DRS: IP 2005(24), Connecticut Tax Tips for Senior Citizens

 

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 
 
This Informational Publication has been modified and superseded by
 
IP 2005(24)
 
Connecticut Tax Tips for Senior Citizens
 

 
Purpose: This publication is designed to acquaint you with Connecticut taxes. It includes information on income tax and sales and use taxes, as well as succession, gift, estate, real estate conveyance, and local property taxes.
 

Income Tax

 
The Connecticut income tax applies to Connecticut residents, part-year residents, and nonresidents who have income from Connecticut sources. (To determine your residency status, see the Connecticut income tax instruction booklets.) The tax is computed on your Connecticut taxable income, which is explained later in this publication.
 

 

Income Tax Return: For calendar year filers, the Connecticut income tax return is due on or before April 15 of the next calendar 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, Connecticut Resident Income Tax Return, Form CT-1040EZ, Connecticut Resident EZ Income Tax Return, or Connecticut Telefile Tax Return. Nonresidents and part-year residents must file Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return.


 

Tax Rate: The tax rate is 3% on the first:

  • $10,000 of Connecticut taxable income for single filers and married taxpayers filing separately;
  • $16,000 of Connecticut taxable income for head of household filers; and
  • $20,000 of Connecticut taxable income for married taxpayers filing jointly.

The remaining income is taxed at 5%.

 

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 personal exemption amount for your filing status, you do not owe any Connecticut income tax.

Maximum personal exemption amounts are:

$12,000  married filing separately

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $24,000, the personal exemption amount is reduced by $1,000.

$12,625  single filers

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $25,250, the personal exemption amount is reduced by $1,000.

$19,000  head of household

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $38,000, the personal exemption amount is reduced by $1,000.

$24,000  married filing jointly

For every $1,000 (or part of $1,000) of Connecticut adjusted gross income over $48,000, the personal exemption amount is reduced by $1,000.


 

Property Tax Credit: A property tax credit is also available to resident individuals for property taxes paid to a Connecticut political subdivision on a primary residence or a motor vehicle, or both.  Generally, this credit is allowed for property tax bills first becoming due during a taxable year and paid during the taxable year.

The maximum property tax credit is $350 per return for the 2005 taxable year. Depending on the amount of property taxes you paid to a Connecticut municipality and your Connecticut adjusted gross income, the property tax credit may be reduced or you may not be eligible for a credit. See Informational Publication 2004(10), Q & A on Income Tax Credit for Property Taxes Paid to Connecticut Political Subdivisions, for more information.


 

Credit for Income Taxes Paid to a Qualifying Jurisdiction: If you are a resident of Connecticut and if any part of your income was taxed by a qualifying jurisdiction, you may be able to claim a credit against your Connecticut income tax liability for qualifying income tax payments you have made.  See the current instruction booklet for Form CT-1040, Connecticut Resident Income Tax Return, for more information.


 

Computing Your Income Tax: The example below shows how to compute the income tax liability for a resident married couple filing jointly. The tax is rounded to the nearest whole dollar.

CT adjusted gross income                           $45,000

Personal exemption                                    -24,000

CT taxable income                                     $21,000

Calculation of Tax

Income taxable at 3%         $20,000

Tax rate                               x .03

Tax at 3%                             $600

Income taxable at 5%           $1,000

Tax rate                               x .05

Tax at 5%                              $50

Total tax                                                      $650

Personal tax credit

(Total tax of $645 X 15% from Table C)             -98

Tax due (before subtracting any
property tax credit)                                        $552


 

Income Subject to Tax: Generally, income included in your federal adjusted gross income is subject to Connecticut income tax.  Income excluded from your federal adjusted gross income generally 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 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 to compute your Connecticut adjusted gross income. These modifications are explained in the instructions to Form CT-1040 and Form CT-1040NR/PY, Schedule 1. 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. You generally cannot use the Connecticut Telefile Tax Return or Form CT-1040EZ 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: Social Security recipients who pay federal income tax on their benefits may be able to reduce the amount of benefits taxable for Connecticut income tax purposes by completing the Social Security Benefit Adjustment Worksheet included with Form CT-1040 or Form CT-1040NR/PY.

Social Security recipients whose filing status is: Single or Married Filing Separately and whose federal adjusted gross income is less than $50,000, or Married Filing Jointly or Head of Household and whose federal adjusted gross income is less than $60,000, are not subject to Connecticut income tax on federally taxable Social Security benefits.


 

Estimated Income Tax Filing Requirements: You must make estimated Connecticut income tax payments if your Connecticut income tax (after tax credits) minus Connecticut income tax withheld is $1,000 or more, and you expect your Connecticut income tax withheld to be less than your required annual payment.  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. See the instructions for Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon for Individuals, for more information.


 

Withholding From Your Pension: If you are a resident and receive 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. Retired federal civil service employees must contact the U. S. Office of Personnel Management (USOPM) to start, stop, or change Connecticut income tax withholding. Call USOPM at 1-800-409-6528 to use the automated request system or 1-202-606-0500 to speak with a representative.

If you are a nonresident and receive a pension, your pension is not subject to Connecticut income tax, even if a former employer pays you a pension for services performed while you were employed in Connecticut.


Sales and Use Taxes


 
Retail sales or leases of tangible personal property and certain services are subject to sales and use taxes at a 6% rate.  Computer and data processing services are taxable at a 1% rate.
 

Some items and services not subject to sales or use taxes include:

  • All newspapers; magazines by subscription;
  • Internet access services;
  • Clothing and footwear items costing under $50 each;
  • Current United States and Connecticut flags;
  • Diabetic supplies (test strips and tablets, lancets and glucose monitoring equipment, and repair and replacement parts for such equipment);
  • Doctor, dentist, medical laboratory, lawyer, and travel agent fees;
  • Eyeglasses, dentures, hearing aids, and hearing aid batteries;
  • Instruction classes, such as knitting, sewing, dog obedience, music, ballroom dancing, etc.;
  • Most non-prescription (over-the-counter) drugs for humans or animals used internally or externally.  This includes: vitamins or mineral concentrates; dietary supplements; natural or herbal medicines; eye, ear, or nose medications; antacids; cough, cold, asthma, and allergy products; antihistamines; analgesics; antibiotic, antibacterial, antiviral, and antifungal medicines; laxatives; antidiarrheal medicines; antiseptics; astringents; anesthetics; steroidal medicines; anthelmintics; and emetics or antiemetics (Cosmetics, dentifrices, mouthwash, shaving and hair care products, soaps, and deodorants are subject to the tax.);
  • Support hose specially designed to aid in the circulation of blood, purchased by persons with a medical need for such hose;
  • Adult diapers and disposable pads for incontinence;
  • Oxygen and oxygen equipment, customized trusses and braces, crutches, walkers, wheelchairs, and inclined stairway chairlifts, and repair and replacement part services for the equipment;
  • Canes;
  • Prescription drugs, syringes, and needles;
  • Repair services and repair and replacement parts for artificial limbs, artificial eyes, hearing aids, and other equipment used to support vital life functions;
  • Telephone equipment designed exclusively for deaf or blind people;
  • Closed circuit television equipment used as reading aids by visually impaired persons;
  • Equipment for people with physical disabilities installed in motor vehicles and repair and replacement parts for the equipment;
  • Electricity and gas for residential use;
  • Fuel for residential heating or cooking such as oil, propane, kerosene, wood, coal, and charcoal;
  • Fabric, thread, buttons, zippers, trim, and similar materials for noncommercial sewing used to make clothing;
  • Yarn for noncommercial use;
  • Shoe repair services;
  • Food purchased in supermarkets (Beer, wine, and all alcoholic beverages are taxable.  Candy, gum, soda, and all other carbonated beverages are also taxable.);
  • Food products sold through coin-operated vending machines;
  • Meals delivered to homes of elderly persons and provided by special programs, such as “Meals on Wheels”;
  • Sales of food, meals, candy, confectionery, and beverages to persons in health care facilities. Health care facilities include assisted living facilities, senior centers, day care centers, hospitals, residential care homes, convalescent homes, nursing homes, and rest homes;
  • Labor for many home repairs and services including plumbing, electrical, refuse removal, septic cleaning services, painting, staining, paving, roofing, wallpapering, siding, and exterior sheet metal work;
  • Landscaping and horticulture services, window cleaning, and maintenance services when rendered at the residence of a person eligible to receive, and currently receiving, total disability benefits under the Social Security Act;
  • Repair and maintenance services to vessels and fabrication labor to existing vessels;
  • Other nontaxable services, including animal grooming and boarding services, laundry, hair styling, towing, real estate, and jewelry appraisal;
  • Vegetable seeds;
  • Bicycle helmets;
  • Firearm safety devices;
  • Personal property used in a burial or cremation with a value of up to $2,500; and
  • Caskets used for burial or cremation.


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: A coupon entitles a purchaser to an immediate reduction in the sales price of an item when the coupon is presented to a retailer.  No additional action is required of the purchaser. 

Sales and use taxes are calculated on the sales price after reducing the price by the value of any coupons presented.  Any additional value assigned by the retailer, such as to double or triple the coupon, is also excluded from the sales price.

For example, if the original price of an item is $3.00 and you present a coupon for 50 cents off the item, the taxable price is $2.50.  The total price of the item, including the sales tax, is $2.65.

In contrast, rebates do not reduce the taxable sales price of an item being purchased. See Policy Statement 98(1.1), Sales Tax Treatment of Coupons, Scan Cards, Cash Equivalents, Promotional Items and Rebates, for more information.

 


 

Use Tax: When the seller of goods or provider of taxable services does not collect the sales tax, you must pay use tax.  You must file a use tax return annually to report purchases of taxable goods or services on which you have not paid Connecticut sales tax.

Typically, if you purchased goods from mail order or catalog companies and had the goods shipped to Connecticut or you purchased goods at out-of-state locations and brought those goods back into Connecticut, you must pay Connecticut use tax if you did not pay Connecticut sales tax.  If all the items purchased and brought into Connecticut at one time total $25 or less, you do not have to pay Connecticut use tax.  The $25 exemption does not apply to items shipped or mailed to you. 

You must pay the use tax for purchases you made during the prior calendar year on or before April 15 on either your Connecticut income tax return or on Form OP-186, Connecticut Individual Use Tax Return.


Succession Tax


 

The Connecticut succession tax has been repealed for estates of decedents dying after December 31, 2004.


Generation-Skipping Transfer Tax

 

The Connecticut generation-skipping transfer tax does not apply to generation-skipping transfers after December 31, 2004.


Estate Tax

For estates of decedents dying before January 1, 2005: Visit the DRS Web site at www.ct.gov/DRS for more information.

For estates of decedents dying on or after January 1, 2005: Resident and nonresident estates are now liable for the Connecticut estate tax if the amount of the Connecticut taxable estate is more than $2 million. A resident estate is an estate of a decedent who at the time of death was domiciled in Connecticut. 

The Connecticut taxable estate is the sum of:

  1. The total value of the decedent’s federal gross estate, less allowable deductions (other than the deduction for state death taxes paid under §2058 of the Internal Revenue Code); and
  2. The aggregate amount of Connecticut taxable gifts made by the decedent (during his or her lifetime) during all calendar years beginning on or after January 1, 2005.

If the sum exceeds $2 million, Connecticut estate tax is payable on the sum (including the first $2 million). These estates must file Form CT-706/709, Connecticut Estate and Gift Tax Return, with the Department of Revenue Services. A copy of Form CT-706/709 must also be filed with the appropriate Connecticut probate court.

If the sum is $2 million or less, Connecticut estate and gift tax is not due. However, estates must file Form CT-706 NT, Connecticut Estate Tax Return (For Nontaxable Estates), with the Connecticut probate court for the district in which the decedent resided at the date of death; or, if the decedent died as a nonresident of Connecticut, with the Connecticut probate court for the district in which the decedent’s real property or tangible personal property is located.

See Special Notice 2005(10), 2005 Legislation Amending the Connecticut Gift Tax and the Connecticut Estate Tax, and Repealing the Succession Tax, and Informational Publication 2005(19), Q&A on the Succession, Estate, Gift, and Generation-Skipping Transfer Taxes.

 


Gift Tax


If you made a gift, you may be required to file federal Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and Form CT-706/709, Connecticut Estate and Gift Tax Return.

Legislation enacted in 2005: The Connecticut gift tax continues to apply to Connecticut taxable gifts, which are federal taxable gifts made by a resident or nonresident of Connecticut on or after January 1, 2005:

  • For a donor who is a Connecticut resident, the taxable gifts include real property or tangible personal property located in Connecticut, as well as intangible personal property wherever located; and
  • For a donor who is a nonresident of Connecticut, the taxable gifts include only real property or tangible personal property located in Connecticut.

A Connecticut gift tax return must be filed to report all Connecticut taxable gifts made in any calendar year on or after January 1, 2005, even though Connecticut gift tax may not be due. For calendar years beginning January 1, 2005, Connecticut gift tax is payable only when the aggregate amount of all Connecticut taxable gifts made by the donor (during his or her lifetime), on or after January 1, 2005, exceeds $2 million.  Once the $2 million threshold is exceeded, Connecticut gift tax is payable on the aggregate amount of Connecticut taxable gifts, including the first $2 million.

See Special Notice 2005(10), 2005 Legislation Amending the Connecticut Gift Tax and the Connecticut Estate Tax, and Repealing the Succession Tax, and Informational Publication 2005(19), Q&A on the Succession, Estate, Gift, and Generation-Skipping Transfer Taxes.


Real Estate Conveyance Tax


 
A state and municipal 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 for less than $2,000 in consideration is exempt from this tax, but may be subject to the gift tax.  A deed of the principal residence of a person receiving property tax benefits for the elderly is exempt from the state tax but subject to the municipal tax.
 

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 age 50 or older, who meet certain residence and income requirements. Regardless of age, a totally and permanently disabled person is also eligible.  Contact the assessor in your town or city for details and forms.

Veteran Exemption: A variable, annual property 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 assessor in your town or city for details and forms for any of the above.

 


 
Effect on Other Documents: Informational Publication 2005(24) modifies and supersedes Informational Publication 2004(23), Connecticut Tax Tips for Senior Citizens.
 


 

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.

 


 

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

  • 1-800-382-9463 (in-state), or
  • 860-297-5962 (from anywhere)

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

 


 

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

  • Internet: Preview and download forms and publications from the DRS Web site at www.ct.gov/DRS
  • Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (in-state) and select Option 2 from a touch-tone phone.

 

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

  • For business returns: Use Fast-File to file admissions and dues tax, attorney occupational tax, business entity tax, business use tax, estimated corporation tax, nursing home user fee, room occupancy tax, sales and use taxes, or withholding tax returns over the Internet.  Visit the DRS Web site at www.ct.gov/DRS and click on File/Register OnLine.
  • For resident income tax returns: Use WebFile to file personal income tax returns over the Internet. Visit the DRS Web site at www.ct.gov/DRS and click on File/Register OnLine.

 

DRS E-News Service: Get connected to the latest news from DRS.  Receive notification by e-mail of changes to legislation, policies, and procedures.  DRS E-News is easy to sign up for – visit www.ct.gov/DRS and follow the directions.  Subscription services are available for employer’s withholding tax, Fast-File information, Alerts, News – Press Releases, and Top 100 Delinquency List.

 


IP 2005(24)
Miscellaneous
Connecticut Tax Tips for Senior Citizens
Issued 10/24/05