Estimated Connecticut Income Taxes for 1992
BACKGROUND: In February 1992, the Department issued IP 92(5) to assist taxpayers in calculating their 1992 estimated Connecticut income taxes. IP 92(5.1) has been updated to reflect changes to the requirements for estimated taxes enacted during the 1992 May Special Session of the Connecticut General Assembly.
PURPOSE: This publication explains filing requirements for paying 1992 estimated income tax. Connecticut taxpayers can be charged penalties and interest for underpaying their estimated income tax, even though they pay all the Connecticut income tax they owe by the April 15 deadline. Connecticut law requires taxpayers to pay State income tax during the year, through withholding or estimated tax payments. Most employees have these taxes automatically withheld from their paychecks. If you are self-employed, or receive a pension or annuity and have not elected Connecticut pension plan withholding, or you receive any other income from which state income tax is not withheld, you should probably be making estimated income tax payments.
WHAT IS ESTIMATED TAX? Estimated tax is tax on income in excess of that on which a sufficient amount of tax has been withheld. Because it is difficult to determine your exact tax bill before the end of the year, you make estimated tax payments during the year based upon what you expect to earn in the current year or based upon what you actually earned in the prior year. When you file your annual income tax return, you report your estimated tax payments. If you have overpaid your estimated tax during the year, you will receive a refund. If you have underpaid your taxes during the year, you will have to pay the tax you owe and you may have to pay a penalty and interest.
WHO SHOULD PAY ESTIMATED TAX? If you expect to owe more than $200 in Connecticut income tax for 1992 in addition to state tax withheld from wages or pension income, you should be making estimated income tax payments. The checklist below includes many (although not all) of the types of income that may require you to pay estimated tax:
pensions and annuities (if no state tax are withheld)
gambling winnings (if no Connecticut income tax is withheld)
federally taxable social security
To avoid the filing of an estimated tax, you may request your employer to withhold additional amounts from your wages or pension income to cover the taxes on other income. You can make this change by providing your employer with a revised Form CT-W4.
HOW DO I ESTIMATE MY TAX? To figure your estimated tax payments, you will need Form CT-1040ES, 1992 Individual Estimated Income Tax Payment Forms. The instructions include a worksheet for computing your estimated tax payments, exemption and credit tables, and coupons to be mailed in with your estimated payments.
WHEN DO I PAY MY ESTIMATED INCOME TAX? Generally, you must make your first estimated income tax payment for 1992 by April 15,1992. You can pay all of your estimated tax with the first payment or pay the tax in four installments, due April 15, June 15, September 15, 1992, and January 15, 1993. (Taxpayers who file their returns on a fiscal year basis will make their payments on the fifteenth day of the fourth, sixth and ninth months of their fiscal year, and the first month of the following fiscal year. If your liability for estimated payments begins after April 1, 1992, consult the instructions for Form CT-1040ES to determine the payment schedule.
HOW MUCH SHOULD I PAY WITH EACH INSTALLMENT? To calculate the proper amount of each estimated payment, you may use one of the following methods:
1. Assumed Tax: You may base your estimate on your assumed tax. Assumed tax means your 1991 income tax liability recalculated using the 1992 income tax rate. (Multiply your 1991 Connecticut income tax liability by 3 to determine your assumed tax. Do not include any capital gains, dividends and interest tax paid on Schedule 394 in 1991.)
2. Current Year's Tax: You may base your estimate on the Connecticut income tax you will owe for 1992.
The amount of your required installment depends upon the method you choose.
Installment #1 should equal the lesser of 30% of the assumed tax or 22.5% of the current year's tax.
Installment #2 should equal the lesser of 25% of the assumed tax or 22.5% of the current year's total tax. (A total of 55% of the assumed tax or 45% of the current year's tax should be paid in by Installment #2.)
Installment #3 should equal the lesser of 25% of the assumed tax or 22.5% of the current year's tax. (A total of 80% of the assumed tax or 67.5% of the current year's tax should be paid in by Installment #3.)
Installment #4 should equal the lesser of 20% of the assumed tax or 22.5% of the current year's tax. (A total of 100% of the assumed tax or 90% of the current year's tax should be paid in by Installment #4.)
WHAT IF MY INCOME CHANGES DURING THE YEAR? Changes in income, deductions or exemptions during the year may require you to amend your original estimate or to begin making estimated tax payments in the middle of the taxable year. Form CT-1040ES, 1992 Individual Estimated Income Tax Payment Forms, includes a worksheet to calculate the new estimated income tax requirement.
WHAT HAPPENS IF I UNDERESTIMATE MY TAX? If you are required to make estimated income tax payments and you do not pay enough tax during the year through estimated tax payments and withholding or if you do not make the payments on time, penalty and interest on the tax underpaid may be charged. The penalty for late payment or underpayment of any required installment is 10 percent of the amount due. Interest of 1 1/4% per month or fraction thereof will also apply to the underpayment(s).
MAY I APPLY OVERPAYMENT IN THE PRIOR YEAR TO THE NEXT YEAR'S ESTIMATE? Yes. When you file a final return for 1992, you may request that overpayments of Connecticut income tax be applied to your 1993 estimated tax. If you file your Connecticut income tax return on or before April 15 (or if you file a timely request for extension of time to file and your income tax return is filed within the extension period) the overpayment will be treated as estimated tax paid on April 15.
EFFECT ON OTHER DOCUMENTS: IP 92(5) issued 2/92 is superseded and may no longer be relied upon.
RELATED FORMS AND PUBLICATIONS: You may request Form CT-1040ES, 1992 Individual Estimated Income Tax Payment Forms.
FOR FURTHER INFORMATION: Please call the Department of Revenue Services during business hours, Monday through Friday:
1-800-382-9463 (toll-free within Connecticut), or
860-297-5962 (from anywhere).
TTY, TDD, and Text Telephone users only may transmit inquiries 24 hours a day by calling 860-297-4911.
FORMS AND PUBLICATIONS: Forms and publications are available all day, seven days a week:
- Internet: Preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs
- Telephone: Call 860-297-4753 (from anywhere) or 1-800-382-9463 (toll-free within Connecticut).
Replaces IP 92(5)