A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040AES
This Information Publication has been obsoleted and superseded by IP 99(33)
WHO SHOULD PAY ESTIMATED TAX?
In general, if you expect to owe, after subtracting Connecticut tax withheld, more than $200 and you expect your Connecticut income tax withheld to be less than your required annual payment, you should make estimated payments.
WHAT IS MY REQUIRED ANNUAL PAYMENT?
Your required annual payment is the lesser of:
90% of the income tax shown on your Connecticut income tax return for the current taxable year, or
- 100% of the income tax shown on your Connecticut income tax return for the preceding taxable year, if you filed a Connecticut income tax return for the preceding taxable year that covered a 12 month period.
NOTE: You do not have to make estimated income tax payments if you did not file a Connecticut income tax return for the preceding taxable year because you had no Connecticut income tax liability and you were either:
- a resident of Connecticut for the entire preceding taxable year, or
- a nonresident or part-year resident of Connecticut with Connecticut source income.
WHEN SHOULD I FILE?
Estimated payments (CT-1040 ES) for the 1997 taxable year are due April 15, June 15, September 15, 1997 and January 15, 1998. (Fiscal year filers should follow federal filing dates.) If any due date falls on a Saturday, Sunday or legal holiday, the next business day is the due date.
HOW MUCH IS DUE WITH EACH INSTALLMENT?
In general, a taxpayer must pay the required annual payment in four equal installments of 25% each. However, if the taxpayer does not receive income evenly throughout the year, because of a seasonal business or for any other reason, the taxpayer may benefit from using the annualized income installment method. If this method is used, the size of the installments may vary, depending upon the amount of income earned during the period preceding the due date of each installment. A taxpayer using this method may be able to reduce or eliminate one or more payments for periods when his or her income is low but will make larger payments for the remaining periods when income is higher.
HOW DO I CALCULATE THE AMOUNT OF EACH INSTALLMENT USING THE ANNUALIZED ESTIMATED INCOME TAX INSTALLMENT METHOD?
First complete the worksheet to Form CT-1040ES, Individual Estimated Income Tax Payment Coupon, to calculate your required annual payment. (You can also use this worksheet to determine your installment payments if you are required to use the regular installment method.) Next, complete Worksheet CT-1040AES, included in this publication, to calculate the amount of each installment using the annualized estimated income tax installment method.
HOW DO I PAY MY ESTIMATED TAX?
Each payment of estimated tax must be accompanied by a coupon from Form CT-1040ES, Individual Estimated Income Tax Payment Coupon. If you made estimated payments of Connecticut income tax last year, you will receive individual estimated tax payment coupons by mail in January. The coupons are preprinted with your name, address and social security number to ensure that your payments are properly credited. If you did not make estimated payments last year, use Form CT-1040ES included in your Connecticut income tax booklet or available from the Departments Forms Unit to make your first payment. If you file this form, additional coupons will be mailed to you.
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 and withholding or if you do not make estimated payments on time, interest will be charged. Interest is calculated separately on each installment from the due date to the date when the underpayment is paid in full. (You may owe interest for an earlier installment even if you paid enough to make up the underpayment with a later installment.)
NOTE: If, on or before January 31st of the following taxable year, you file your return for the taxable year and pay in full the amount computed on the return as payable, no interest will be imposed if you fail to pay or you underpay your fourth required installment.
WILL INTEREST APPLY IF I USE THE ANNUALIZED ESTIMATED INCOME TAX INSTALLMENT METHOD?
Interest will not apply if you correctly calculate the required installments by completing Worksheet CT-1040AES, included with this publication, and you make the required installment payments (using Form CT-1040ES) on or before the due date.
NOTE: If your estimated installment payments are based on the annualized income installment method, you must attach to your income tax return, Form CT-2210, Underpayment of Estimated Income Tax by Individuals, Trusts and Estates, to show that you are not underpaid and are not subject to interest charges.
MAY I APPLY OVERPAYMENTS IN THE PRIOR YEAR TO THE NEXT YEARS ESTIMATED TAX?
When you file a final return for the year, you may request that overpayments of Connecticut income tax be applied to your next years 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 an estimate filed on April 15. Your request to apply overpayments to next year's estimated tax is irrevocable.
EFFECT ON OTHER DOCUMENTS: IP 93(6.3) is effective for taxable years beginning on or after January 1, 1997 and modifies and supersedes IP 93(6.2).
RELATED FORMS AND PUBLICATIONS:
Request the most recent edition of the following publications and forms:
Form CT-1040ES, Individual Estimated Income Tax Coupon
IP 92(5.6), Estimated Connecticut Income Tax
IP 95(10), Estimated Connecticut Income Tax Requirements For Farmers and Fishermen
FOR FURTHER INFORMATION: To order forms or publications or for further information, call the Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) or 1-800-382-9463 (in-state). (Forms and publications may be ordered through voice-mail 24 hours a day by choosing Option 3 on your touch tone telephone.)
Electronic Delivery Options: You can also obtain tax forms and publications 24 hours a day from our site on the World Wide Web at http://www.ct.gov/drs. Telecommunications Device for the Deaf (TDD/TT) users only, call 860-297-4911 during business hours.
Before you begin, be sure you have a copy of Form CT-1040ES, Individual Estimated Income Tax Payment Coupon. You will need the worksheet to assist you in calculating your Connecticut adjusted gross income, your estimated tax due, and your required annual payment. You will also need the coupon for making your installment payment.
After the end of each payment period, complete the column on Worksheet CT-1040AES for the period from the beginning of the taxable year through the end of that payment period to figure how much estimated tax to pay by the payment due date. (For calendar year filers, the payment periods are listed at the top of each column of the worksheet. Fiscal year filers, use the same payment periods required for federal income tax purposes.)
Line 1. Figure your total income for the period plus or minus your adjustments to income for the period. (See instructions for Form CT-1040ES, Lines 1, 2, and 3, for guidance in figuring your Connecticut adjusted gross income. Nonresidents and part-year residents, be sure to follow the directions included in the "NOTE" to Line 3, Form CT-1040ES.)
Estates and trusts must enter their Connecticut taxable income. Estates and trusts must use the following period ending dates: 2/28/97, 4/30/97, 7/31/97 and 11/30/97.
Line 2. Estates and trusts: do not use the amounts shown in Columns (a) - (d). Instead use 6, 3, 1.71429 and 1.09091, as the annualization amounts.
Line 4: Resident individuals must compute the tax on the amount shown on Line 3, using the tax calculation schedule on Form CT-1040ES. Resident estates and trusts multiply Line 3 by 4.5% (.045).
Nonresidents and part-year residents must use the schedules and worksheets for Form CT-1040NR/PY to determine Connecticut source income. Nonresident trusts and estates and part-year resident trusts must use the schedules and worksheets for Form CT-1041 to determine Connecticut source income. To calculate the tax, complete the worksheet below: (A separate worksheet should be completed for each period.)
a. annualized adjusted gross income from Line 3 of this worksheet
b. annualized Connecticut source income
c. enter the greater of Line a or b
d. enter the tax due on Line c using the tax calculation schedule on Form CT-1040ES. Trusts and estates multiply Line c by 4.5% (.045)
e. divide Connecticut source income for the period by Connecticut adjusted gross income for the period. This is your Allocated Connecticut Income Tax Percentage. (If Line b is greater than Line a, enter 1.0000.)
f. multiply Line d by Line e. Enter here and on Line 4 of this worksheet
Line 5. RESIDENTS AND PART-YEAR RESIDENTS ONLY: Enter your allowable net credit for income taxes paid to other jurisdictions. (Follow the instructions to Schedule 2, Form CT-1040 or Form CT-1040NR/PY to calculate the credit.)
Line 7. If you expect to owe federal alternative minimum tax, you may also owe Connecticut alternative minimum tax. Enter your estimated Connecticut alternative minimum tax liability for each period. (See instructions for Form CT-6251, Connecticut Alternative Minimum Tax Return, for instructions on figuring this tax.)
Line 9. Include the adjusted net Connecticut minimum tax credit you can claim because of events that occurred during the period.
Line 15. Enter 25% of your required annual payment as calculated on the worksheet to Form CT-1040ES, Individual Estimated Income Tax Coupon.
Line 21. Include all estimated tax payments and withholding through the payment due date for the period.
Your withholding is considered paid in four equal installments, one on the due date of each payment period. To figure the amount to include on Line 21 for each period, multiply your total expected withholding for the taxable year by:
25% (.25) for the first period
50% (.50) for the second period
75% (.75) for the third period
100% (1.00) for the fourth period
You may also choose to include your actual withholding through the due date for each period on Line 21.
(See example worksheet CT-1040AES)