IP 92(5.3)

Estimated Connecticut Income Taxes

BACKGROUND:  In January 1993, the Department issued IP 92(5.2) to assist taxpayers in calculating their estimated Connecticut income tax.  1993 Conn. Pub. Acts 74, Section 41 and 57, amended the estimated income tax requirements for taxable years beginning on or after January 1, 1993.  IP 92(5.3) reflects these changes.

PURPOSE: This publication explains filing requirements for paying estimated income tax for taxable years beginning in 1993 and thereafter.  Connecticut taxpayers can be charged interest for underpaying their estimated income tax, even though they pay all the Connecticut income tax they owe by the April 15 filing 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 income tax 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 income 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 interest on the amount of the underpayment.

WHO SHOULD PAY ESTIMATED TAX? In general, you must make estimated payments of Connecticut income tax if you expect to owe, after subtracting Connecticut income tax withheld for the taxable year, more than $200 and expect your Connecticut income tax withholding to be less than your required annual payment.

WHAT IS MY REQUIRED ANNUAL PAYMENT?   Your required annual payment is the lesser of:

• 90% of your total Connecticut income tax for the current taxable year
                                    or
• 100% of your total Connecticut income tax 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.

INCOME NOT SUBJECT TO WITHHOLDING:  The checklist below includes many (although not all) of the types of income that is not subject to Connecticut income tax withholding and that may require you to pay estimated tax: 

• self-employment;
• pensions and annuities (if no Connecticut income tax is withheld);
• prize winnings;
• capital gains;
• interest income;
• dividend income;
• gambling winnings (if no Connecticut income tax is withheld);
• rental income;
• unemployment compensation;
• federally taxable social security;

To avoid the filing of an estimated tax, you may request your employer or pension plan payer 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 or Form CT-W4P.

HOW DO I ESTIMATE MY TAX?  To figure your estimated tax payments, you will need Form CT-1040ES, Individual Estimated Income Tax Payment Coupon. The instructions include a worksheet for computing your estimated tax payments, exemption and credit tables, and a coupon to be mailed in with your estimated payments.

NOTE:  If you made estimated payments of Connecticut income tax last year, you will receive an individual estimated income tax payment coupon book 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 department's Forms Unit to make your first payment.  If you file this form, additional coupons will be mailed to you.

WHEN DO I PAY MY ESTIMATED INCOME TAX?  Generally, you must make your first estimated income tax payment by April 15. 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, and January 15.  (Taxpayers who file their returns on a fiscal year should follow federal filing dates.)

If your liability for estimated payments begins after April 1 of the taxable year, due to changes in income, deductions or exemptions, consult the instructions for Form CT-1040ES to determine the payment schedule and the percentage to pay with each installment.

HOW MUCH SHOULD I PAY WITH EACH INSTALLMENT? In general, you are required to pay 25% of your required annual payment with each installment.  Your installments should be made as follows:  

WHAT IF MY INCOME VARIES DURING THE YEAR?  If you do not earn your income evenly throughout the year, you may benefit from using the annualized income installment method.  Instead of paying your required annual payment in four equal installments, you may be able to reduce or eliminate the amount of one or more installments.   You will make up the difference by making a larger payment for the period or periods when more of your income is earned.

For information, about this method, request from the Forms Unit a copy of IP 93(6),  A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040AES.

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 and Fiduciaries, to show that you are not underpaid and are not subject to interest charges.

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, interest may be charged.  Interest is calculated separately for 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.)   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?  When you file a final return for the year, you may request that overpayments of Connecticut income tax be applied to your next year's 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.

EFFECT ON OTHER DOCUMENTS:  IP 92(5.2) issued 1/20/93 is superseded and may no longer be relied upon.

RELATED FORMS AND PUBLICATIONS:  

• Form CT-1040ES,  Individual Estimated Income Tax Coupon

• IP 92(9.2), Is My Connecticut Withholding Correct?

• IP 93(6), A Guide to Calculating Your Annualized Estimated Income Tax Installments and Worksheet CT-1040AES

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
• Telephone: Call 860-297-4753 (from anywhere) or 1-800-382-9463 (toll-free within Connecticut).