Q & A: The Connecticut Alternative Minimum Tax
This Informational Publication has been superseded by IP 94(2.1)
PURPOSE: The Connecticut alternative minimum tax is a tax imposed on certain individuals, estates and trusts in addition to the regular Connecticut income tax. This publication is intended to answer some of the most common questions concerning the application and calculation of this tax.
BACKGROUND: 1993 Conn. Pub. Act 74, Section 54 provides that, for taxable years beginning on or after January 1, 1993, certain taxpayers are subject to the Connecticut alternative minimum tax.
WHO IS SUBJECT TO THE CONNECTICUT ALTERNATIVE MINIMUM TAX?
You are subject to the Connecticut alternative minimum tax and are required to file Form CT-6251, Connecticut Alternative Minimum Tax Return - Individuals, if for the taxable year:
you were a Connecticut resident or part-year resident and had a federal alternative minimum tax liability;
you were a Connecticut nonresident with a federal alternative minimum tax liability and you had Connecticut-source income.
NOTE: If you meet either of the requirements above, you must file Form CT-6251 even if you do not have to pay the Connecticut alternative minimum tax.
WHEN IS A TRUST OR ESTATE SUBJECT TO THE CONNECTICUT ALTERNATIVE MINIMUM TAX?
Any trust or estate liable for the federal alternative minimum tax must complete and attach Schedule H, Connecticut Alternative Minimum Tax Computation of Fiduciary, to Form CT-1041, Connecticut Fiduciary Income Tax return. (The rules in this informational publication apply primarily to individuals. Guidance for trusts and estates can be found in the instructions to 1993 Form CT-1041 and Schedule H of that form.)
WHO HAS A LIABILITY FOR THE FEDERAL ALTERNATIVE MINIMUM TAX?
You have a federal alternative minimum tax liability if you are required to pay the federal alternative minimum tax. Only those individuals who are required to pay the federal alternative minimum tax for taxable years beginning in 1993 or thereafter are subject to the Connecticut alternative minimum tax and must file Form CT-6251. If you have questions about the federal alternative minimum tax, please call the Internal Revenue Service at 1-800-829-1040.
NOTE: Certain individuals may be required to file federal Form 6251, Alternative Minimum Tax - Individuals, even though they do not have to pay the federal alternative minimum tax. These individuals are not subject to the Connecticut alternative minimum tax and are not required to file Form CT-6251.
HOW IS THE CONNECTICUT ALTERNATIVE MINIMUM TAX COMPUTED?
Using Form CT-6251, compute the tax in the following manner:
STEP 1: Calculate your adjusted federal alternative minimum taxable income by making certain Connecticut modifications to your federal alternative minimum taxable income (as reported on Line 21 of federal Form 6251). Use your adjusted federal alternative minimum taxable income to recalculate your allowable exemption. The result is your adjusted federal tentative minimum tax.
STEP 2: Multiply the adjusted federal tentative minimum tax by 23% (the Connecticut alternative minimum tax rate) to determine your Connecticut minimum tax.
STEP 3: Subtract your Connecticut income tax (as reported on your 1993 Form CT-1040 (line 6) or 1993 (Form CT1040NR/PY (line 8) from your Connecticut minimum tax. The difference between the two (if greater than zero) is your net Connecticut minimum tax.
STEP 4: Nonresidents and part-year residents only will allocate the net Connecticut minimum tax based upon the percentage of income from Connecticut sources.
STEP 5: Residents and part-year residents only who paid minimum taxes to other jurisdictions will calculate their allowable credit and subtract it from the net Connecticut minimum tax. The result is the Connecticut alternative minimum tax. This amount is entered on 1993 Form CT-1040 (line 9) or 1993 Form CT-1040NR/PY (line 13).
NOTE: If you are subject to the Connecticut alternative minimum tax (as explained earlier in this publication), you must complete Form CT-6251 and attach it to your Form CT-1040 or Form CT-1040NR/PY even if your Connecticut alternative minimum tax is zero.
HOW IS THE CREDIT FOR MINIMUM TAXES PAID TO ANOTHER JURISDICTION CALCULATED?
Use Schedule A, Form CT-6251 to calculate your allowable credit for alternative minimum taxes paid to other jurisdictions. Connecticut residents and part-year residents are entitled to a credit on Form CT-6251 for alternative minimum taxes paid to qualifying jurisdictions on income taxed by the other jurisdiction. (Credit for regular income tax paid to qualifying jurisdictions may only be claimed on Form CT-1040 or Form CT-1040NR/PY.) A qualifying jurisdiction means another state of the United States or a political subdivision of a state, the District of Columbia, or a Canadian province. No credit is allowed for alternative minimum tax paid to the United States or any foreign country, including Canada.
DOES THE STATE ALLOW CREDIT FOR PRIOR YEAR MINIMUM TAX?
For taxable years beginning on or after January 1, 1994, you may be able to take a credit against your regular Connecticut income tax for Connecticut alternative minimum tax paid in a prior year (1993 or thereafter).
HOW IS THE CREDIT FOR PRIOR YEAR MINIMUM TAX CALCULATED?
Your credit is calculated by subtracting from your net Connecticut minimum tax paid in 1993, the part of that tax generated by adjustments and items of preference specified in Internal Revenue Code 53 (d). The result is your credit. The 1994 Connecticut income tax booklets will include a form for calculating credit for prior year Connecticut minimum tax.
HOW MAY THE CREDIT BE USED?
You may be able to reduce your regular Connecticut income tax liability by the amount of your credit. Your credit for 1994 is limited to the amount that your regular Connecticut income tax for 1994 exceeds your Connecticut minimum tax for 1994.
EXAMPLE: If your 1994 regular Connecticut income tax is $5,000 and your 1994 Connecticut minimum tax is $3,500, your allowable credit is limited to $1,500 ($5,000 - $3,500 = $1,500). If your credit for the prior year's alternative minimum tax is $2,000, you can only use $1,500 of that credit in 1994.
WHAT HAPPENS TO THE UNUSED PORTION OF THE CREDIT?
Any unused portion of the credit can be carried forward to reduce your regular Connecticut income tax liability in future years. You can carry the credit forward until it is completely used. If you are entitled to any additional credit in subsequent years, you can add the credit to any balance being carried forward from earlier years.
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: None.
RELATED FORMS AND PUBLICATIONS:
For related publications, please request:
Form CT-6251, Connecticut Alternative Minimum Tax Return - Individuals
Form CT-1041, Connecticut Income Tax Return for Resident, Nonresident and Part-Year Resident Trusts and Estates
Form CT-8801, Credit for Prior Year's Minimum Tax For Individuals and Fiduciaries
FOR FURTHER INFORMATION: For information about the insurance premiums tax or the health care center tax, please call the Excise/Public Services Taxes Subdivision at 860-541-3225 during business hours, Monday through Friday.
For information concerning other Connecticut taxes, 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.