DRS: IP 2007(25), Personal Taxes

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 
 
This Informational Publication has been superseded by IP 2008(23)
 
IP 2007(25)
Personal Taxes
 

 
Purpose: This Informational Publication includes information on the income and alternative minimum taxes, admissions and dues tax, sales and use taxes, estate, gift, real estate conveyance, alcoholic beverages, cigarette, motor vehicle fuels, and property taxes. While it does not answer every question about Connecticut taxes, it provides answers to some of the most common inquiries.
 

Income Tax

The Connecticut income tax applies to Connecticut residents, part-year residents, and nonresidents with income from Connecticut sources. The tax is computed on your Connecticut taxable income. See the Connecticut income tax instruction booklets to determine your residency status.


Modifications to Federal Adjusted Gross Income: Generally, income included in your federal adjusted gross income is subject to Connecticut income tax and income excluded from your federal adjusted gross income is not subject to Connecticut income tax. However, certain income is treated differently for Connecticut income tax purposes than it is for federal income tax purposes.

You must make the appropriate modifications to your federal adjusted gross income to compute your Connecticut adjusted gross income (AGI) if you have:

  • Social security benefits;
  • Refunds of state and local income taxes;
  • Interest or dividend income from U.S. government obligations, for example, U.S. Savings Bonds or Treasury Notes;
  • Interest income from bonds issued by another state;
  • Gain (loss) on the sale of Connecticut state and local government bonds;
  • Interest earned on contributions to accounts established for a designated beneficiary under the Connecticut Homecare Option Program for the Elderly;
  • Contributions to a CHET account or accounts; or
  • Any other allowable addition or subtraction modification.

Allowable modifications are explained in the instruction booklet for Form CT-1040, Connecticut Resident Income Tax Return,and Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return. See the section for Schedule 1.


 
Taxable Income: To compute your Connecticut taxable income, subtract your Connecticut personal exemption from your Connecticut adjusted gross income. If your Connecticut adjusted gross income is less than or equal to the maximum exemption amount for your filing status, you do not owe any Connecticut income tax.
 

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

  • $10,000 of Connecticut taxable income for single filers, married taxpayers filing separately, 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, civil union taxpayers filing jointly, and qualifying widow(er) with dependent child.
The remaining income is taxed at 5%.
 

 
Personal Exemptions: The maximum personal exemption level for single filers increases annually until taxable year 2012. See the chart on Page 2 for the changes for taxable years 2005 through 2012.
 

Taxable Year
Beginning

Maximum Personal Exemption

$1,000 Reduction in Exemption for
Every $1,000 of CT AGI Over

January 1, 2005
and
January 1, 2006

$12,625

$25,250

January 1, 2007

$12,750

$25,500

January 1, 2008

$13,000

$26,000

January 1, 2009

$13,500

$27,000

January 1, 2010

$14,000

$28,000

January 1, 2011

$14,500

$29,000

January 1, 2012

$15,000

$30,000

 

The maximum personal exemption levels for married filing separately, civil union filing separately, head of household, married filing jointly, civil union filing jointly, and qualifying widow(er) with dependent child filers remain unchanged.

Filing Status

Maximum Personal Exemption

$1,000 Reduction in Exemption for Every $1,000 of CT AGI Over

Married filing separately and civil union filing separately

$12,000

$24,000

Head of household

$19,000

$38,000

Married filing jointly, civil union filing jointly and qualifying widow(er) with dependent child

$24,000

$48,000


 
Credit for Income Taxes Paid to a Qualifying Jurisdiction:If you are a resident of Connecticut and any part of your income was taxed by a qualifying jurisdiction, or if you are a part-year resident of Connecticut and any part of your income earned during the residency portion of your taxable year 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 made. See the current year instruction booklets for Form CT-1040 and Form CT-1040 NR/PY.
 

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, a motor vehicle, or both. 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 $500 per return for the 2007 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. The amount of the credit is reduced by 10% for each $10,000 or fraction of $10,000 increase in Connecticut (AGI).

The property tax credit AGI limitation for any taxpayer who files as an unmarried individual has increased to $55,500.

A husband and wife or civil union partners who file a joint Connecticut income tax return may include property tax bills for which each spouse is individually or jointly liable. If you are claiming a property tax credit, you must complete and attach the property tax schedule to your return or the Department of Revenue Services (DRS) will disallow your claim.

See Informational Publication 2007(21), Q & A:  Income Tax Credit for Property Taxes Paid to Connecticut Political Subdivision.
 

Estimated Payments: You must make estimated Connecticut income tax payments if your Connecticut income tax due 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 of the current year, and January 15 of the following year.

However, if your income varies throughout the year, you may be able to reduce or eliminate the amount of one or more estimated payments by using the annualized installment method. See Informational Publication 2006(24), Estimated Connecticut Income Taxes, and Informational Publication 2006(25), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040AES.

Your Connecticut income tax return is due on or before the fifteenth day of the fourth month following the end of your taxable year. The due date is April 15 if your taxable year is the calendar year.
 

Alternative Minimum Tax

The Connecticut alternative minimum tax is a tax imposed on certain individuals, estates, and trusts in addition to the regular Connecticut income tax. Taxpayers who are subject to and required to pay the federal alternative minimum tax are subject to the Connecticut alternative minimum tax.

The Connecticut alternative minimum tax is the lesser of:

  • 19% of your adjusted federal alternative minimum tax; or
  • 5.5% of your adjusted federal alternative minimum taxable income.
The tax must be reported on Form CT-6251, Connecticut Alternative Minimum Tax Return — Individuals. See Informational Publication 2005(31), Q & A: The Connecticut Alternative Minimum Tax.

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 website at www.ct.gov/DRS for more information.

For estates of decedents dying on or after January 1, 2005: Resident and nonresident estates are 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:

  • The total value of the decedent’s federal gross estate less allowable deductions other than the deduction for state death taxes paid under Section 2058 of the Internal Revenue Code; and
  • The aggregate amount of Connecticut taxable gifts made by the decedent during his or her lifetime for 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 DRS. 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, no Connecticut estate and gift tax is 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 Repealing the Succession Tax and Amending the ConnecticutGift Tax and the Connecticut Estate Tax, and Special Notice 2006(5), 2006 Legislation and Other Developments Affecting the Connecticut Estate and Gift 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.

The Connecticut gift tax applies 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. 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 Repealing the Succession Tax and Amending the Connecticut Gift Tax and the Connecticut Estate Tax, and Special Notice 2006(5), 2006 Legislation and Other Developments Affecting the Connecticut Estate and Gift Taxes.

Local Real Estate and
Personal Property Taxes

State law governs the manner in which a city or town assessor determines property assessments and the procedures tax collectors use to collect property taxes. State law also authorizes property tax exemptions, credits, and abatements. For more information on property tax, write to Intergovernmental Policy Division, Office of Policy and Management, 450 Capitol Avenue, Mail Stop 54 GSU, Hartford CT 06106-1379, or visit the website of the Office of Policy and Management at www.ct.gov/OPM/ and select Offices & Divisions, then Intergovernmental. Scroll down to Intergovernmental Affairs Unit and select Statutes Relating to Assessment and Taxation. Specific information may also be obtained from a city or town assessor.

October 1 is the assessment date for all municipalities. All owners of personal property, other than registered motor vehicles, must file a declaration with the assessor on or before November 1.

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 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.

Real Estate Conveyance Tax

 
A state and municipal real estate conveyance tax is imposed on deeds conveying real estate where the consideration for the interest in property equals or exceeds $2,000. A deed for less than $2,000 in consideration is exempt from real estate conveyance tax but may be subject to the gift tax. A deed of the principal residence of any person receiving property tax benefits for the elderly is exempt from the state tax but subject to the municipal tax. The state tax rate on the consideration received for the real estate is as follows:
 

Type of Real Estate

Rate

Unimproved land

0.5%

Residential property (other than residential dwelling)

0.5%

Nonresidential property (other than unimproved land)

1.0%

Residential dwelling (portion not exceeding $800,000)

0.5%

Residential dwelling (portion exceeding $800,000)

1.0%

Property conveyed by a delinquent mortgagor*

0.5%

*  If mortgage payments are more than six months delinquent and property is conveyed to a financial institution.

Those conveying the property pay the state and municipal taxes. The grantor/seller must present a separate check to the town clerk, payable to the Commissioner of Revenue Services, in payment of the state tax when recording the deed.

Sales and Use Taxes

A 6% tax is imposed on the sale or rental of most goods and the sale of certain services. However, there are exemptions such as food, all purchases made with food stamps, yarn, utility charges for residential property, household fuel, prescription drugs, certain nonprescription drugs, clothing under $50, newspapers, magazines by subscription, compact fluorescent light bulbs, materials for noncommercial sewing used to make clothing, and Internet access services. Computer and data processing services are taxable at 1%.

When the seller of goods or provider of taxable services does not collect sales tax, the buyer must pay use tax at the same rate as the sales tax. If you purchase goods from mail order, catalog companies, or over the Internet and have the goods shipped to Connecticut, you must pay Connecticut use tax if you did not pay Connecticut sales tax. If you purchase goods at out-of-state locations for use in Connecticut and the tax paid is less than the Connecticut tax, you must pay the difference between the Connecticut tax and the tax paid in the other state. 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 pay the use tax for purchases you made during the prior calendar year on your Connecticut income tax return or on Form OP-186, Connecticut Individual Use Tax Return, on or before April 15. See Informational Publication 2007(27), Q & A on the Connecticut Individual Use Tax.

Room Occupancy Tax

A room occupancy tax of 12% applies to the rental of rooms in a hotel or lodging house for 30 consecutive days or less. See Policy Statement 2003(1), Application of Sales and Use Taxes and the Room Occupancy Tax to the Hotel and Motel Industry.

Alcoholic Beverages Tax, Cigarette Taxes, and Tobacco Products Tax

Alcoholic beverages tax, cigarette taxes, and tobacco products tax are included in the retail price of the items. In addition, 6% sales and use taxes apply at the time of sale.

The tax for alcoholic beverages, which is imposed on licensed distributors, is:

Alcoholic Beverage

Per Wine

Gallon

Distilled liquor

$4.50

Fortified and sparkling wines

$1.50

Still wines

$0.60

Still wines (from licensed farm winery)

$0.15

Beer ($3.00 per half barrel, $1.50 per quarter barrel)

$0.20

Liquor coolers

$2.05

Alcohol in excess of 100 proof is taxed at $4.50 per proof gallon. Most alcoholic cider is taxed at the beer rate.

You may legally bring into Connecticut up to four gallons of alcoholic beverages you bought or were given outside Connecticut. Bringing alcoholic beverages into Connecticut means personally carrying them into Connecticut or transporting them into Connecticut in a motor vehicle you are driving, or if you are returning by air, rail, bus, or water to Connecticut, placing them in your luggage being returned with you to Connecticut. Bringing alcoholic beverages into Connecticut does not include having alcoholic beverages shipped to you.

You do not need a permit to bring up to four gallons of alcoholic beverages into Connecticut, but you will owe Connecticut use tax and the Connecticut alcoholic beverages tax on the alcoholic beverages being brought into the state.  To report and pay Connecticut use tax and Connecticut alcoholic beverages tax, you must file Form S&BT, Alcoholic Beverages Tax - Payment of Taxes Due on the Importation of Alcoholic Beverages with DRS. See Informational Publication 2000(15), Bringing or Importing Alcoholic Beverages Into Connecticut.

Under certain conditions, the direct shipment of wine to consumers and retailers in Connecticut may be authorized. See Special Notice 2005(6), 2005 Legislation Affecting the Direct Shipment of Wine to State Residents.

In Connecticut, the tax on cigarettes is $2.00 per pack of 20 cigarettes, while the tax on most tobacco products excluding cigarettes is 20% of the wholesale sales price. The tax on snuff tobacco product is 40¢ per ounce.

Admissions and Dues Tax

The dues tax is a 10% tax levied on dues and initiation fees of a social, athletic, or sporting club either owned or operated by its members. The club is exempt from the dues tax if the annual dues of every member and any initiation fee are each $100 or less. Lawn bowling clubs are exempt from dues tax. See Informational Publication 2003(11), Q & A: The Dues Tax.

A 10% admissions tax applies to admission charges to any place of amusement, entertainment, or recreation. Charges over $5 to motion picture shows are subject to 6% admissions tax.

Certain venues are specifically exempt from admissions tax. Productions featuring live entertainment by actors or musicians at nonprofit theaters and playhouses exempt under I.R.C. §501 are exempt from the tax. Also exempt from the tax are admission charges of $5 or less to motion picture shows and admission charges to carnivals, amusement rides, and establishments whose admissions charges would have been subject to the cabaret tax prior to its repeal on July 1, 1999.

Motor Vehicle Fuels Tax

A tax is imposed on motor vehicle fuels used to propel motor vehicles on public roads and highways. The rate on gasoline or gasohol is 25¢ per gallon and the rate for diesel fuel is 37¢ per gallon.

Motor Vehicle Registration Fees

The Connecticut Department of Motor Vehicles (DMV) issues certificates of registration for motor vehicles and issues driver’s licenses. For fee information, call the DMV at 1-800-842-8222 (Connecticut calls outside the Greater Hartford calling area only) or 860-263-5700 (from anywhere), or visit the DMV website at www.ct.gov/dmv and select Fees.

Boat Registration Fees

There is an annual registration fee for boats in lieu of a local property tax. For fee information, call the DMV at 1-800-842-8222 (Connecticut calls outside the Greater Hartford calling area only) or 860-263-5700 (from anywhere), or visit the DMV website at www.ct.gov/dmv and select Fees.


Effect on Other Documents: Informational Publication 2007(25) modifies and supersedes Informational Publication 2006(17), Personal Taxes.


Effect of This Document: An Informational Publication issued by the Department of Revenue Services (DRS) 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 (Connecticut calls outside the Greater Hartford calling area only); or
  • 860-297-5962 (from anywhere)

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


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

  • Internet: Visit the DRS website at www.ct.gov/DRS to download and print Connecticut tax forms; or
  • Telephone: Call 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and select Option 2 from a touch-tone phone, or call 860-297-4753 (from anywhere)

 
Paperless Filing/Payment Methods (fast, secure, easy, free, and confidential):
  • For business returns, tax payments, and electronic bill payments: Use the Taxpayer Service Center (TSC) to file a variety of tax returns and extensions, as well as to pay taxes or bills over the Internet. Visit the DRS website at www.ct.gov/DRS and choose the TSC logo for a complete list of taxes that can be electronically filed and paid.
  • For income tax returns, extensions, estimated payments, and electronic bill payments: Use the Taxpayer Service Center (TSC) to file personal income tax returns and extensions, or to make estimated payments and electronic bill payments over the Internet. Visit the DRS website at www.ct.gov/DRS and select the TSC logo.

DRS E-News Service: Get connected to the latest news from DRS. Receive notification by email 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, TSC-BUS Online Filing Alerts, News - Press Releases, and top 100 Delinquency List.


IP 2007(25)
Various
Personal Taxes
Issued: 12/20/2007