Employer's Classification Determines When Payments Are Required to be Made

Weekly remitters must pay over Connecticut income tax withholding with Form CT-WH, Connecticut Withholding Tax Payment Form, on or before the Wednesday following the weekly period during which the wages were paid.

Monthly remitters must pay over Connecticut income tax withholding with Form CT-WH on or before the fifteenth day of the month following the month during which the wages were paid.

Quarterly remitters must pay over Connecticut income tax withholding with Form CT-WH on or before the last day of the month following the quarterly period during which the wages were paid.

See Household Employers

See Employers

Payer's Classification Determines When Payments Are Required to be Made

Weekly remitters must pay over Connecticut income tax withholding with Form CT-8109, Connecticut Withholding Tax Payment Form for Nonpayroll Amounts, on or before the Wednesday following the weekly period during which the nonpayroll amounts were paid.

Monthly remitters must pay over Connecticut income tax withholding with Form CT-8109 on or before the fifteenth day of the month following the month during which the nonpayroll amounts were paid.

Quarterly remitters must pay over Connecticut income tax withholding with Form CT-8109 on or before the last day of the month following the quarterly period during which the nonpayroll amounts were paid.

See Payers of Nonpayroll Amounts

On or Before April 30, July 31, October 31, and January 31

Employers must file Form CT-941 (even if no tax is due or has been withheld for the quarter), together with required copies of Forms CT-W4, Employee’s Withholding Certificate, claiming exempt status from the tax and given to you by employees during that quarter. Send copies of Form CT-W4 to the Department of Revenue Services (DRS) only as required.

See Employee’s Withholding Certificate

On or Before January 31

Employers must give federal Form W-2, Wage and Tax Statement, to each employee to whom Connecticut wages were paid during the preceding calendar year.

Payers of nonpayroll amounts must file Form CT-945 (even if no tax is due or has been withheld for the year).

Payers of nonpayroll amounts must give federal Form 1099-MISC, Miscellaneous Income; 1099-R, Distributions From Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; 1099-S, Proceeds From Real Estate Transactions; or W-2G, Certain Gambling Winnings, for each payment, distribution, or transaction made during the preceding calendar year.

On or Before February 15

Employers must obtain a new Form CT-W4 from each employee who claimed exempt status (Withholding Code "E") from Connecticut withholding in the prior year.

On or After February 15

Employers must begin withholding at a flat rate of 5% (.05), without allowance for exemption, from each employee who claimed exempt status from Connecticut income tax withholding in the prior year and who did not provide a new Form CT-W4 on or before February 15. The Form CT-W4 previously filed by the employee claiming exemption has now expired.

On or Before the Last Day of February

Employers must file Form CT-W3, Connecticut Annual Reconciliation of Withholding, together with every "state copy" of federal Form W-2 reporting Connecticut wages paid to employees during the prior calendar year.

Note: State copies of federal Form W-2 are required for all employees to whom Connecticut wages were paid during the prior calendar year, even if no Connecticut income tax was withheld during the calendar year.

Payers of nonpayroll amounts must file Form CT-1096, Connecticut Annual Summary and Transmittal of Informational Returns, and the "state copy" of federal Forms 1099 and W-2G.

Important Information for Connecticut Employers and Payers

All withholding requirements, tables, and forms effective January 1, 2005, are included in Informational Publication 2005(7), Connecticut Circular CT - Employer's Tax Guide.

Use Fast-File to Speed Filing of Certain Withholding Tax Forms

Fast-File is a fast, easy, secure, and paperless way to file withholding tax returns and pay withholding tax electronically. Employers may use Fast-File to file Forms CT-WH and CT-941. Payers of nonpayroll amounts may use Fast-File to file Forms CT-8109 and CT-945.

To Fast-File, visit the DRS Web site. For more information, see TPG(129), Fast-File in Five (available from the DRS Web site or from the DRS Forms Unit at 860-297-4753).

When to Submit Exempt Forms CT-W4 to DRS

Employers are only required to submit Forms CT-W4 to DRS in certain circumstances. Do not send exempt Forms CT-W4 to DRS unless the conditions under Reporting Certain Employees to DRS, are met.

New Rules for Employers

Each employer is required to withhold Connecticut income tax from employee wages at the time wages are paid and is required to pay over such Connecticut income tax withholding to DRS in accordance with the employer's remitter classification. DRS will notify most employers of their new filing frequency before mailing them their 2005 Employer's Withholding Remittance Coupon Book. Most new employers will be classified as monthly remitters.

Each calendar year an employer will be classified by DRS either as a weekly remitter, monthly remitter, or quarterly remitter. An employer's classification has nothing to do with how often the employer pays its employees or how often the employer is required to pay over Connecticut income tax withholding to DRS. The classification relates to how much time an employer has to pay over Connecticut income tax withholding to DRS after wages are paid to employees and Connecticut income tax is deducted and withheld from those wages. An employer's classification is based on the employer's reported liability for Connecticut income tax withholding during the twelve-month look-back period. (The twelve-month look-back period for calendar year 2005 is the twelve-month period that ended on June 30, 2004.)

See: Special Notice 2004(9), 2004 Legislation Affecting Connecticut Income Tax Withholding by Employers on Wages Paid on or After January 1, 2005

New Rules for Payers

Each payer is required to withhold Connecticut income tax from nonpayroll amounts at the time those amounts are paid and is required to pay over such Connecticut income tax withholding to DRS in accordance with the payer's remitter classification. DRS will notify most payers of their new filing frequency before mailing them their 2005 Withholding Remittance Coupon Book for Payers of Nonpayroll Amounts. Most new payers will be classified as monthly remitters.

Each calendar year a payer will be classified by DRS either as a weekly remitter, monthly remitter, or quarterly remitter. A payer's classification has nothing to do with how often the payer pays its payees or how often the payer is required to pay over Connecticut income tax withholding to DRS. The classification relates to how much time a payer has to pay over Connecticut income tax withholding to DRS after nonpayroll amounts are paid to payees and Connecticut income tax is deducted and withheld from those nonpayroll amounts. A payer's classification is based on the payer's reported liability for Connecticut income tax withholding during the look-back calendar year. (The look-back calendar year for calendar year 2005 is calendar year 2003.)

See Special Notice 2004(10), 2004 Legislation Affecting Connecticut Income Tax Withholding by Payers From Nonpayroll Amounts Paid on or After January 1, 2005

When sending forms, returns, or payments to DRS, employers may use certain private delivery services in addition to the U.S. Postal Service and satisfy the "timely mailing as timely filing/payment" rule.

See Policy Statement 2002(4), Designated Private Delivery Services and Designated Types of Service

Supplemental Tables for Joint Filers Where Both Spouses Work

Employees who file a joint income tax return where both spouses work and choose Withholding Code "A" on Form CT-W4, should refer to the supplemental tables on Form CT-W4, effective January 1, 2005, to ensure the correct amount of tax is withheld.

Employers should post Announcement 2005(1), Information for Married Individuals Who Are Both Employed and Are Filing a Joint Connecticut Income Tax Return

Anyone who maintains an office or transacts business in Connecticut and who is considered an employer for federal withholding purposes must withhold Connecticut income tax, whether or not the payroll department is located in Connecticut. Special rules apply to payers of nonpayroll amounts and payers of compensation to professional athletes and entertainers.

Any employer or payer who is required to withhold Connecticut income tax must register for withholding tax with DRS.

An employer who is not already registered with DRS, including an employer starting a new business, must register to withhold Connecticut income tax by completing Form REG-1, Business Taxes Registration Application. Form REG-1 is also used to register a business for most other state taxes, including sales and use taxes and corporation business tax.

An employer who is already registered with DRS for other state taxes is still required to register to withhold Connecticut income tax and must complete Form REG-1 to register for withholding as an additional tax.

An employer who acquires an existing business must also complete Form REG-1 to obtain a Connecticut tax registration number. The new owner cannot use the previous owner’s tax registration number or withholding tax coupons.

The DRS tax registration number and federal employer identification number must appear on all Connecticut withholding forms and on all correspondence with DRS. Do not use the registration number issued by the Department of Labor (DOL) on DRS forms.

A new payer who is required to deduct and withhold Connecticut income tax from nonpayroll amounts must complete Form REG-1. See Nonpayroll Amounts for the requirements to withhold Connecticut tax.

A payer of nonpayroll amounts who is not already registered with DRS, including a payer starting a new business, must register to withhold Connecticut income tax by completing Form REG-1. Form REG-1 is also used to register a business for most other state taxes, including sales and use taxes and corporation business tax.

A payer of nonpayroll amounts who is already registered with DRS for other state taxes is still required to register to withhold Connecticut income tax and must complete Form REG-1 to register for withholding as an additional tax.

A payer of nonpayroll amounts who acquires an existing business must also complete Form REG-1 to obtain a Connecticut tax registration number. The new owner cannot use the previous owner’s tax registration number or withholding tax coupons.

The DRS tax registration number and federal employer identification number must appear on all Connecticut withholding forms and on all correspondence with DRS. Do not use the registration number issued by the Connecticut Department of Labor (DOL) on DRS forms.

Household Employers

A household employer is not required to withhold Connecticut income tax from the wages of household employees but may do so voluntarily by agreement between the employer and the employee. A household employer who agrees to withhold Connecticut income tax must register with DRS for withholding by submitting a completed Form REG-1 with a written request stating that the employer is a household employer and is asking for annual filer status.

A household employer already registered to withhold Connecticut income tax may request annual filer status by submitting a written request which states that the employer is a household employer who prefers annual filer status. The request should be sent to the registration address below.

This request must be received on or before March 31 of the calendar year in order to be effective for that calendar year. A new request is not required to be made for succeeding calendar years, as long as the household employer remains an annual filer.

Every household employer is required to file federal Form(s) W-2, Wage and Tax Statement, with Form CT-W3, Connecticut Annual Reconciliation of Withholding, whether or not the employer is registered with DRS and whether or not the employer has withheld any Connecticut income tax. Form CT-W3 is due on or before the last day of February to report Connecticut wages paid during the preceding year. Unregistered household employers should enter the words "HOUSEHOLD EMPLOYER" in the space reserved for the Connecticut tax registration number on Form CT-W3.

Agricultural Employers

An agricultural employer must register by completing Form REG-1, and withhold Connecticut income tax from the wages of agricultural workers if:

An agricultural employer may request seasonal filer status by submitting a written request with a completed Form REG-1 which states that the employer is an agricultural employer who will file federal Form 943 and employs farm workers only.

An agricultural employer who is already registered to withhold Connecticut income tax may request seasonal filer status by submitting a written request which contains the information listed above. The request should be sent to the registration address in the next column.

Every agricultural employer is required to file federal Form(s) W-2, with Form CT-W3, whether or not the employer is registered with DRS, and whether or not the employer has withheld any Connecticut income tax. Form CT-W3 is due on or before the last day of February to report Connecticut wages paid in the preceding year. Unregistered agricultural employers should enter the words "AGRICULTURAL EMPLOYER" in the space reserved for the Connecticut tax registration number on Form CT-W3.

Note: In general, an agricultural employer is required to withhold federal income tax (and Connecticut income tax) from an agricultural worker receiving cash wages, if those cash wages are subject to FICA (social security) tax withholding. Refer to the IRS Circular A, Agricultural Employer's Tax Guide, for information on federal income tax withholding for agricultural workers. To obtain a copy of Circular A, Agricultural Employer's Tax Guide, call the IRS at 1-800-829-3676.

Professional Athletes and Entertainers

Certain payers of compensation to professional athletes and entertainers must register for Connecticut withholding. See below for additional information.

Seasonal Employers

A new employer whose liability for Connecticut withholding will occur seasonally and in the same one or more quarters each year must complete Form REG-1. The employer may request seasonal filer status by submitting a written request with a completed Form REG-1 which states the quarters that the employer will be active.

This request must be received on or before the last day of a calendar quarter to be effective for that calendar quarter. A new request is not required for succeeding calendar years as long as the employer remains a seasonal filer.

Seasonal employers who are already registered to withhold Connecticut income tax may request seasonal filer status by submitting a written request which states the quarters during which their business is active and their Connecticut Tax Registration Number to the following address:

Voluntary Registration to Withhold Tax

Any employer who is not required to register to withhold Connecticut income tax may register solely for the purpose of withholding Connecticut income tax if both the employer and the employee voluntarily agree to have Connecticut income tax withheld.

Upon registration, the employer will be treated as an employer required to withhold Connecticut income tax while the agreement remains in effect.

Voluntary Registration by Persons Other Than Employers to Withhold Tax

Any person (other than an employer) who is not required to register to withhold Connecticut income tax may register solely for the purpose of withholding Connecticut income tax if both the payer and the payee voluntarily agree that Connecticut income tax will be withheld.

Upon registration, the payer will be treated as an employer required to withhold Connecticut income tax while the agreement remains in effect.

In general, Connecticut law follows the federal law in determining what income is subject to withholding. Employers should consult the IRS Circular E, Employer’s Tax Guide, and Publication 15-A, Employer's Supplemental Tax Guide, to determine federal withholding rules for specific types of income.

Wages

In general, all amounts that are wages and subject to federal withholding are also wages for Connecticut income tax withholding purposes. Such amounts include, but are not limited to, fringe benefits, supplemental compensation, golden parachutes, sick pay, moving expenses, and severance pay.

Resident wages subject to Connecticut withholding

All wages of a Connecticut resident are subject to Connecticut income tax withholding, even if the resident works outside of Connecticut. If an employer is required to withhold income tax for services performed in other states or their political subdivisions, or the District of Columbia, from the resident’s wages, the employer is required to withhold Connecticut income tax as follows:

1. For an employee who is a resident individual and works for an employer in one or more qualifying jurisdictions, but not in Connecticut, and the employer maintains an office or transacts business both in Connecticut and in the same qualifying jurisdiction(s) in which the employee works for the employer

Example 1: A Connecticut resident is employed in State X by an employer maintaining an office or transacting business both in Connecticut and in State X. State X income tax payable on the employee’s wages is $100. The Connecticut income tax that would otherwise be required to be withheld from such wages is $160. The amount of Connecticut income tax required to be withheld is $60.

Example 2: A Connecticut resident works in State Y for an employer maintaining an office or transacting business both in Connecticut and in State Y. The income tax payable to State Y on the employee’s wages is $200. The Connecticut income tax that would otherwise be required to be withheld from such wages is $200. No Connecticut income tax is required to be withheld.

Example 3: A Connecticut resident works in State Z for an employer maintaining an office or transacting business both in Connecticut and in State Z. The income tax payable to State Z on the employee's wages is $300. The Connecticut income tax that would otherwise be required to be withheld from such wages is $250. No Connecticut income tax is required to be withheld.

Example 4: A resident individual is employed in New York and New Jersey by an employer maintaining an office or transacting business in Connecticut, New York, and New Jersey. Assume that the Connecticut income tax that would be required to be deducted and withheld from the employee's total wages for work performed in New York and New Jersey is $500, and that half of the employee's wages are for work performed in New York and the other half are for work performed in New Jersey. Therefore, the prorated tax amount for New York is $250, and the prorated tax amount for New Jersey is $250. Assuming that the New York income tax that would be required to be deducted and withheld from the employee's New York wages is $300, no Connecticut income tax would be required to be deducted and withheld from the employee's New York wages, because the New York income tax required to be deducted and withheld from the employee's wages exceeds the prorated tax amount for New York. Assuming that the New Jersey income tax that would be required to be deducted and withheld from the employee's New Jersey wages is $210, the amount of Connecticut income tax that would be required to be deducted and withheld from the employee's New Jersey wages is $40. (This is the amount by which the prorated tax amount for New Jersey ($250) exceeds the New Jersey income tax required to be deducted and withheld from the employee's wages.) Therefore, the amount of Connecticut income tax that would be required to be deducted and withheld from the employee's total wages is $40.

Nonresident Wages Subject to Connecticut Withholding

Wages of a nonresident are subject to Connecticut income tax withholding if the wages are paid for services rendered in Connecticut. Wages of a nonresident are not subject to Connecticut income tax withholding if the wages are paid for services performed entirely outside of Connecticut.

Example 5: Working solely within Connecticut: A resident of State X works in Connecticut for an employer that is doing business in Connecticut and in State X. The employer is required to withhold Connecticut income tax because the services are performed in Connecticut. The employer should contact State X for withholding requirements in that state.

Example 6: Working solely outside Connecticut: A resident of State Y works in State Y for an employer whose main office, including the payroll department, is located in Connecticut. The employer is not required to withhold Connecticut income tax even though payment is made from a point in Connecticut, since the employee is a nonresident and performs all his services outside Connecticut. The employer should contact State Y for withholding requirements in that state.

Example 7: Working partly within and partly outside Connecticut: A resident of State Z works partly in Connecticut and partly in State Z for an employer who is doing business in Connecticut and State Z. The employer is required to withhold Connecticut income tax on wages paid to the nonresident employee in the same proportion that the employee’s wages derived from or connected with sources within Connecticut relate to the employee’s total wages.

Nonpayroll Amounts

Certain nonpayroll income (also known as nonpayroll amounts) is subject to withholding.

Pension and annuity distributions if the recipient is a Connecticut resident and has requested Connecticut income tax withholding.

Payers of pensions and annuities, both public and private, that maintain an office or transact business in Connecticut, are required to notify Connecticut resident recipients of the availability of Connecticut income tax withholding and withhold Connecticut income tax from payments if the Connecticut resident recipient submits a request in writing. This requirement applies to all pension and annuity payments from qualified or nonqualified plans, including lump sum distributions, whether or not payments are made from a Connecticut location.

Payers must provide recipients with Form CT-W4P, Withholding Certificate for Pension or Annuity Payments (or a reasonable facsimile). A written request for withholding (Form CT-W4P or a written request providing the same information) must be on file with the payer before withholding begins. The request to deduct and withhold Connecticut income tax must be made in specific whole dollar amounts. The minimum amount that a recipient can request to be withheld is $10 per payment. No maximum limit is placed on the amount that can be withheld, but it must be an even dollar amount.

The written request for withholding or a request for a change in the amount to be withheld takes effect with the first payment made on or after the date which occurs:

1. In a case in which no previous request is in effect, three calendar months after the date the request is furnished to the payer; or
2. In a case in which a previous request is in effect, the first status determination date (January 1, May 1, July 1, and October 1 of each year) which occurs at least 30 days after the date the request is furnished to the payer.

Form CT-W4P remains in effect until terminated by the payee. The payee may terminate the request by furnishing the payer with a signed written notice of termination.

Any payer who receives a request to withhold Connecticut income tax must register by filing Form REG-1.

See How to Register for Withholding Tax

In general, the payer will follow the instructions in the section entitled How to Report and Remit Taxes Withheld, except as follows:

1. Informational Return: Federal Form 1099-R, showing the amount of Connecticut income tax withheld in the prior year, must be given by payers of pension and annuity plans to their recipients on or before the succeeding January 31.
2. Annual Reconciliation: Form CT-1096 is due from all payers who are required to be registered for Connecticut income tax withholding on the last day of February even if no Connecticut income tax was withheld. No payment is to be made with this form. Payers must file the "state copy" of federal Form 1099-R, only if Connecticut income tax was withheld.

Military retirement pay if the recipient is a Connecticut resident and has requested Connecticut income tax withholding.

Unemployment compensation payments, if the recipient has requested Connecticut income tax withholding.

Gambling winnings other than Connecticut lottery winnings if the payment is subject to federal income tax withholding, and the payment is made to a resident or to someone receiving the payment on behalf of a resident.

A payer of gambling winnings maintaining an office or transacting business in Connecticut must withhold Connecticut income tax from winnings if the winnings are paid to a Connecticut resident, or to someone receiving them on behalf of a Connecticut resident, and the winnings are subject to federal income tax withholding.

See Informational Publication 2001(29), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings

Connecticut lottery winnings if reportable for federal income tax withholding purposes, whether or not federal income tax withholding is required. On or after September 1, 2003, the Connecticut Lottery Corporation will withhold Connecticut income tax at the rate of 5% (.05) from payments of reportable Connecticut Lottery winnings whether or not federal income tax withholding is required.

See Informational Publication 2003(21), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut

Gambling winnings include both cash and noncash winnings. The value of noncash winnings is fair market value.

Any payer of gambling winnings that are subject to Connecticut withholding and who is not otherwise required to register with DRS, must register by filing Form REG-1.

See How to Register for Withholding Tax

Connecticut income tax must be deducted and withheld at a flat rate of 5% (.05), without allowance for exemption, and is computed on the same amount that is subject to withholding for federal income tax purposes. If the winnings are a noncash prize, the payer of the prize must collect the required withholding, in cash, from the winner before awarding the noncash prize.

In general, payers will follow the instructions in the section entitled How to Report and Remit Taxes Withheld, except as follows:

1. Statement for Gambling Winnings: Federal Form W-2G, showing the gambling winnings paid and any Connecticut income tax withheld during the preceding year, must be given by payers of gambling winnings to recipients who are resident individuals on or before the succeeding January 31.
2. Annual Reconciliation: Form CT-1096 is due from all payers of gambling winnings on or before the last day of February. No payment is to be made with this form. Payers must file every "state copy" of federal Form W-2G, for winnings paid to resident individuals, even if no Connecticut income tax was withheld.

Payments made to athletes or entertainers, if the payments are not wages for federal income tax withholding purposes, but Connecticut income tax withholding is required.

Compensation for personal services performed in Connecticut by a professional athlete or entertainer, paid in cash or otherwise, in connection with sporting events or with the preparation or presentation of entertainment, whether as a participant, performer or otherwise, is subject to Connecticut income tax withholding if the payer is a designated withholding agent.

See Policy Statement 2005(1), Income Tax Withholding for Athletes or Entertainers

What Payments Are Not Subject to Connecticut Income Tax Withholding?

In general, income that is not subject to federal withholding is not subject to Connecticut income tax withholding.

Payments Not Subject to Federal Withholding

Other than the exceptions noted in the previous section, Connecticut income tax withholding is not required for any compensation paid to an employee if the compensation is not subject to federal withholding. Employers should consult the IRS Circular E, Employer’s Tax Guide, for federal withholding rules for specific types of income.

Self-Employed Individuals

The owner of a business that has no employees is not required to register for Connecticut income tax withholding. The owner of a business, other than the sole shareholder of an S corporation, is not an employee for federal or Connecticut withholding purposes.

Exemption from Connecticut income tax withholding does not exempt the income from Connecticut income tax. The recipient of taxable income that is not subject to Connecticut withholding is required to pay estimated taxes if the recipient’s Connecticut taxable income meets the minimum filing requirements.

See Informational Publication 2004(18) Estimated Connecticut Income Taxes

Example 8: Mary owns her own business and her business income is not subject to Connecticut income tax withholding. Generally, if Mary will owe $1,000 or more in Connecticut income tax for the current year (over and above any Connecticut income tax withheld for the current year), she must make estimated Connecticut income tax payments.

Interstate Commerce

Compensation paid by interstate rail carriers, interstate motor carriers, and interstate motor private carriers to a nonresident employee who performs regularly assigned duties in two or more states is not subject to Connecticut income tax withholding. The compensation is not income derived from Connecticut sources even though the employee performed services in Connecticut. However, such compensation is income derived from sources within the employee’s state of residence.

Interstate Air Carriers

Compensation paid by an interstate air carrier to a nonresident employee who performs regularly assigned duties on an aircraft in two or more states is income derived from sources in both the employee’s state of residence, and the state in which the employee earns more than 50% of the compensation. An employee has earned more than 50% of the compensation in Connecticut if the scheduled flight time in Connecticut is more than 50% of the total scheduled flight time in the calendar year.

See Nonresident Wages Subject to Connecticut Withholding

Nonresident Seaman

A nonresident seaman’s wages for employment on a ship which enters a Connecticut port for the purpose of foreign or interstate trade is not subject to Connecticut income tax withholding.

Wages Paid by the United States to Armed Forces Personnel

Payments made by the United States to nonresident military personnel stationed or performing services for the United States armed forces in Connecticut are not subject to Connecticut income tax withholding. In general, payments made by the United States to military personnel who are Connecticut residents or whose domicile was Connecticut when they entered the military, regardless of where they are stationed, are subject to Connecticut income tax withholding. Certain individuals, however, may be entitled to claim exemption from the tax.

See Informational Publication 2004(15), Connecticut Income
Tax Information for Armed Forces Personnel and Veterans

Withholding for Military Retirees

Connecticut residents who are retired from the regular and reserve components of the Uniformed Services are allowed to request, in writing, Connecticut withholding from their monthly retired pay. The term Uniformed Services refers to the Army, Navy, Air Force, Marine Corps, Coast Guard, commissioned corps of the Public Health Service, and commissioned corps of the National Oceanic and Atmospheric Administration.

A member may request withholding by completing Form CT-W4P and submitting it to the retired pay office of his or her uniformed service. The amount withheld from each payment must be an even dollar amount, but not less than $10.

How to Withhold Connecticut Income Tax

Employers should use the current Connecticut Income Tax Withholding Tables and Calculation Rules to determine the amount to withhold. To determine how much Connecticut income tax to withhold from each employee’s wages, employers should refer to the most recently completed Form CT-W4, Employee's Withholding Certificate on file for each employee.

Employers with nonresident employees who work partly within and partly outside Connecticut, see below.

Employee's Withholding Certificate

Employers must obtain a completed copy of Form CT-W4 from each new employee when hired. The form is effective for the first payroll period ending or the first payment of wages made on or after the date the employer receives a completed Form CT-W4. Unless the employee claims exemption, Form CT-W4 is effective until the employee provides the employer with a new one.

A copy of Form CT-W4 is shown below. Employers may photocopy as needed.

Employees claiming exemption

Employers are required to obtain a new Form CT-W4 on or before February 15 from each employee who claimed exemption from withholding in the prior year. If a new Form CT-W4 for the current year is not provided by the employee, the employer must begin withholding at a flat rate of 5% (.05), without allowance for exemption, on February 16. The Form CT-W4 previously given to the employer has now expired.

Reporting certain employees to the DRS

Generally, employers should not send copies of Form CT-W4 to DRS. However, employers must send copies of Forms CT-W4 from employees claiming exemption from Connecticut withholding, if:

1. The employee is employed by the employer on the last day of the quarter; and

2. The employer reasonably expects that:

• The annual wages of an employee whose filing status is "married filing separately" will exceed $36,000; or
• The annual wages of an employee whose filing status is "single" will exceed $37,875; or
• The annual wages of an employee whose filing status is "head of household" will exceed $57,000; or
• The annual wages of an employee whose filing status is "married filing jointly" will exceed $72,000.

Forms CT-W4 meeting the above conditions and received during the quarter must be sent to DRS with Form CT-941, Connecticut Quarterly Reconciliation of Withholding.

Reporting new or rehired employees to DOL

Employers with offices in Connecticut or transacting business in Connecticut are required to report the name, address, and Social Security Number of new or rehired employees to DOL. Each new employee's Form CT-W4 must be sent to the DOL no later than 20 days after the date of hire to assist in the enforcement of child support obligations. Employers should verify that all employee and employer items have been completed legibly before submitting Form CT-W4 to DOL. DOL may use information reported on this form in a manner consistent with its governmental powers and duties.

See additional instructions for submitting copies
on Form CT-W4

Determining How Much Connecticut Income Tax to Withhold From Employees

The amount to withhold from an employee’s wages depends on:

1. Payroll period;

2. Gross taxable wages;

3. Withholding Code; and

4. Additions or reductions to withholding requested by the employee on Form CT-W4.

How to Use the Withholding Tables:

Use these steps when calculating withholding from the tables:

1. Select the table which is the same as your payroll period (weekly, monthly, etc.).

2. Use the columns on the left side of the table. Find the line on which your employee’s gross taxable wages are included. (Gross taxable wages are wages subject to federal withholding.)

3. Select the "Withholding Amount" column on the right side of the table which corresponds with the Withholding Code selected by your employee on Form CT-W4 (Status A, B, C, D, or F).

4. Add to the "Withholding Amount" the amount, if any, on Line 2 of Form CT-W4.

5. Subtract from the "Withholding Amount" the amount, if any, on Line 3 of Form CT-W4. The amount on Line 3 of Form CT-W4 cannot exceed the total withholding amount.

Employees Who Do Not Return a Completed Form CT-W4

Employers must withhold at a flat rate of 5% (.05), without allowance for exemption, on the gross taxable wages of employees who do not return a completed Form CT-W4.

Withholding for Daily/Miscellaneous Amounts

For those employees who receive one-time or miscellaneous payments, the employer must withhold at a flat rate of 5% (.05) without allowance for exemption.

See Supplemental Compensation

Determining How Much to Withhold From Nonresident Employees Who Work Partly Within and Partly Outside Connecticut

A nonresident employee who performs services partly within and partly outside Connecticut is subject to Connecticut income tax only on the portion of wages attributable to services performed within Connecticut.

For Connecticut income tax withholding purposes, however, an employer must withhold Connecticut income tax on all wages paid to the employee unless the employer can properly allocate the wages attributable to services performed in Connecticut by means of one of the following:

• The nonresident employee gives the employer a completed Form CT-W4NA, Employee’s Withholding Certificate – Nonresident Apportionment, identifying the portion of wages subject to Connecticut income tax; or
• The employer maintains adequate current records to determine the amount of wages paid for such services performed within Connecticut.

Employers who receive Form CT-W4NA or who maintain adequate current records from nonresident employees will calculate the amount of Connecticut income tax to be withheld for services performed within Connecticut as follows:

1. Determine the total "Withholding Amount" on all wages paid to a nonresident employee.
2. If the employee has provided a Form CT-W4NA, multiply the total "Withholding Amount" by the percentage from Form CT-W4NA that certifies the estimated portion of services performed in Connecticut during the calendar year.

Employers who know or have reason to know that the percentage of services estimated on Form CT-W4NA is no longer correct, must make necessary adjustments during the calendar year. In making those adjustments, the employer must determine the percentage of wages that is paid for the performance of services within Connecticut by using the same percentage that the wages derived from or connected with Connecticut sources bears to the total wages.

Alternate to Using Form CT-W4NA

An employer who maintains adequate current records to accurately determine the amount of a nonresident employee’s wages that is paid for services performed within Connecticut, may withhold Connecticut income tax from the wages based on those records whether or not the employee files Form CT-W4NA. To calculate the amount to withhold, multiply the total "Withholding Amount" by a fraction, the numerator of which is the amount of wages paid during the year for services performed in Connecticut (as shown by those records) and the denominator of which is the total amount of wages paid during the year for services performed, wherever performed.

The following examples refer to the Withholding Tables, Effective January 1, 2005.

Example 10: Employer Maintains Records: A nonresident employee performs services partly within and partly outside Connecticut. The employee’s taxable wages are $1,000 per week. The employee’s Form CT-W4 indicates Withholding Code "A." The employee did not complete Form CT-W4NA, but the employer does maintain adequate current records showing that in week 1, the employee worked 2 out of 5 days (40%) in Connecticut. In week 2, the employee worked 100% of the time in Connecticut. If all work was performed in Connecticut, the employer would withhold $44.99 per week; therefore, for week 1 the employer will withhold $17.99 ($44.99 x .40) and for week 2 the employer will withhold $44.99.

Example 11: No Method of Allocation: An employer has not received a Form CT-W4NA from a nonresident employee who performs services partly within and partly outside Connecticut and the employer does not keep adequate current records for the amount of wages paid to the nonresident for services performed within Connecticut. The employee’s taxable wages are $2,300 bi-weekly and his Withholding Code shown on his Form CT-W4 is "B." The employer will withhold $91.88 of Connecticut income tax from the nonresident’s wages; the same amount that would be withheld if all services were performed in Connecticut.

Form CT-W4NA
Employers may photocopy as needed.

Supplemental Compensation

Withholding rules for supplemental compensation (such as bonuses, commissions, overtime pay, sales awards, etc.) depend on when the supplemental compensation is paid.

Supplemental compensation paid at the same time as regular wages

When supplemental compensation is paid at the same time as regular wages, the tax withheld should be determined as if the total of the supplemental and regular wages were a single payment for the regular payroll period.

Supplemental compensation paid at a different time than regular wages

If supplemental compensation is paid at a different time than regular wages, the method of withholding depends on whether the employer withheld income tax from the employee’s regular wages.

How to Report and Remit Taxes Withheld

Employers who are registered with DRS for Connecticut income tax withholding purposes will receive the Employer’s Withholding Remittance Coupon Book. Payers of nonpayroll amounts who are registered with DRS for Connecticut income tax withholding purposes will receive the Withholding Remittance Coupon Book for Payers of Nonpayroll Amounts. Each of the forms included in the coupon book is a machine readable document which is personalized with the employer’s or payer's name, address, Connecticut tax registration number, and federal employer identification number. Only the original coupon should be submitted. Forms, payments, or other documents will be timely filed if received on or before the due date, or if the date shown by the U.S. Postal Service cancellation mark is on or before the due date.

Employers

Send Form CT-WH, Connecticut Withholding Tax Payment Form, to DRS with each Connecticut withholding payment. Each employer is required to deduct and withhold Connecticut income tax from employee wages at the time wages are paid and is required to pay over such Connecticut income tax withholding to DRS on or before the due dates described below. Formerly, employers were required to pay over Connecticut income tax withholding to DRS at the same time that they made a deposit of federal income tax withholding. 2004 Conn. Pub. Acts 201, §5 establishes new due dates for employers to pay over Connecticut income tax withholding to DRS.

Each calendar year an employer will be classified by DRS either as a weekly remitter, monthly remitter, or quarterly remitter. An employer’s classification has nothing to do with how often the employer pays its employees or how often the employer is required to pay over Connecticut income tax withholding to DRS. The classification relates to how much time an employer has to pay over Connecticut income tax withholding to DRS after wages are paid to employees and Connecticut income tax is deducted and withheld from those wages. An employer’s classification is based on the employer’s reported liability for Connecticut income tax withholding during the twelve-month look-back period. (The twelve-month look-back period for calendar year 2005 is the twelve-month period that ended on June 30, 2004.) Employers do not need to file Form CT-WH if no payment is due.

If the tax liability was deducted and withheld during one quarter and paid over in another quarter, the employer must enter the number for the quarter in which the tax liability was deducted and withheld. For example, if the tax liability was deducted and withheld in March and paid over in April, enter "1" on Line 1 of Form CT-WH.

DRS will notify most employers of their classification before mailing them their 2005 Employer’s Withholding Remittance Coupon Book.

Weekly Remitter

The term weekly remitter does not refer to how often an employer pays its employees or how often an employer is required to pay over Connecticut income tax withholding to DRS. A weekly remitter is an employer whose reported liability for Connecticut income tax withholding during the twelve-month look-back period was more than $10,000. A weekly remitter is required to pay over Connecticut income tax withholding on or before the Wednesday following the weekly period during which the wages were paid. (Weekly period is the seven-day period beginning on a Saturday and ending on the following Friday.)

Schedule for Weekly Remitters

DRS may require weekly remitters to pay over Connecticut income tax withholding by electronic funds transfer instead of by mailing a check, and to file electronically instead of by filing a paper Form CT WH and a paper Form CT-941. However, no weekly remitter will be required to pay over Connecticut income tax withholding by electronic funds transfer and to file electronically before being notified in writing by DRS to do so.

Weekly Period Spanning Two Quarterly Periods

If a weekly remitter has two or more paydays during a weekly period, the weekly remitter is generally required to make only one payment for the weekly period to DRS and should enter the date of the last payday when making the payment. However, if the paydays fall in different quarterly periods, the weekly remitter must make separate payments with separate Forms CT-WH for the separate Connecticut income tax withholding liabilities.

Monthly Remitter

The term monthly remitter does not refer to how often an employer pays its employees or how often an employer is required to pay over Connecticut income tax withholding to DRS. A monthly remitter is an employer whose reported liability for Connecticut income tax withholding during the twelve-month look-back period was more than $2,000 but not more than $10,000. A monthly remitter is required to pay over Connecticut income tax withholding with Form CT-WH on or before the fifteenth day of the month following the month during which the wages were paid.

Quarterly Remitter

The term quarterly remitter does not refer to how often an employer pays its employees or how often an employer is required to pay over Connecticut income tax withholding to DRS. A quarterly remitter is an employer whose reported liability for Connecticut income tax withholding during the twelve-month look-back period was $2,000 or less. A quarterly remitter is required to pay over Connecticut income tax withholding with Form CT-941 on or before the last day of the month following the quarterly period during which the wages were paid. (Quarterly period means a period of three calendar months that ends on the last day of March, June, September, or December.)