes.

Exemption from Connecticut income tax withholding does not exempt the income from Connecticut income tax. The recipient of taxable income that is not subject to Connecticut withholding is required to pay estimated taxes if the recipient’s Connecticut taxable income meets the minimum filing requirements. See Informational Publication 2003(36), Estimated Connecticut Income Taxes.

Example 8: Mary owns her own business and her business income is not subject to Connecticut income tax withholding. Generally, if Mary will owe more than $500 in Connecticut income tax for the current year (over and above any Connecticut income tax withheld for the current year), she must make estimated Connecticut income tax payments.

Interstate Commerce

Compensation paid by interstate rail carriers, interstate motor carriers, and interstate motor private carriers to a nonresident employee who performs regularly assigned duties in two or more states is not subject to Connecticut income tax withholding. The compensation is not income derived from Connecticut sources even though the employee performed services in Connecticut. However, such compensation is income derived from sources within the employee’s state of residence.

Interstate Air Carriers

Compensation paid by an interstate air carrier to a nonresident employee who performs regularly assigned duties on an aircraft in two or more states is income derived from sources in both the employee’s state of residence, and the state in which the employee earns more than 50% of the compensation. An employee has earned more than 50% of the compensation in Connecticut if the scheduled flight time in Connecticut is more than 50% of the total scheduled flight time in the calendar year. See Nonresident Wages Subject to Connecticut Withholding.

Nonresident Seaman

A nonresident seaman’s wages for employment on a ship which enters a Connecticut port for the purpose of foreign or interstate trade is not subject to Connecticut income tax withholding.


Wages Paid by the United States to Armed Forces Personnel

Payments made by the United States to nonresident military personnel stationed or performing services for the United States armed forces in Connecticut are not subject to Connecticut income tax withholding. In general, payments made by the United States to military personnel who are Connecticut residents or whose domicile was Connecticut when they entered the military, regardless of where they are stationed, are subject to Connecticut income tax withholding. Certain individuals, however, may be entitled to claim exemption from the tax. See Informational Publication 2003(23), Connecticut Income Tax Information for Armed Forces Personnel and Veterans.


Withholding for Military Retirees

Connecticut residents who are retired from the regular and reserve components of the Uniformed Services are allowed to request, in writing, Connecticut withholding from their monthly retired pay. The term Uniformed Services refers to the Army, Navy, Air Force, Marine Corps, Coast Guard, commissioned corps of the Public Health Service, and commissioned corps of the National Oceanic and Atmospheric Administration.

A member may request withholding by completing Form CT-W4P and submitting it to the retired pay office of his or her uniformed service. The amount withheld from each payment must be an even dollar amount, but not less than $10.


How to Withhold Connecticut Income Tax

Employers should use the current Connecticut Income Tax Withholding Tables and Calculation Rules to determine the amount to withhold. To determine how much Connecticut income tax to withhold from each employee’s wages, employers should refer to the most recently completed Form CT-W4, Employee's Withholding Certificate on file for each employee.

Employers with nonresident employees who work partly within and partly outside Connecticut.

Employee's Withholding Certificate

Employers must obtain a completed copy of Form CT-W4 from each new employee when hired. The form is effective for the first payroll period ending or the first payment of wages made on or after the date the employer receives a completed Form CT-W4. Unless the employee claims exemption, Form CT-W4 is effective until the employee provides the employer with a new one.

A copy of Form CT-W4 is included. Employers may photocopy as needed.

Employees claiming exemption: Employers are required to obtain a new Form CT-W4 on or before February 15 from each employee who claimed exemption from withholding in the prior year. If a new Form CT-W4 for the current year is not provided by the employee, the employer must begin withholding at a flat rate of 5% (.05), without allowance for exemption, on February 16. The Form CT-W4 previously given to the employer has now expired.

Reporting certain employees to the DRS: Generally, employers should not send copies of Form CT-W4 to DRS. However, employers must send copies of Forms CT-W4 from employees claiming exemption from Connecticut withholding, if:

1. The employee is employed by the employer on the last day of the quarter;

and

2. The employer reasonably expects that:

  • The annual wages of an employee filing as a married individual filing separately will exceed $36,000; or
  • The annual wages of an employee filing as a single individual will exceed $37,875;* or
  • The annual wages of an employee filing as a head of household will exceed $57,000; or
  • The annual wages of an employee filing as a married individual filing jointly will exceed $72,000.

* This number is three times the maximum personal exemption amount ($12,625) available to an employee filing as a single individual for the taxable year beginning January 1, 2004. The maximum personal exemption amount will increase through the 2009 taxable year. An employer should multiply the maximum personal exemption amount for the taxable year by a factor of three to determine if the Form CT-W4 of an employee filing as a single individual is required to be sent to DRS.

Forms CT-W4 meeting the above conditions and received during the quarter must be sent to DRS with Form CT-941, Connecticut Quarterly Reconciliation of Withholding.

Reporting new or rehired employees to DOL: Employers with offices in Connecticut or transacting business in Connecticut are required to report the name, address, and social security number of new or rehired employees to the DOL. Each new employee's Form CT-W4 must be sent to the DOL no later than 20 days after the date of hire to assist in the enforcement of child support obligations. Employers should verify that all employee and employer items have been completed legibly before submitting Form CT-W4 to DOL. DOL may use information reported on this form in a manner consistent with its governmental powers and duties. Additional instructions for submitting copies of this form are provided on Form CT-W4.


Determining How Much Connecticut Income Tax to Withhold From Employees

The amount to withhold from an employee’s wages depends on:

  • Payroll period;
  • Gross taxable wages;
  • Withholding Code; and
  • Additions or reductions to withholding requested by the employee on Form CT-W4 

How to Use the Withholding Tables

Use these steps when calculating withholding from the tables:

  1. Select the table which is the same as your payroll period (weekly, monthly, etc.).
  2. Use the columns on the left side of the table. Find the line on which your employee’s gross taxable wages are included. (Gross taxable wages are wages subject to federal withholding.)
  3. Select the "Withholding Amount" column on the right side of the table which corresponds with the Withholding Code selected by your employee on Form CT-W4 (Status A, B, C, D, or F).
  4. Add to the "Withholding Amount" the amount, if any, on Line 2 of Form CT-W4.
  5. Subtract from the "Withholding Amount" the amount, if any, on Line 3 of Form CT-W4. The amount on Line 3 of Form CT-W4 cannot exceed the total withholding amount.

Employees Who Do Not Return a Completed Form CT-W4

Employers must withhold at a flat rate of 5% (.05), without allowance for exemption, on the gross taxable wages of employees who do not return a completed Form CT-W4.

Withholding for Daily/Miscellaneous Amounts

For those employees who receive one-time or miscellaneous payments, the employer must withhold at a flat rate of 5% (.05) without allowance for exemption. For withholding rules on supplemental compensation, see Supplemental Compensation.


Determining How Much to Withhold From Nonresident Employees Who Work Partly Within and Partly Outside Connecticut

A nonresident employee who performs services partly within and partly outside Connecticut is subject to Connecticut income tax only on the portion of wages attributable to services performed within Connecticut.

For Connecticut income tax withholding purposes, however, an employer must withhold Connecticut income tax on all wages paid to the employee unless the employer can properly allocate the wages attributable to services performed in Connecticut by means of one of the following:

The nonresident employee gives the employer a completed Form CT-W4NA, Employee’s Withholding Certificate – Nonresident Apportionment, identifying the portion of wages subject to Connecticut income tax; or

The employer maintains adequate current records to determine the amount of wages paid for such services performed within Connecticut.

Employers who receive Form CT-W4NA or who maintain adequate current records from nonresident employees will calculate the amount of Connecticut income tax to be withheld for services performed within Connecticut as follows:

Determine the total "Withholding Amount" on all wages paid to a nonresident employee using the procedure described in Determining How Much Connecticut Income Tax to Withhold From Employees.
 
If the employee has provided a Form CT-W4NA, multiply the total "Withholding Amount" by the percentage from Form CT-W4NA that certifies the estimated portion of services performed in Connecticut during the calendar year.

Employers who know or have reason to know that the percentage of services estimated on Form CT-W4NA is no longer correct, must make necessary adjustments during the calendar year. In making those adjustments, the employer must determine the percentage of wages that is paid for the performance of services within Connecticut by using the same percentage that the wages derived from or connected with Connecticut sources bears to the total wages.

Alternate to Using Form CT-W4NA

An employer who maintains adequate current records to accurately determine the amount of a nonresident employee’s wages that is paid for services performed within Connecticut, may withhold Connecticut income tax from the wages based on those records whether or not the employee files Form CT-W4NA. To calculate the amount to withhold, multiply the total "Withholding Amount" by a fraction, the numerator of which is the amount of wages paid during the year for services performed in Connecticut (as shown by those records) and the denominator of which is the total amount of wages paid during the year for services performed, wherever performed.

The following examples refer to the Withholding Tables, Effective January 1, 2004.

Example 9: Form CT-W4NA: A nonresident employee performs services partly within and partly outside Connecticut. The employee’s taxable wages are $700 per week. The employee’s Form CT-W4 indicates Withholding Code "F" and Form CT-W4NA, filed by the employee, shows 60% as the estimated portion of services performed within Connecticut. Because 60% of the employee’s work time was performed in Connecticut, the employer will withhold 60% of the Connecticut income tax that would have been due if all wages were earned in Connecticut. ($26.47 x .60 = $15.88, the amount of Connecticut income tax to be withheld.)

Example 10: Employer Maintains Records: A nonresident employee performs services partly within and partly outside Connecticut. The employee’s taxable wages are $1,000 per week. The employee’s Form CT-W4 indicates Withholding Code "A." The employee did not complete Form CT-W4NA, but the employer does maintain adequate current records showing that in week 1, the employee worked 2 out of 5 days (40%) in Connecticut. In week 2, the employee worked 100% of the time in Connecticut. If all work was performed in Connecticut, the employer would withhold $44.99 per week; therefore, for week 1 the employer will withhold $17.99 ($44.99 x .40) and for week 2 the employer will withhold $44.99.

Example 11: No Method of Allocation: An employer has not received a Form CT-W4NA from a nonresident employee who performs services partly within and partly outside Connecticut and the employer does not keep adequate current records for the amount of wages paid to the nonresident for services performed within Connecticut. The employee’s taxable wages are $2,300 bi-weekly and his Withholding Code shown on his Form CT-W4 is "B." The employer will withhold $91.88 of Connecticut income tax from the nonresident’s wages; the same amount that would be withheld if all services were performed in Connecticut.

A copy of Form CT-W4NA is available. Employers may photocopy as needed.

Supplemental Compensation

Withholding rules for supplemental compensation (such as bonuses, commissions, overtime pay, sales awards, etc.) depend on when the supplemental compensation is paid.

Supplemental compensation paid at the same time as regular wages: When supplemental compensation is paid at the same time as regular wages, the tax withheld should be determined as if the total of the supplemental and regular wages were a single payment for the regular payroll period.

Example 12: Mary worked five hours of overtime during the pay period. In her paycheck, Mary’s employer includes her regular pay and her overtime pay. Her employer will determine the amount to be withheld based upon the total of the regular pay plus the overtime.

Supplemental compensation paid at a different time than regular wages: If supplemental compensation is paid at a different time than regular wages, the method of withholding depends on whether the employer withheld income tax from the employee’s regular wages.

No withholding on regular wages: If the employer did not withhold income tax from the regular wages, the regular and supplemental wages should be added together and the tax computed on the whole amount.

Withholding on regular wages: If the employer did withhold income tax from the employee’s regular wages, the employer must compute the tax on the combined regular and supplemental wages. The computed tax minus the tax withheld from regular wages is the tax to be withheld from supplemental wages.

Example 13: An employer pays her employees annual bonuses. The bonuses are not included in the employees’ regular paychecks but income tax is withheld from the regular pay. The employer must add the bonus to the gross wages for the last regular pay period, determine the withholding tax on the total of the bonus plus the gross wages, subtract the tax already withheld from the regular wages, and withhold the difference from the bonus check.


How to Report and Remit Taxes Withheld 

Employers who are registered with DRS for Connecticut income tax withholding purposes will receive the Employer’s Withholding Remittance Coupon Book. Payers of nonpayroll amounts who are registered with DRS for Connecticut income tax withholding purposes will receive the Withholding Remittance Coupon Book for Payers of Nonpayroll Amounts. Each of the forms included in the coupon book is a machine readable document which is personalized with the employer’s or payer's name, address, Connecticut tax registration number, and federal employer identification number. Only the original coupon should be submitted. Forms, payments or other documents will be 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.

Employers 

Send Form CT-WH, Connecticut Withholding Tax Payment Form, to DRS with each Connecticut withholding payment. Due dates for payment over of Connecticut income tax withholding for wages are the same as the due dates for the employer’s deposits of federal withholding. Employers do not need to file Form CT-WH if no payment is due.  IMPORTANT CHANGE TO REMITTANCE SCHEDULE FOR 2005

However, if an employer chooses to deposit federal withholding more frequently than is required under federal law, the employer must also pay over Connecticut income tax withholding at the same time.

If the tax liability was deducted and withheld during one quarter and paid over in another quarter, the employer must enter the number for the quarter in which the tax liability was deducted and withheld. For example, if the tax liability was deducted and withheld in March and paid over in April, enter "1" on Line 1 of Form CT-WH.Payers of Nonpayroll Amounts

Send Form CT-8109, Connecticut Withholding Tax Payment Form for Nonpayroll Amounts, to DRS with each Connecticut withholding payment. Due dates for payment over of Connecticut income tax withholding for nonpayroll amounts (other than for nonpayroll amounts paid to athletes or entertainers) are the same as the due dates for the payer’s deposits of federal withholding. Payers do not need to file Form CT-8109 if no payment is due. IMPORTANT CHANGE TO REMITTANCE SCHEDULE FOR 2005

However, if any payer chooses to deposit federal withholding more frequently than is required under federal law, the employer must also pay over Connecticut income tax withholding at the same time.

The due dates for nonpayroll amounts paid to athletes or entertainers during calendar year 2004 are as follows: First quarter, April 30, 2004, second quarter, July 31, 2004, third quarter, October 31, 2004, and fourth quarter, January 31, 2005. However, if the Connecticut withholding liability is less than $1,000 for a calendar year, the payer may remit the tax with Form CT-945.

If the tax liability was deducted and withheld during one quarter and paid over in another quarter, the employer must enter the number for the quarter in which the tax liability was deducted and withheld. For example, if the tax liability was deducted and withheld in March and paid over in April, enter "1" on Line 1 of Form CT-8109.

Withholding of Less Than $500

Employers

An employer who is required to withhold less than $500 in Connecticut income tax during a calendar quarter, is not required to file Form CT-WH. An employer who is not required to file Form CT-WH may pay over the Connecticut withholding tax quarterly with Form CT-941, Connecticut Quarterly Reconciliation of Withholding. If the employer is unsure whether withholding of less than $500 will be required, the employer should follow the federal requirements for paying withholding tax to avoid interest and late payment penalties.

Payers of Nonpayroll Amounts

A payer of nonpayroll amounts who is required to withhold less than $500 during a calendar year, is not required to file Form CT-8109.** A payer of nonpayroll amounts who is not required to file Form CT-8109, may pay over the Connecticut withholding tax annually with Form CT-945, Connecticut Annual Reconciliation of Withholding for Nonpayroll Amounts. If the payer of nonpayroll amounts is unsure whether withholding of less than $500 will be required, the payer should follow the federal requirements for paying withholding tax to avoid interest and late payment penalties.

**Designated withholding agents who are required to withhold less than $1,000 during a calendar year are not required to file Form CT-8109 and may pay over the Connecticut withholding tax annually with Form CT-945.

Quarterly Reconciliation

All employers (except seasonal, annual, agricultural, and household employer filers) who are registered for Connecticut income tax withholding must file Form CT-941, even if no tax is due or has been withheld for a quarter.

Due dates are:

First Quarter - April 30
Second Quarter - July 31
Third Quarter -  October 31
Fourth Quarter - January 31

This requirement applies to all employers even if they are not required to file a quarterly reconciliation for federal withholding purposes. Form CT-941 is located in the back of the Employer's Withholding Remittance Coupon Book.

An employer who makes timely withholding payments and owes no additional withholding for the quarter has 10 days after the normal due date to file Form CT-941.

Agricultural Employers: An agricultural employer who files federal Form 943 and employs farm workers only may obtain permission from DRS to file one Form CT-941, due January 31, reporting annual wages and Connecticut income tax withholding for farm workers. (See Agricultural Employers, for information on how to request annual filer status.)

Seasonal Employers: A seasonal employer must file Form CT-941, for any quarter the employer is listed as active. (For further information on requesting seasonal filer status, see Seasonal Employers.) If permission to become a seasonal filer is not granted, the employer must continue to file Form CT-941 each quarter (even if no tax is withheld) as long as the employer remains registered for Connecticut income tax withholding.

Household Employers: A household employer who has voluntarily registered with DRS is required to file one Form CT-941 on or before April 15 of the following calendar year and pay over all Connecticut income tax withholding for the previous calendar year.

Amended Reconciliation of Withholding

If an error was made by the employer on a previously filed Form CT-941, an amended return must be filed.  An employer must use Form CT-941X, Amended Connecticut Reconciliation of Withholding, to amend Form CT-941.

Wage and Tax Statement

An employer must furnish a federal Form W-2, Wage and Tax Statement, showing the correct amount of Connecticut wages paid by the employer to an employee during the calendar year and the correct amount of Connecticut income tax withheld from wages of the employee during the calendar year, to the employee on or before January 31 of the following calendar year.

The employer must complete the state information in boxes 15, 16, and 17 of federal Form W-2 for the calendar year. In box 15, the employer should enter "CT" (the two-letter state code for Connecticut) and the employer’s Connecticut tax registration number. In box 16, the employer must enter the total wages paid during the calendar year to an employee who is a Connecticut resident or, if an employee is a nonresident, the wages paid during the calendar year which are attributable to services performed in Connecticut by the employee. In box 17, the employer must enter the total Connecticut income tax withheld from wages of the employee during the calendar year.

Annual Reconciliation

Employers

Form CT-W3, is due from all employers on or before the last day of February. No payment is to be made with this form. Employers must file every "state copy" of federal Form W-2 (Copy 1 of the optional six-part federal Form W-2 or equivalent) reporting Connecticut wages paid during the preceding calendar year with the annual reconciliation, even if no Connecticut income tax was withheld.

W-2 Magnetic Media Filing: An employer who is required by the Internal Revenue Service to file copies of federal Form W-2 on magnetic media must file these forms on magnetic media with DRS. However, an employer who files 24 or fewer Forms W-2 with DRS may be excused from the magnetic media filing requirements without obtaining a waiver. Magnetic media reporting specifications for federal Form W-2 are contained in Informational Publication 2003(18), 2003 Annual Wage Information on Magnetic Media, 2003 Connecticut Magnetic Media Filing Requirements for Federal Form W-2.

Payers of Nonpayroll Amounts

Form CT-945 is due from all payers of nonpayroll amounts on or before January 31. Payers of nonpayroll amounts that are subject to Connecticut income tax withholding are required to file Form CT-945 as long as they have an active withholding account with DRS. This is true even if no tax is due or required to be withheld for that year, or even if federal Form 945 is not required to be filed. A payer that has paid the Connecticut withholding tax in full for calendar year 2004 through timely deposits may file Form CT-945 on or before February 10, 2005.

Form CT-1096, is due on or before the last day of February. No payment is to be made with this form.

A payer of nonpayroll amounts who is required to file federal Form 1096, must file Form CT-1096 with every "state copy" of the following:

  • Federal Form W-2G, for (1) Connecticut Lottery winnings paid to resident and nonresident to resident individuals, even if no Connecticut income tax was withheld;
  • Federal Form 1098, for property taxes paid on real estate to a Connecticut municipality;
  • Federal Form 1099-MISC, for payments to resident individuals, or to nonresident individuals, if the payments relate to services performed wholly or partly in Connecticut, even if no Connecticut income tax was withheld;
  • Federal Form 1099-R, only if Connecticut income tax was withheld;
  • Federal Form 1099-S, reporting real estate transactions in Connecticut.

Group the forms by form number and send each group with a separate Form CT-1096. Do not make payments with Form CT-1096. All payments must be made using Forms CT-8109 and CT-945.

Form 1099 and W-2G Magnetic Media Filing: A payer who is required by the Internal Revenue Service to file copies of federal Forms 1099 or Form W-2G on magnetic media must file these forms on magnetic media with DRS. However, a payer who files 24 or fewer Forms 1099 or W-2G with DRS may be excused from the magnetic media filing requirements for that particular type of informational return without obtaining a waiver. Magnetic media reporting specifications for federal Forms 1099 and Form W-2G are contained in Informational Publication 2003(17), 2003 Connecticut Magnetic Media Filing Requirements for Federal Forms 1098, 1099-MISC, 1099-R, 1099-S, and W-2G.

Request for Extended Due Date: Taxpayers may request an extension to file Form CT-W3, Form CT-1096, or both, by filing Form CT-8809, Request for Extension of Time to File Informational Returns, on or before the last day of February.

DRS does not accept the electronic filing of W-2 withholding forms or informational returns including Forms CT-W3 and CT-1096. The Connecticut due date for filing these forms is the last day of February. This due date is not affected by the fact that a person may file federal withholding forms electronically and that the federal due date for filing withholding forms electronically is the last day of March.

Amended Annual Reconciliation

If an error was made on a previously filed Form CT-W3 or Form CT-1096, an amended return must be filed. Employers and payers should write "Amended" at the top of Form CT-W3 or Form CT-1096, as the case may be, for the appropriate year, and attach the "state copy" of federal Forms W-2C or corrected federal Forms 1098, 1099-MISC, 1099-R, 1099-S, or W-2G.

Corrections to Your Magnetic Media or W-2 Informational Returns

DRS does not accept magnetic filing of federal Form W-2C. If there is an error in the employer's or payer's magnetic media Form W-2 or informational returns, the employer or payer must correct the file and replace the entire file. An employer must complete Form CT-6559, Transmitter Report, and check the box indicating that it is a replacement file. A payer must complete Form CT-4804, Transmittal of Informational Returns Reported Magnetically (for Forms W-2G, 1099-R, 1099-S, and 1099-MISC), and check the box indicating that it is a replacement file. An amended Form CT-W3 or Form CT-1096 must also be filed. The employer must write "Amended" at the top of the form.

Correction/Reorder Form

Form CTC, Withholding Correction/Reorder Form, allows employers or payers of nonpayroll amounts to make corrections to taxpayer identification information preprinted in the coupon book or to order an additional coupon book for the current calendar year. An employer or payer should allow a minimum of four weeks when ordering additional coupon books.


Payment by Electronic Funds Transfer

Effective July 1, 2003, employers or payers of nonpayroll amounts whose prior year liability for a particular tax exceeded $50,000 for the 12-month period ending the preceding June 30 for monthly and quarterly tax liabilities or for the preceding taxable year for annual tax liabilities, and who are notified by DRS to pay that tax by EFT must pay the tax by EFT. On or after July 1, 2004, employers or payers of nonpayroll amounts whose prior year liability for a particular tax exceeds $10,000 will be required to pay that tax by EFT.

Each year DRS reviews each taxpayer's liability for a particular tax. A taxpayer will be notified by DRS if the requirement to pay that tax by EFT no longer exists. Taxpayers must continue to pay by EFT until notified by DRS that they are no longer required to do so. (See Informational Publication 2003(25), Paying Connecticut Taxes by Electronic Funds Transfer.) For further information on payment by electronic funds transfer, call 860-297-4973.


Liability for Taxes Withheld

An employer or payer of nonpayroll amounts is liable for the amount of the Connecticut income tax required to be withheld. For purposes of assessment and collection, amounts required to be withheld and paid over to DRS (and any penalties and interest) are the liability of the employer or payer (as withholding agent) under the law. The employer or payer remains liable for the tax even if a third party is withholding on the employer’s or payer's behalf.


Penalties and Interest

Employers or payers of nonpayroll amounts who fail to comply with the requirements to withhold Connecticut income tax are subject to penalties, including:

Late Payment Penalty

The penalty for late payment or underpayment of tax due is 10% (.10) of the amount due on all returns including Forms CT-WH and CT-8109.

Late Filing Penalty

In the event that no tax is due, the Commissioner of Revenue Services may impose a $50 penalty for failure to file any return or report that is required by law to be filed. (This late filing penalty does not apply to Forms CT-WH and CT-8109.)

Interest

If you are filing a late or amended return, interest is computed on the underpayment at the rate of 1% (.01) per month or fraction thereof from the due date until the date of payment.

Required Informational Returns

A penalty of $5 per statement (up to a total of $2,000 per calendar year) is imposed for failure to provide federal Form W-2 and required federal Forms 1098, 1099-MISC, 1099-R, 1099-S, and W-2G to each employee or payee and a copy to DRS (unless due to reasonable cause).

Willful Evasion

A penalty equal to the total amount of the tax evaded, not collected or not paid over is imposed on any responsible person for the willful failure of an employer or payer of nonpayroll amounts to collect or truthfully account for income tax, or for willfully attempting to evade the tax.

Fraud

In addition to any other penalty that may be imposed, a civil penalty of not more than $1,000 is imposed where, with fraudulent intent, an employer or payer of nonpayroll amounts fails to pay, deduct or withhold and pay tax, or to make or sign any return or supply information.

Criminal Penalties

Any person who willfully fails to pay tax, file a return, keep records, or supply information is guilty of a misdemeanor. A person who willfully files with DRS any document known to be fraudulent or false in any material manner is guilty of a felony.


How To Advise Employees To Have Enough Tax Withheld

An employer should remind employees to check the amount of Connecticut income tax withheld. An employee who owes more than $500 in Connecticut income tax over and above what has been withheld may be required to make estimated income tax payments and may be liable for an addition to tax. Employees should also be advised to check Connecticut withholding by using Informational Publication 2004(1), Is My Connecticut Withholding Correct?

Two-earner couples may also refer to the Supplemental Table of Form CT-W4.


What Records To Keep

An employer must maintain a current accurate record of all persons from whom tax is withheld. DRS has the authority to inspect an employer’s records at any time. Records should contain all applicable information listed below:

  • Amounts and dates of all payments subject to withholding tax.
  • Names, addresses, occupations, and social security numbers of persons receiving such payments.
  • Periods of employment, including periods during which compensation is paid while an employee is absent due to sickness or injury.
  • Amounts paid by pay period
  • Copies of payment coupons, quarterly and annual returns, and statements filed with DRS and IRS.
  • Federal Form W-4, Federal Employee Withholding Allowance Certificate.
  • Form CT-W4, Employee’s Withholding Certificate.
  • Form CT-W4NA, Employee’s Withholding Certificate—Nonresident Apportionment.
  • Form CT-W4P, Withholding Certificate for Pension or Annuity Payments.

An employer should keep records for at least four years after the date the tax becomes due or the date the tax is paid, whichever is later. However, a current, accurate copy of Form CT-W4, Form CT-W4NA, or Form CT-W4P must be on file at all times.


How To Cancel Registration for Withholding Connecticut Income Tax

If an employer goes out of business or permanently stops paying wages, the employer should notify DRS immediately by filing Form CT-941 for the current quarter. The employer must check the box indicating that the employer no longer has employees and must enter the last payroll date on the line provided on Form CT-941. If a payer of nonpayroll amounts goes out of business or permanently stops making payments of nonpayroll amounts, the payer should notify DRS immediately by filing Form CT-945 for the current calendar year. The payer must check the box indicating that the payer no longer is making payments of nonpayroll amounts subject to Connecticut income tax withholding and must enter the last payment date on the line provided on Form CT-945.

Employers or payers of nonpayroll amounts may send written notification to:

Department of Revenue Services
State of Connecticut
Registration Unit
PO Box 2937
Hartford CT 06104-2937

Employers and payers of nonpayroll amounts must comply with all filing requirements for the calendar year as explained in How to Report and Remit Taxes Withheld.


Related Publications

IP 2004(1), Is My Connecticut Withholding Correct?

IP 2003(36), Estimated Connecticut Income Taxes

IP 2003(25), Paying Connecticut Taxes by Electronic Funds Transfer

IP 2003(23), Connecticut Income Tax Information for Armed Forces Personnel And Veterans

IP 2003(22), Federal/State Electronic Filing Handbook

IP 2003(21), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut

IP 2003(18), 2003 Connecticut Magnetic Media Filing Requirements for Federal Form W-2

IP 2003(17), 2003 Connecticut Magnetic Media Filing Requirements for Federal Forms 1098, 1099-Misc, 1099-R, 1099-S, and W-2G

IP 2001(29), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings

PS 2002(4), Designated Private Delivery Services and Designated Types of Service.

PS 2004(1), Income Tax Withholding for Athletes and Entertainers

AN 2004(1), Information for Married Individuals Who Are Both Employed and Are Filing a Joint Connecticut Income Tax Return


Effective Date: Effective January 1, 2004.


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


Effect on Other DocumentsIP 2000(11), Connecticut Circular CT–Employer's Tax Guide, is modified and superseded and may not be relied upon on or after the date of issuance of this IP.


FREQUENTLY ASKED QUESTIONS

1. Does this booklet contain all the information I need to withhold Connecticut income tax from my employees or payees?

A. Yes. The instructions, withholding tables, and calculation rules are all included in Informational Publication 2004(8), Connecticut Circular CT – Employer's Tax Guide.

2. Will the Connecticut Circular CT be revised each calendar year?

A. No. The Connecticut Circular CT is no longer revised annually. Continue to use Informational Publication 2004(8) until a new Informational Publication is issued.

3. Will DRS mail a Quarterly Reconciliation to employers just like the IRS?

A. No. Form CT-941, Connecticut Quarterly Reconciliation of Withholding, is located in the back section of the Employer’s Withholding Remittance Coupon Book, which was previously mailed to all employers. Form CT-941 is preprinted with the number of the quarter and due dates. Employers must use the preprinted form.

4. Does DRS publish any information that assists employees in calculating the amount to have withheld from their paychecks?

A. Yes. Informational Publication 2004(1), Is My Connecticut Withholding Correct?, is designed to help individuals decide if they are having enough tax withheld. A copy of that publication is available from the DRS Forms Unit.

5. What is the difference between gross Connecticut wages and gross wages?

A. Gross wages means the sum of wages paid to all your employees regardless of where they work. The amount of gross wages you report on Form CT-941 for a calendar quarter must correspond with the amount reported on federal Form 941 for that quarter. Gross Connecticut wages means the sum of all wages paid to resident employees, regardless of where their services are performed, and all wages paid to nonresident employees for services performed in Connecticut.

6. Which forms should be submitted to DRS with Form CT-W3, Connecticut Annual Reconciliation Of Withholding?

A. Every "state copy" of federal Form W-2, showing Connecticut wages paid to resident employees regardless of where services were performed and to nonresident employees for services performed in Connecticut.

7. Under what circumstances are payers of nonpayroll amounts required to file Form CT-1096?

A. Payers of nonpayroll amounts who are required to file federal Form 1096 are also required to file Form CT-1096 with every "state copy" of the following:

Federal Form W-2G, for (1) Connecticut Lottery winnings paid to resident and nonresident individuals, and (2) Other gambling winnings paid to resident individuals, even if no Connecticut income tax was withheld;

Federal Form 1098, for property taxes paid on real estate to a Connecticut municipality;

Federal Form 1099-MISC, for payments made to resident individuals, or to nonresident individuals, if the payments relate to services performed wholly or partly in Connecticut, even if no Connecticut income tax was withheld;

Federal Form 1099-R, only if Connecticut income tax was withheld; and

Federal Form 1099-S, reporting real estate transactions in Connecticut.Form CT-1096 is contained in the Withholding Remittance Coupon Book for Payers of Nonpayroll Amounts.

8. Is a payer of nonpayroll amounts who files federal Form 1096, but who is not required to be registered with DRS for Connecticut income tax withholding purposes, required to file Form CT-1096?

A. Yes, but only if payer files any of the forms as described in the answer to Question 7. (The payer must enter "information only" in the space provided for the Connecticut tax registration number.) Form CT-1096 is available from the DRS Website or the DRS Forms Unit.


IP 2004(8)
Withholding tax
Issued:  3/10/04
Replaces:  IP 2000(11)

Beginning in 2005, employers will no longer follow their federal withholding deposit schedule for Connecticut withholding remittances.  An employer will be classified by DRS each calendar year either as a weekly remitter, monthly remitter, or quarterly remitter.  Employers will receive notification of the classification and new withholding remittance schedule by letter in the near future.