IP 94(2.2)

Q & A: The Connecticut Alternative Minimum Tax

This publication has been superseded by IP 94(2.3)

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: Conn. Gen. Stat. 12-700a 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;

or

• 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 I, Connecticut Alternative Minimum Tax Computation of Trust or Estate, to Form CT-1041, Connecticut Income Tax Return for Resident, Nonresident, and Part-Year Resident Trusts and Estates. (The rules in this informational publication apply primarily to individuals. Guidance for trusts and estates can be found in the instructions to Form CT-1041 and Schedule I 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: The Connecticut minimum tax is the lesser of:

1. 19% of the adjusted federal tentative minimum tax;

or

2. 5% of the adjusted federal alternative minimum taxable income.

STEP 3: Nonresidents and part-year residents will allocate the Connecticut minimum tax based upon the percentage of income from Connecticut sources.

STEP 4: Subtract your Connecticut income tax from the apportioned Connecticut minimum tax. The difference (if greater than zero) is your net Connecticut minimum tax.

STEP 5: Residents and part-year residents 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.

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?

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 the tax attributable to adjustments and items of preference (i.e. exclusion items) specified in Internal Revenue Code 53 (d) from your net Connecticut minimum tax calculated at 19%.

EXAMPLE: If your 1995 regular Connecticut income tax is $5,000 and your 1995 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 1995. ($500 is carried forward.)

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: IP 94(2.2) modifies and supersedes IP 94(2.1) which may no longer be relied upon on or after this date.

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
IP 93 (6.2), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040AES

FOR FURTHER INFORMATION: If you have questions about Connecticut taxes, please call the Department of Revenue Services during business hours, Monday through Friday:

• 860-297-5962 (Hartford calling area or from out-of-state); or
• 1-800-382-9463 (toll-free from within Connecticut)

Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.

FORMS AND PUBLICATIONS:

You may obtain forms and publications at any hour, seven days a week:

• Telephone: use the phone numbers listed above and select Option 3 from a touch-tone phone;
• Internet: preview and download forms from the DRS web site

IP 94(2.2)
Income tax
Issued: 12/11/95
Replaces IP 94(2.1), issued 2/17/95