Connecticut State Department of Revenue Services

Walk-in services at all DRS branch office locations remain suspended. Email DRS at drs@po.state.ct.us. Email the Priority One Taxpayer Assistance Program: DRSPriorityOne_CollectionsAssist@po.state.ct.us. Please check our Frequently Asked Questions page.

This information is not current and is being provided for reference purposes only

Connecticut Circular CT Employer's Tax Guide

This publication has been superseded by IP 2004(8)

WITHHOLDING TABLES are NOT included in this booklet.

Continue to use IP 96(7), Connecticut Income Tax Withholding Tables and Forms, Effective July 1, 1996, until further notice.

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

CALENDAR OF EMPLOYER'S DUTIES

Each time a deposit of federal income tax is made:

  • Mail a deposit of Connecticut withholding tax with Form CT-WH, Connecticut Withholding Tax Payment, to:

State of Connecticut
Department of Revenue Services
P.O. Box 5055
Hartford, CT 06102-5055

  • Your payment will be considered timely if it is actually received, or if the date shown by the U.S. Post Office cancellation mark is on or before the due date of the federal income tax withholding deposit. Use the same deposit schedule for Connecticut withholding purposes that you are following for federal withholding purposes. Do not file Form CT-WH if no payment is due. Employers who withhold less than $500 of Connecticut income tax for a calendar quarter may pay the tax quarterly with Form CT-941, Connecticut Quarterly Reconciliation of Withholding. (Special rules apply for household employers.)

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

  • File Form CT-941 (even if no tax is due), together with required copies of Forms CT-W4, Employee's Withholding or Exemption Certificate, claiming exempt status from the tax given to you by employees during that quarter. 

          NOTE: Send copies of Form CT-W4 only as required.

By January 31

  • Give to each employee to whom Connecticut wages were paid during the preceding calendar year, federal Form W-2, Wage and Tax Statement, and any other information returns, showing the amount of Connecticut income tax withheld.

By February 15

  • Obtain a new Form CT-W4 from each employee who claimed exempt status (filing status "E") from Connecticut income tax withholding in the prior year.

By February 16

  • Begin withholding at a flat rate of 4.5% 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 by February 15. The Form CT-W4 previously given to you claiming exemption has now expired.

By February 28

  • File Form CT-W3, Connecticut Annual Reconciliation of Wages, 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.

  • If required, file Form CT-1096, Connecticut Annual Summary and Transmittal of Information Returns, and the "State copy" of certain federal Form 1099 and W-2G.

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

Numbers and Names of Connecticut Forms Referenced in This Booklet

CT-WH

Connecticut Withholding Tax Payment Form

CT-941

Connecticut Quarterly Reconciliation of Withholding

CT-W4

Employee's Withholding or Exemption Certificate

CT-1096

Connecticut Annual Summary and Transmittal of Information Returns

REG 1

Application for Tax Registration Number

CT-W3

Connecticut Annual Reconciliation of Withholding Tax Payment Form

CT-W4P

Withholding Certificate for Pension or Annuity Payments

CT-W4CS

Request to Withhold Connecticut Income Tax From Civil Service Annuity

CT-W4NA

Employee's Withholding or Exemption Certificate - Nonresident Apportionment

CT-941X

Amended Connecticut Quarterly Reconciliation of Withholding

CT-8809

Request for Extension of Time to File Information Returns

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 income tax withholding purposes must withhold Connecticut income tax whether or not the payroll department is located in Connecticut.

  HOW DO EMPLOYERS REGISTER FOR WITHHOLDING TAX?

Every employer must be registered with the Connecticut Department of Revenue Services (DRS) to withhold Connecticut income tax. The employer's DRS tax registration number and federal employer identification number must appear on all Connecticut income tax withholding forms and on all correspondence with DRS. On DRS forms, do not use the registration number issued by the Connecticut Department of Labor.

Employers Who Are Not Already Registered

Employers who are not already registered with DRS, including employers starting a new business, must register to withhold Connecticut income tax by completing Form REG-1. Form REG-1 is also used to register a business for most other state taxes, including sales and use taxes and corporation business tax.

  Employers Who Are Already Registered With DRS

Employers who are already registered with DRS for other state taxes are still required to register to withhold Connecticut income tax. Complete Form REG-1 to register for withholding as an additional tax.

Employers Who Acquire An Existing Business

Employers who acquire 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.

Seasonal Filers

A new employer whose liability for Connecticut income tax 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 with Form REG-1 a written request stating which quarters the employer will be active.

This request must be received on or before the last day of a calendar quarter in order to be effective for that calendar quarter. As long as the employer remains a seasonal employer, no new request need be made for succeeding calendar years.

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

State of Connecticut
Department of Revenue Services
Registration Unit
P.O. Box 2937
Hartford, CT 06104-2937

Annual Filers

A new payer who is required to deduct and withhold Connecticut income tax from nonpayroll amounts, as described in 26 C.F.R. §31.6011(a)-4(b), must complete Form REG-1. The payer may request annual filer status by submitting with Form REG-1 a written request stating that the payer pays only nonpayroll amounts, files federal Form 945, and is not required to file federal Forms 941 quarterly. If all of these requirements are met, the payer will file a quarterly withholding tax return for only the last quarter of the calendar year.

This request must be received on or before March 31st of the calendar year in order to be effective for that calendar year. As long as the employer remains an annual filer, no new request is required to be made for succeeding calendar years.

NOTE: Nonpayroll payers who are already registered to withhold Connecticut income tax may request annual filer status by submitting this written request stating the information listed above to:

State of Connecticut
Department of Revenue Services
Registration Unit
P.O. Box 2937
Hartford, CT 06104-2937

HOUSEHOLD EMPLOYERS

Household employers are not required to withhold Connecticut income tax from the wages of their household employees but may do so voluntarily by agreement between the employer and the employee. Household employers who agree to withhold Connecticut income tax must register with DRS for income tax withholding by completing Form REG-1 and may request annual filer status by following the procedures outlined in SN 96(8), 1996 Legislative Changes Concerning "Nanny Tax" Withholding.

All household employers are 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 in 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

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

  1. an employer is required to withhold federal income tax from the worker's wages;

NOTE: In general, you are 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 Internal Revenue Service Circular A for information on federal income tax withholding for agricultural workers. To obtain a copy of Circular A, call the IRS at 1-800-829-3676.

  1. the employer and employee voluntarily agree to have Connecticut income tax withheld.

All agricultural employers are 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.

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 for its employees who make an agreement with the employer to have Connecticut income tax withheld.

NOTE:

Upon registration the employer will be treated as an employer required to withhold Connecticut income tax with respect to his or her employees 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 to have Connecticut income tax withheld.

NOTE:

Upon registration the payer will be treated as an employer required to withhold Connecticut income tax with respect to his or her payees while the agreement remains in effect.

WHAT INCOME IS SUBJECT TO CONNECTICUT INCOME TAX WITHHOLDING?

In general, Connecticut follows the federal rules for determining income subject to income tax withholding. Employers should consult the Internal Revenue Service Circular E, Employer's Tax Guide and Publication 15-A, Employer's Supplemental Tax Guide, to determine federal income tax withholding rules for specific types of income.

A. Wages: In general, all amounts determined to be wages and subject to federal income tax 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 income tax withholding:

All wages of a Connecticut resident are subject to Connecticut income tax, even though the resident works outside of Connecticut. However, if the employer is required to withhold from the resident's wages the income tax of other states or their political subdivisions, the District of Columbia, or the provinces of Canada, the employer must withhold Connecticut income tax only to the extent the Connecticut tax exceeds the amount required to be withheld for the other state(s) for services performed there. Refer to the examples below for illustrations.

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. The 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 to be deducted and 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 State Y income tax payable 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 to be deducted and 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 State Z income tax payable on the employee is 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 to be deducted and withheld.
  • Nonresident wages subject to Connecticut income tax 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. Refer to the examples below for illustrations:

EXAMPLE 1: 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 must withhold Connecticut income tax because the services are performed in Connecticut. The employer should contact the other state to determine to what extent it may be required to withhold income tax for State X.

EXAMPLE 2: Working solely without 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 will not withhold Connecticut income tax regardless of the fact 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 3: Working partly within and partly without 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 must withhold Connecticut income tax on wages 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. (For additional information see "How to Withhold Connecticut Income Tax".)

B. Nonpayroll Income: Certain nonpayroll income (also known as nonpayroll amounts, as described in 26 C.F.R. §31.6011(a)-4(b)) is subject to withholding.

Pension and Annuity Plans: 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 to 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 a qualified or nonqualified plan, 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 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:

  • 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
  • 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.

A 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 a Form REG-1. (See "How Do Employers 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:

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.

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 "State copy" of federal Form 1099-R, only if Connecticut income tax was withheld.

Gambling Winnings: A payer of gambling winnings maintaining an office or transacting business in Connecticut must withhold Connecticut income tax from such 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.

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

Any person making payments of gambling winnings that are subject to Connecticut income tax withholding and who is not otherwise required to register with DRS, must register by filing a Form REG-1, (See "How Do Employers Register for Withholding Tax".)

Connecticut income tax is to be deducted and withheld at a flat rate of 4.5% without allowance for exemption and is computed on the same amount that is subject to withholding for federal income tax purposes. Where 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:

Statement for Gambling Winnings:

Federal Form W-2G, showing the amount of Connecticut income tax withheld in the prior year, must be given by payers of gambling winnings to their recipients on or before the succeeding January 31.

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.

Professional Athletes and Entertainers: Compensation for personal services performed in Connecticut by a professional athlete or entertainer, paid in cash or otherwise, in connection with sporting events or in connection 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 the "employer."

A person whose services are covered under this section is treated as an employee for Connecticut income tax purposes, whether or not such person is considered an employee for federal withholding tax purposes.

For further information on withholding for professional athletes and entertainers refer to PS 96(1), Income Tax Withholding for Athletes and Entertainers.

WHAT PAYMENTS ARE NOT SUBJECT TO CONNECTICUT INCOME TAX WITHHOLDING?

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

A. Federal Income Tax Withholding Exemption: Other than the exceptions noted in the previous section, Connecticut income tax withholding is not required on any compensation paid to an employee if the compensation is not subject to federal income tax withholding. Employers should consult the Internal Revenue Service Circular E, Employer's Tax Guide, to determine federal income tax withholding rules for specific types of income.

B. 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 considered an employee for federal or Connecticut income tax withholding purposes.

NOTE: 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 income tax withholding is required to pay estimated taxes if the recipient's Connecticut taxable income meets the minimum filing requirement. For further information, refer to IP 92 (5.6), Estimated Connecticut Income Taxes.

EXAMPLE 1: Mary owns her own business. The income she earns is not subject to Connecticut income tax withholding. Generally, if she will owe more than $200 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.

C. Interstate Commerce: Compensation paid by interstate rail carriers, interstate motor carriers and interstate motor private carriers to nonresident employees who perform regularly assigned duties in two or more states is not subject to Connecticut income tax withholding. The compensation does not constitute income derived from Connecticut sources even though the employees performed services in Connecticut. However, such compensation constitutes income derived from sources within the employee's state of residence.

D. Employees of 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 constitutes income derived from sources within the employee's state of residence, and in the state in which the employee earns more than 50% of such compensation. An employee is deemed to have earned more than 50% of his or her compensation in Connecticut when the employee's scheduled flight time in Connecticut is more than 50% of the employee's total scheduled flight time in the calendar year. If this is the case, refer to "Nonresident Wages Subject to Connecticut Income Tax Withholding".

E. Nonresident Seaman: A nonresident seaman's wages attributable to 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.

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. IP 92(2.2), Connecticut State Income Tax Information for Military Personnel and Veterans, lists the criteria which must be met in order to claim exemption from withholding.

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, that the Uniformed Services withhold Connecticut income tax 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 to be withheld from each payment must be an even dollar amount but not less than $10.

WITHHOLDING FOR CIVIL SERVICE RETIREES

Civil service retirees are allowed to elect to have the United States Office of Policy and Management (U.S.O.P.M.) withhold Connecticut income tax from their monthly civil service annuity payments. A civil service annuitant who is a resident of Connecticut may request that the U.S.O.P.M. withhold Connecticut income tax from regular, recurring monthly annuity payments by completing Form CT-W4CS, Request to Withhold Connecticut Income Tax From Civil Service Annuity and submitting it to the Department of Revenue Services (not to the U.S.O.P.M.). The amount to be withheld from each payment must be an even dollar amount, not less than $10.

HOW TO WITHHOLD CONNECTICUT INCOME TAX

Employers will use the current Connecticut Income Tax Withholding Tables and Calculation to determine how much Connecticut income tax to withhold from each employee's wages. The Connecticut income tax withholding tables are NOT included in this booklet. Continue to use IP 96(7), Connecticut Income Tax Withholding Tables and Forms, Effective July 1, 1996, unless new tables are issued in the future. To determine how much income tax to withhold from employee wages, you must have a completed Form CT-W4 on file for each employee.

NOTE:

Employers with nonresident employees who work partly within and partly without Connecticut see Subsection E of this part.

A. Form CT-W4: Employers must obtain a completed copy of Form CT-W4 from each new employee when hired. The form takes effect as of the first payroll period ending or first payment of wages on or after the date it is furnished by the employee. Unless the employee claims exemption, Form CT-W4 remains in effect until the employee provides the employer with a new one.

Reporting new employees to the Department of Labor: Conn. Gen. Stat. §31-2c requires employers with offices in Connecticut or transacting business in Connecticut to report the name, address and social security number of new employees to the Department of Labor. Each new employee's Form CT-W4 must be sent to the Department of Labor within 35 days from the date of hire to assist in the enforcement of child support obligations. The Department of Labor may use information reported on this form in a manner consistent with its governmental powers and duties. Further instructions for submitting copies of this form are contained on Form CT-W4.

NOTE: 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, begin withholding at a rate of 4.5% without allowance for exemption on February 16. The Form CT-W4 previously given to you claiming exemption 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 to DRS of Forms CT-W4 received during the quarter from employees claiming exemption from Connecticut income tax withholding with Form CT-941, if:

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

2. the employer reasonably expects that:

  • in the case of an employee filing as an unmarried individual or married individual filing separately, his or her annual wages will exceed $36,000; or
  • in the case of an employee filing as head of household, his or her annual wages will exceed $57,000; or
  • in the case of an employee filing a joint return, his or her annual wages will exceed $72,000.

B. Determining How Much to Withhold from Employees: The amount of income tax to be withheld from an employee's wages depends on: (1) payroll period, (2) gross pay, (3) filing status and (4) additions or reductions to withholding requested by the employee on Form CT-W4.

Employees who do not return a completed Form CT-W4: Employees who do not return a completed Form CT-W4 to their employer must be withheld at a flat 4.5% without allowance for exemption until such time as a completed Form CT-W4 is provided to the employer.

C. Using the Tables:

To figure withholding from the tables, do the following:

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 income tax withholding.)

3. Select the "Withholding Amount" column on the right side of the table which corresponds with the filing status selected by your employee on Form CT-W4 (Status A, B, C, D).

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.

D. Withholding for Daily/Miscellaneous Amounts: For those employees who receive one-time or miscellaneous payments, the employer must withhold at a flat rate of 4.5% without allowance for exemption. (For withholding rules on supplemental compensation, see Subsection F.)

E. Determining How Much to Withhold from Nonresident Employees Who Work Partly Within and Partly Without Connecticut: A nonresident employee who performs services partly within and partly without 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 files with his or her employer a Form CT-W4NA, Employee's Withholding or Exemption Certificate - Nonresident Apportionment, identifying the portion of wages subject to Connecticut income tax. or
  • The employer maintains accurate current records to determine the amount of wages paid for such services performed within Connecticut. Employers who receive Form CT-W4NA or who maintain accurate 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 the employee using the procedure in "Determining How Much to Withhold from Employees".
  • Multiply that total "Withholding Amount" by the percentage from Form CT-W4NA that certifies the estimated portion of services performed in Connecticut during the year (when the employer has a completed Form CT-W4NA on file) or by the percentage representing wages paid for such services performed within Connecticut, divided by the nonresident's total wages (when the employer maintains accurate and current records).
  • NOTE: The following examples refer to the Withholding Tables, Effective July 1, 1996.

  • EXAMPLE 1: Form CT-W4NA: A nonresident employee performs services partly within and partly without Connecticut. The employee's taxable wages are $900 per week. The employee's Form CT-W4 indicates filing status "A" 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. ($35.22 x .60 = $21.13, the amount of Connecticut income tax to be withheld.)

    EXAMPLE 2: Employer Maintains Records: A nonresident employee performs services partly within and partly without Connecticut. The employee's taxable wage is $1000 per week. The employee's Form CT-W4 indicates filing status "A." The employee did not complete Form CT-W4NA but the employer does maintain accurate current records showing that in week 1, the employee worked 2 out of 5 days (40%) in Connecticut. In week 2, the employee worked 80% of the time in Connecticut. If all work was performed in Connecticut, the employer would withhold $42.61; therefore, for week 1 the employer will withhold $17.04 ($42.61 x .40) and for week 2 the employer will withhold $42.61.

    EXAMPLE 3: No Method of Allocation: An employer has not received a Form CT-W4NA from a nonresident employee who performs services partly within and partly without Connecticut and the employer does not keep accurate current records for the amount of wages paid to the nonresident for services performed within Connecticut. The employee's taxable wages are $2300 biweekly and his filing status shown on his Form CT-W4 is "B". The employer will withhold $89.03 of Connecticut income tax from the nonresident's wages, the same amount that would be due if all services were performed in Connecticut.

    F. 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 to be withheld should be determined as if the total of the supplemental and regular wages were a single payment for the regular payroll period.

    EXAMPLE: Mary worked 5 hours 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: 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

    All employers who are registered with DRS for Connecticut income tax withholding will receive the Employer's Withholding Remittance Coupon Book containing the reporting forms. Each of the forms included in the coupon book is a machine readable document which is personalized with the employer's name, address, Connecticut tax registration number and federal employer identification number. Only the original coupon should be submitted.

    Withholding Payment Coupon

    Form CT-WH, Connecticut Withholding Tax Payment, is to be mailed to DRS with each Connecticut income tax withholding payment. Due dates for payment of Connecticut income tax withholding for wage and nonpayroll amounts are the same as the due dates for the employer's deposits of federal income tax withholding. Do not file Form CT-WH if no payment is due.

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

    NOTE: If the tax liability was deducted and withheld during one quarter and paid over in another quarter, 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.

    Less Than $500 Quarterly

    If an employer is required to withhold less than $500 of Connecticut income tax during a calendar quarter, Form CT-WH does not have to be filed. The tax may be paid quarterly with Form CT-941. However, if you are unsure whether you will be required to withhold less than $500 of Connecticut income tax, remit the payments under the appropriate rules so that you will not be subject to interest and late payment penalties.

    Quarterly Reconciliation

    All employers and payers (except seasonal, annual 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 that 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 and payers even if they are not required to file a quarterly reconciliation for federal income tax withholding purposes. Form CT-941 is located in the back of the Employer's Withholding Remittance Coupon Book.

    A. Extended due date: An employer that makes timely withholding deposits for the quarter has 10 days after the normal due date to file Form CT-941. An extension for filing Form CT-941 beyond the automatic 10-day extension is not allowed.

    B. Annual filers: A payer who is permitted to file annually using federal Form 945 and who pays no wage income may obtain permission from the Department of Revenue Services to file Form CT-941 for only the last calendar quarter. (See "How Do Employers Register For Withholding?" for information on requesting annual filer status.) If permission to become an annual filer is not granted, payers must continue to file Form CT-941 each quarter (even if no tax is withheld) as long as they remain registered for Connecticut income tax withholding.

    DRS does not use a form that is similar to federal Form 945. Therefore, report wages and nonpayroll amounts on Form CT-941.

    C. Seasonal filers: Seasonal employers must file Form CT-941, for any quarter in which they are listed as active. (For further information on requesting seasonal filer status see, "How Do Employers Register For Withholding?") If permission to become a seasonal filer is not granted, employers and payers must continue to file Form CT-941 each quarter (even if no tax is withheld) as long as they remain registered for Connecticut income tax withholding.

    D. Household Employer: Household employers are required, on or before April 15 of the following calendar year, to file just one Form CT-941 and pay over all the Connecticut income tax withholding. (See SN 96(8), 1996 Legislative Changes Concerning "Nanny Tax" Withholding).

    Amended Quarterly Reconciliation of Withholding

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

    Wage and Tax Statement

    Federal Form W-2, Wage and Tax Statement, showing the correct amount of Connecticut wages paid by the employer to the employee and the correct amount of Connecticut income tax withheld in the calendar year, must be given by employers to their employees on or before January 31.

    Annual Reconciliation

    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 calendar year with the annual reconciliation, even if no Connecticut income tax was withheld. When completing a federal Form W-2 employers must enter the Connecticut wages in the "State Wages" box and identify them as Connecticut wages.

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

    If you are required to file federal Form 1096, you must file a Form CT-1096 with every "State copy" of the following:

    • federal Form W-2G, for winnings paid to resident individuals, even if no Connecticut income tax was withheld;
    • federal Form 1099-MISC, for payments made to resident individuals or, if the payments relate to services performed wholly or partly in Connecticut, payments to nonresident individuals, 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.

    Extended Due Date

    Employers may request an extension to file Form CT-W3 with every "State copy" of federal Form W-2, and/or Form CT-1096 with copies of federal Forms W-2G, 1099-MISC, 1099-R and 1099-S, by filing Form CT-8809, Request for Extension of Time to File Information Returns, on or before the last day of February.

    Correction/Reorder Form

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

    PAYMENT BY ELECTRONIC FUNDS TRANSFER

    Taxpayers whose 12-month liability for a particular tax exceeded $300,000 must pay that tax for the next 12-month period by electronic funds transfer. Additionally, effective July 1, 1997, taxpayers whose 12-month liability for a particular tax exceeded $100,000 must pay that tax for the next 12-month period by electronic funds transfer.

    DRS will issue a notice to payers who are required to pay by electronic funds transfer.

    Although the Department reviews annually whether a taxpayer must continue to pay withholding tax by electronic funds transfer, any taxpayer that has previously been issued notice to pay withholding tax by electronic funds transfer must continue to pay by electronic funds transfer until the Department issues notice to such taxpayer that payment by electronic funds transfer by the taxpayer is no longer required. (See SN 96(5), 1996 Legislative Changes Affecting Payment of Connecticut Taxes by Electronic Funds Transfer and IP 93(2.1), Q & A on Paying Taxes By Electronic Funds Transfer.)

    EMPLOYER'S LIABILITY FOR TAXES WITHHELD

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

    PENALTIES AND INTEREST

    Employers who fail to comply with the requirements to withhold Connecticut income tax are subject to penalties, including:

    Late Payment

    The penalty for late payment or underpayment of the tax due is 10% of such amount due on all returns including Form CT-WH.

    Late Filing Penalty

    If no tax is due the penalty for late filing of a return is $50. (This late filing penalty does not apply to Form CT-WH.)

    Interest

    If you are filing a late or amended return, interest is computed at the rate of 1% per month or fraction thereof from the due date until the date of payment. Interest is based on the amount which should have been remitted on time.

    Required Wage and Tax Statement

    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 to each employee and a copy thereof to DRS (unless due to reasonable cause). The penalty also applies to employers or payers who fail to provide copies of required informational returns to each recipient and a copy thereof to DRS.

    Willful Evasion

    A penalty equal to the total amount of the tax evaded, not collected or not paid over is imposed for willful failure to collect or truthfully account for income tax, or for willfully attempting to evade the tax.

    Fraud

    A penalty of not more than $1,000 is imposed where, with fraudulent intent, an employer fails to pay, deduct or withhold and pay tax, or make or sign any return or supply information.

    Criminal Penalties

    Any person who willfully fails to pay tax, make 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

    Remind employees to check their withholding. If an employee will owe more than $200 in Connecticut income tax over and above what has been withheld, he or she may be required to make estimated income tax payments and may be liable for an addition to tax. Advise employees to check their Connecticut income tax withholding by using IP 92(9.4), Is My Connecticut Withholding Correct?

    NOTE: Two-earner couples may also refer to the Supplemental Tables 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.
    • Federal Form W-4, Federal Employee Withholding Allowance Certificate.
    • Form CT-W4, Employee's Withholding or Exemption Certificate.
    • Form CT-W4NA, Employee's Withholding or Exemption Certificate - Nonresident Apportionment.
    • Form CT-W4P, Withholding Certificate for Pension or Annuity Payments.

    NOTE: Records should be kept 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.

    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 the 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 IP 92(10.4), Annual Wage Information On Magnetic Media.

    FORM 1099 AND W-2G MAGNETIC MEDIA FILING

    A payer who is required by the Internal Revenue Service to file copies of federal Form 1099 and/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 Forms W-2G with DRS may be excused from the magnetic media filing requirements for that particular type of information return without obtaining a waiver. Magnetic media reporting specifications for federal Form 1099 and W-2G are contained in IP 93(5.3), Informational Returns on Magnetic Media.

    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 should enter the last payroll date on the line provided and comply with all filing requirements for the calendar year as explained in "How To Report and Remit Taxes Withheld".

    Related Publications

    IP 96(7) - Connecticut Income Tax Withholding Tables and Forms, Effective July 1, 1996
    IP 93(5.3) - Informational Returns on Magnetic Media
    IP 93(2.1) - Q & A On Paying Taxes by Electronic Funds Transfer
    IP 92(10.4) - Annual Wage Information on Magnetic Media
    IP 92(9.4) - Is My Connecticut Withholding Correct?
    IP 92(5.6) - Estimated Connecticut Income Taxes
    IP 92(2.2) - Connecticut Income Tax Information for Military Personnel And Veterans
    SN 96(8) - 1996 Legislative Changes Concerning "Nanny Tax" Withholding
    SN 96(5) - 1996 Legislative Changes Affecting Payment of Connecticut Taxes by Electronic Funds Transfer
    SN 92(9) & SN 91(18) - Income Tax Withholding on Certain Gambling Winnings
    PS 96(1) - Income Tax Withholding for Athletes and Entertainers

    Effect Of This Document

    An Informational Publication is a document that addresses issues frequently raised by taxpayers, usually in a question-and-answer format. It is less technical in nature than a Policy Statement, but may be referred to by individual taxpayers for guidance.     

    Effect On Other Documents

    IP 92(8.2), IP 92(8.2a) and IP 92(8.2b), 1995 Connecticut Circular CT are modified and superseded and may not be relied upon on or after the date of issuance of this Informational Publication. AN 91(8) is superseded and may not be relied upon on or after the date of issuance of this Informational Publication.

    FEDERAL/CONNECTICUT FILING COMPARISON
    (for most commonly filed withholding forms)

    Connecticut

    Federal

    WAGE AMOUNTS

    EMPLOYERS HIRING
    NEW EMPLOYEES

     

     

    Complete Form CT-W4 for each employee. Mail a copy of Form CT-W4 for each new employee to the Department of Labor.

    Complete federal Form W-4 for each employee.

     

     

    WITHHOLDING
    PAYMENTS

     

     

    Mail payment with Form CT-WH on the same due dates as your federal deposits are required.
    NOTE: Do not use Form CT-WH when:

    Payments are deposited as required by federal law.

     

     

    QUARTERLY
    RECONCILIATION

     

     

    Form CT-941 is INCLUDED in the Employer's Withholding Remittance Coupon Book.

    The IRS mails federal Form 941 quarterly

    ANNUAL
    RECONCILIATION

     

     

    File Form CT-W3 with every "State copy" of federal Form W-2. Form CT-W3 is INCLUDED in the Employer's Withholding Remittance Coupon Book.

    File federal Form W-3 with federal Forms W-2.

    NONPAYROLL AMOUNTS

    WITHHOLDING
    PAYMENTS

     

     

    Combine payroll and nonpayroll withholding amounts on one Form CT-WH and mail to DRS.

    Deposit in separate transaction from payroll withholding.

    QUARTERLY
    RECONCILIATION

     

     

    File one Form CT-941 combining both payroll and nonpayroll items.

    None.

    ANNUAL
    RECONCILIATION

     

     

    If you are required to file federal Form 1096, file From CT-1096 with every "State copy" of federal forms listed below:

    File federal Form 945 and federal Form 1096.

    Questions & Answers

    1. DOES THIS BOOKLET CONTAIN ALL THE INFORMATION I NEED TO WITHHOLD CONNECTICUT INCOME TAX FROM MY EMPLOYEES OR PAYEES?
    A.     No. The withholding tables and calculation are no longer included in Connecticut Circular CT. Now you need three publications: Connecticut Circular CT, Connecticut Income Tax Withholding Tables and Forms, Effective July 1, 1996, and Employer's Withholding Remittance Coupon Book.

    2. WILL I RECEIVE NEW WITHHOLDING TABLES AND FORM CT-W4 FOR 1997?
    A.     No. IP 96(7), Connecticut Income Tax Withholding Tables and Forms, Effective July 1, 1996, will remain in effect until new withholding tables are issued.

    3. WILL I RECEIVE A CONNECTICUT CIRCULAR CT EACH CALENDAR YEAR?
    A.     No. Connecticut Circular CT is no longer year-specific. Continue to use this Connecticut Circular CT until a new Connecticut Circular CT is issued.

    4. WILL THE DEPARTMENT OF REVENUE SERVICES MAIL A QUARTERLY RECONCILIATION TO EMPLOYERS JUST LIKE THE IRS DOES?
    A.     No. Form CT-941, Connecticut Quarterly Reconciliation of Withholding, is located in the Employer's Withholding Remittance Coupon Book. Form CT-941 is preprinted with the number of the quarter and due dates. Employers should be certain to use the correct form.

    5. MY EMPLOYEES OFTEN ASK ME FOR ASSISTANCE IN CALCULATING THE AMOUNT THEY SHOULD HAVE WITHHELD FROM THEIR PAYCHECKS. DOES THE DEPARTMENT OF REVENUE SERVICES PUBLISH ANY INFORMATION THAT I CAN DISTRIBUTE TO THEM?
    A.     Yes. IP 92 (9.4), Is My Connecticut Withholding Correct?, is designed to help individuals decide if they are having enough tax withheld.

    6. WHAT IS THE DIFFERENCE BETWEEN GROSS WAGES AND GROSS CONNECTICUT WAGES?
    A.     Gross wages mean 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 mean 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.

    7. WHAT SHOULD BE SUBMITTED TO THE DEPARTMENT OF REVENUE SERVICES WITH FORM CT-W3, CONNECTICUT ANNUAL RECONCILIATION OF WITHHOLDING?
    Every "State copy" of federal Form W-2, whether or not Connecticut income tax was withheld.

    8. DO I HAVE TO FILE FORM CT-1096 WHICH IS INCLUDED IN MY EMPLOYER'S REMITTANCE COUPON BOOK?
    A.     Only payers who are required to file federal Form 1096 must file Form CT-1096 with every "State copy" of the following:

    9. IF I FILE FEDERAL FORM 1096 AND I AM NOT REGISTERED WITH CONNECTICUT DRS FOR WITHHOLDING BECAUSE I AM NOT REQUIRED TO BE REGISTERED, AM I REQUIRED TO FILE FORM CT-1096?
    A. Yes, but only if you file any of the forms as described in the answer to question 8. (Enter "information only" in the space provided for the Connecticut Tax Registration Number.)