State Tax Tips for Senior Citizens
This Informational Publication has been modified and superseded by IP 99(2.1)
PURPOSE: This publication is designed to acquaint you with Connecticut state taxes and to indicate tax advantages that may be available. Information on income tax and sales tax, as well as succession, gift, real estate conveyance and local property taxes, is included in this publication. To order forms or publications or to get help follow the instructions below.
PART 1. INCOME TAX:
The Connecticut income tax applies to Connecticut residents and to part-year residents and nonresidents who have income from Connecticut sources. (See the instructions in the Connecticut income tax instruction booklets to determine your residency status.) The tax is computed on your Connecticut taxable income.
Income Tax Return: The Connecticut income tax return for calendar year filers is due on or before April 15 for the preceding taxable year. You may be required to file an income tax return even if you do not owe any tax. Information on filing requirements is included in all Connecticut income tax instruction booklets. Residents must file Form CT-1040, Form CT-1040EZ or Form CT-1040EZ Telefile. Nonresidents and part-year residents must file Form CT-1040NR/PY.
To compute your Connecticut taxable income, subtract your personal exemption from your Connecticut adjusted gross income. If your Connecticut adjusted gross income is less than or equal to the maximum exemption amount for your filing status, you do not owe any Connecticut income tax.
Maximum exemption amounts are:
$12,000 - single filers or married filing separately
For every $1,000 (or part of) of Connecticut adjusted gross income over $24,000, the exemption amount is reduced by $1,000.
$19,000 - head of household
For every 1,000 (or part of) of Connecticut adjusted gross income up to $38,000, the exemption amount is reduced by $1,000.
$24,000 - married filing jointly
For every $1,000 (or part of) of Connecticut adjusted gross income up to $48,000, the exemption amount is reduced by $1,000.
Tax rate: For the 1998 taxable year, the tax rate is 3% on the first:
$7,500 of taxable income for single filers and married taxpayers filing separately;
$12,000 of taxable income for head of household filers; and
$15,000 of taxable income for married taxpayers filing jointly.
For the 1999 taxable year, the amount taxed at 3% increases to $10,000 for single filers or married taxpayers filing separately, $16,000 for head of household filers and $20,000 for married taxpayers filing jointly.
Credits: You may be eligible for a personal tax credit of between 1% and 75%, depending upon your income level. The credit is incorporated into the personal income tax tables. (See Table C if you are using the tax calculation schedule to compute your income tax liability.)
A property tax credit is also available to individual Connecticut taxpayers for property taxes paid to a Connecticut political subdivision on a primary residence or on a motor vehicle, or both. Generally, this credit is allowed for property tax bills first becoming due during 1998 and paid during 1998.
This credit is also allowed for second or later installments of property tax paid during 1998, where the first installment first became due during 1998. The maximum credit allowed for the 1998 taxable year is $350 per return. Supplemental property tax bills first becoming due during 1998 and paid during 1998 and paid during 1998 also qualify for this credit. However, the payment of any delinquent property tax bills or the payment of any interest, fees or charges related to the property tax bill do not qualify for this credit.
If you paid more than $100 in qualifying property taxes, you may be subject to a limitation based upon your filing status and your Connecticut adjusted gross income. Request IP 97(9.1), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision, for further information.
Computing Your Income Tax: The following example shows how to compute the income tax liability for the 1998 taxable year for a married couple filing jointly. Tax is rounded to the nearest whole dollar.
|CT adjusted gross income||$40,000|
|Personal exemption||- 24,000|
|CT taxable income||$16,000|
Calculation of Tax
|Income taxable at 3%||$15,000|
|Tax Rate||x .03|
|Tax at 3%||$ 450|
|Income taxable at 4.5%||$ 1,000|
|Tax rate||x .045|
|Tax at 4.5%||$ 45|
|Personal tax credit
(total tax of $495 x 35% from Table C)
|Tax due (before deducting any property tax credit)||$322|
Income Subject to Tax: Income included in your federal adjusted gross income generally is subject to Connecticut income tax. Income excluded from your federal adjusted gross income generally is not subject to Connecticut income tax. For example, interest from Connecticut state or local bonds is not subject to federal or Connecticut income tax. Likewise, the gain from the sale of your primary residence is subject to Connecticut income tax only to the extent that it is subject to federal income tax.
Modifications to Federal Adjusted Gross Income: Certain income is treated differently for Connecticut income tax purposes than it is for federal income tax purposes. If you have such income, you must make modifications (additions or subtractions) to your federal adjusted gross income when you complete your Connecticut income tax return. These modifications are explained fully in the instructions to Schedule 1, Form CT-1040, Connecticut Resident Income Tax Return or Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return. If you have income from U.S. government obligations, such as U.S. Savings Bonds or Treasury Notes, or income from bonds issued by another state, you must complete Schedule 1 to make the appropriate modification. Remember: You cannot use Form CT-1040EZ or Form CT-1040EZ Telefile if you are required to make a modification to federal adjusted gross income. You must use Form CT-1040 or Form CT-1040NR/PY.
Social Security Benefit Adjustment: Social security recipients who pay federal income tax on their benefits may be able to reduce the amount of benefits that are taxable for Connecticut income tax purposes by completing the Social Security Benefit Adjustment Worksheet included with Form CT-1040 or Form CT-1040NR/PY. For taxable years beginning on or after January 1, 1998, Connecticut only taxes 25% of the social security benefits received.
Estimated Income Tax Filing Requirements: After subtracting your Connecticut income tax withholding, if you expect to owe more than $500 for 1999, after taking any tax credits, into account, and you expect your withholding to be less than your required annual payment, you must make estimated Connecticut income tax payments. Estimated payments are generally made in four equal installments: April 15, June 15, September 15, and January 15. If your income varies throughout the year, however, you may be able to reduce or eliminate the amount of one or more estimated payments by using the annualized installment method. Request IP 92(5.8), Estimated Connecticut Income Taxes, and IP 93(6.5), A Guide to Calculating Your Annualized Estimated Income Tax Installments, for more information.
Withholding from Your Pension: If you are a resident and receive a pension, you may be able to have Connecticut income tax withheld from your pension payments. Contact your pension payer and ask for Form CT-W4P, Withholding Certificate for Pension or Annuity Payments. Retired federal civil service employees must contact the United States Office of Personnel Management (USOPM) to start, stop or change Connecticut income tax withholding. Call USOPM at 1-800-409-6528 to use the automated request system or 1-202-606-0500 to speak with a representative.
Nonresidents of Connecticut are not subject to Connecticut income tax on their pension income, even if a former employer pays the pension for services performed while employed in Connecticut.
PART II. SALES AND USE TAX:
There are no special exemptions from the sales tax for senior citizens. However, some examples of items and services that are not subject to the sales or use tax are:
- Clothing and footwear items costing under $50
- Current United States and Connecticut flags
- Diabetic supplies (test strips and tablets, lancets and glucose monitoring equipment)
- Doctor, dentist, medical laboratory, lawyer and travel agent fees
- Eyeglasses, dentures, hearing aids, and hearing aid batteries
- Some non-prescription (over-the-counter) drugs that are used internally. This includes: vitamins, minerals, food supplements, pain relievers, laxatives, cough syrups, lozenges, cold and allergy products, eye care products, nasal sprays, drops and inhalers, and antacids
- Adult diapers and disposable pads for incontinence
- Oxygen and oxygen equipment, customized trusses and braces, crutches and wheelchairs
- Prescription drugs, syringes and needles
- Repair services to artificial limbs, artificial eyes, hearing aids and other equipment used to support vital life functions
- Repair services to crutches, walkers and wheelchairs
- Telephone equipment designed exclusively for deaf or blind people
- Equipment for people with physical disabilities installed in motor vehicles
- Electricity and gas for residential use
- Fuel for residential heating or cooking such as oil, kerosene, wood, coal and charcoal
- Fabric, thread, buttons, zippers, trim, and similar materials, for noncommercial sewing used to make clothing
- Yarn for noncommercial use
- Food purchased in supermarkets. (Beer, wine and all alcoholic beverages are taxable. Candy, gum, soda, and all other carbonated beverages, including water are also taxable.)
- Food products sold through coin-operated vending machines
- Instruction classes, such as knitting, sewing, dog obedience, music, dance etc.
- Labor for many home repairs and services including plumbing, electrical, refuse removal, and septic cleaning services. However, the following renovation services are subject to sales or use taxes: painting, staining, paving, roofing, wallpapering, siding, and exterior sheet metal work
- Landscaping and horticultural services, window cleaning, and maintenance services when rendered at the residence of a person eligible to receive, and currently receiving, total disability benefits under the Social Security Act
- Meals that are delivered to home of elderly persons and that are provided by special programs, such as "Meals on Wheels"
- All newspapers and subscription to magazines
- Other nontaxable services, including animal grooming and boarding services, laundry, hair styling, health and athletic services, towing, real estate and jewelry appraisal
- Vegetable seeds
Personal property used in a burial or cremation with a value of up to $2,500
Discounts: When a senior citizen discount or other discount is offered on a taxable item, the sales tax is applied to the discounted price.
Coupons: A coupon entitles a purchaser to an immediate reduction in the sales price of an item when the coupon is presented to a retailer. No additional action is required of the purchaser. In contrast, rebates do not reduce the taxable sales price of an item being purchased.
Sales and use taxes must be calculated on the sales price after reducing the price by the value of any coupons presented. Any additional value assigned by the retailer, such as to double or triple the coupon, is also excluded from the sales price.
For example, if the original price of an item is $3.00 and you present a coupon for 50 cents off the item, the taxable price is now $2.50. The total price of the item, including the sales tax, is $2.65.
Request PS 98(1.1), Sales Tax Treatment of Coupons, Scan Cards, Cash Equivalents, Promotional Items and Rebates, for additional information.
When the seller of goods or provider of taxable services does not collect the sales tax, you must pay a use tax. You must file a use tax return annually to report purchases of goods or services on which Connecticut sales tax was not paid.
Typically, if your purchased goods from mail order or catalog companies and had the goods shipped to Connecticut or you purchased goods at out-of-state locations and brought those goods back into Connecticut you must pay the Connecticut use tax if you did not pay Connecticut sales tax. You must pay the use tax for purchases you made during the prior calendar year on either your Connecticut income tax return or on Form OP-186, Connecticut Individual Use Tax, on or before April 15.
PART III. SUCCESSION TAX:
The Connecticut succession tax began to be phased out in 1997 and is scheduled for total repeal in 2005. For estates of decedents dying on or after January 1, 2001, any part of the net taxable estate passing to Class A beneficiaries will no longer be subject to the tax. For a Connecticut resident, the tax applies to all property, except for real property and tangible personal property located outside Connecticut. For nonresidents, it applies only to real property and tangible personal property located in Connecticut. The tax rate depends on the relationship of the beneficiary to the decedent and the size of the estate. There is a total exemption from tax if the entire estate passes to a surviving spouse. For information and tax tables for estates of decedents dying after 1996, see SN 95(18), 1995 Legislative Changes Affecting the Succession and Transfer Taxes and the Estate Tax.
PART IV. GIFT TAX:
Residents are taxed on all gifts of intangible property and gifts of real property and tangible personal property located in Connecticut. Nonresidents are taxed on gifts of real and tangible personal property located in Connecticut.
Gifts of a present interest to any particular donee during the calendar year are not subject to the Connecticut gift tax unless the value of all gifts to the donee during the calendar year exceeds $10,000. (For gifts made after 1998, this $10,000 amount may be adjusted based on the percentage by which the Consumer Price Index for the preceding calendar year exceeds the Consumer Price Index for calendar year 1997.) Transfers of future interest are not covered by this $10,000 annual exclusion. The special valuation rules under Internal Revenue Code §§2701 to 2704 (dealing with transfers to or for the benefit of family members) apply for Connecticut gift tax purposes. For example, if a donor delivers a deed transferring title to his home to his children but reserving a life use, the value of the gift equals the sum of the value of the life estate and the value of the remainder interest.
PART V. REAL ESTATE CONVEYANCE TAX:
A state and municipal real estate conveyance tax is imposed on deeds conveying an interest in realty where the consideration for the interest in property equals or exceeds $2,000. A deed to a corporation in exchange for shares of its stock (whether or not such shares are exchanged) is subject to real estate conveyance tax as is a deed by a partner or a partnership or LLC as a contribution of partnership or LLC assets. (In those situations, the tax is based on the fair market value of the property.) A deed for no consideration or less than $2,000 in consideration is exempt from this tax, but may be subject to the gift tax. A deed of the principal residence of a person receiving the property tax benefits for the elderly is exempt from the state tax but subject to the municipal tax.
PART VI. LOCAL PROPERTY TAXES:
Homeowner/Renter Tax Credit: An annual property tax credit or rent rebate is available to residents, age 65 or older, or to a surviving spouse, age 50 or older, who meet certain residence and income requirements. Regardless of age, a totally and permanently disabled person is also eligible. Contact the local assessor in your town or city hall for details and forms.
Veteran Exemption: A variable, annual tax exemption on the assessed value of an owner-occupied dwelling or on a motor vehicle is available to any qualified veteran or surviving spouse. Contact the local assessor in your town or city hall for details and forms for any of the above.
EFFECT ON OTHER DOCUMENTS: IP 99(2) supersedes IP 92(4.4), State Tax Tips for Senior Citizens.
EFFECT OF THIS DOCUMENT: An Informational Publication is a document that addresses frequently-asked questions about a current Department position, policy or practice, usually in a less technical format.
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, please 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: http://www.ct.gov/drs.
State Tax Tips for Senior Citizens