Connecticut State Department of Revenue Services

Composite Income Tax Information

What's New for 2024

New Form

Form CT-1065/CT-1120SI has been changed from the Connecticut Pass-Through Entity Tax Return to the Connecticut Composite Income Tax Return. This return is mandatory for every pass-through entity (PE) that does business in Connecticut or has income derived from or connected with sources within Connecticut regardless of the amount of its income (loss). The PE must first complete either federal Form 1065, U.S. Return of Partnership Income, or federal Form 1120S, U.S. Income Tax Return for an S corporation. Information on the federal return is needed to complete Form CT-1065/CT-1120SI.

Estimated Tax Payments

Estimated tax payments are not required for Form CT-1065/CT-1120SI. If the election to file a pass-through entity tax return has not been made and there are 2024 payments for the pass-through entity tax, enter the total amount of payments on Part 1, Schedule A, Line 5b.

Electing to file Form CT-PET, Pass-Through Entity Tax Return

The entity may elect to file Form CT-PET, Connecticut Pass-Through Entity Tax Return, in addition to Form CT-1065/CT-1120SI, Connecticut Composite Income Tax Return, by checking the box at the bottom of the first page of Form CT-1065/CT-1120SI and filing Form CT-PET. The election is irrevocable and cannot be amended. If the PE does not elect to file Form CT-PET on their Form CT-1065/CT1120SI, the PE cannot elect in on an amended return.

Income Tax Payment Requirement

Income tax payments are required to be paid on behalf of nonresident noncorporate members (nonresident individuals, nonresident trusts, and nonresident estates) and members that are pass-through entities. These payments may be offset by any direct or indirect PE tax credit.

The income tax payment reported to nonresident, noncorporate members and members that are pass-through entities on Part 3 of the Schedule CT K-1 comes from the PE’s Form CT-1065/CT-1120SI, Part 1, Schedule B, Column F minus Column G; the income tax liability less the PE tax credit offset.

Reporting the PE Tax Credit

If a Form CT-PET is filed and results in a credit to members, or the PE receives an indirect credit from a subsidiary PE, this may be passed down to all members other than corporate members. Any PE credit in excess of a nonresident noncorporate member or a member that is a pass-through entity, may be refunded to the PE. Additional items of consideration for the PE Tax credit include:

  • The indirect credit from a subsidiary PE may be prorated to members if there are corporate members that are not entitled to claim the credit;
  • The credit to report to nonresident, noncorporate members and members that are pass-through entities on Part 4 of the Schedule CT K‑1 comes from the PE’s Form CT-1065/CT-1120SI, Part 1, Schedule B, Column G; and
  • The credit to report to resident noncorporate members on Part 4 of the Schedule CT K-1 comes from the PE’s Form CT-1065/CT-1120SI, Part 8, Column D.

New Connecticut Tax Credits

There are three new tax credits that may be earned by the PE. Please note that these tax credits may offset the composite liability up to the liability and may not be refunded to the PE.

New Tax Credit for Youth Development Organization Contribution

Legislation authorizes a new tax credit for cash contributions made to a youth development organization to fund programs such as after-school tutoring, mentoring programs and workforce preparedness training. The credit is only available for income or taxable years commencing on or after January 1, 2024, and prior to January 1, 2026. This legislation is effective January 1, 2024.

New Tax Credit for contributions made by taxpayers into ABLE accounts

Legislation authorizes a new tax credit for contributions made by taxpayers into the ABLE accounts of employees who are employed by such taxpayers. The legislation specifies the taxes against which the credit can be applied and is effective January 1, 2024, and applicable to income years or taxable years commencing on or after January 1, 2024.

New Tax Credit for Accredited Theater Productions

Legislation establishes a new tax credit for production companies of eligible pre‑ and post‑Broadway productions and live theatrical tours performed at qualified facilities in Connecticut. The legislation specifies the taxes against which the credit can be applied and caps the total amount of these tax credits allowed to $2.5 million per fiscal year. This legislation is effective January 1, 2024, and applicable to income and taxable years commencing on or after January 1, 2024.

Definitions

Pass-through entity (PE) means a partnership or an S corporation.

Partnership means and includes a general partnership, limited partnership, limited liability partnership, publicly traded partnership, limited liability company (LLC) treated as a partnership for federal income tax purposes, or other entity treated as a partnership for federal income tax purposes.

Parent pass‑through entity (parent PE) is a PE which is a member of another PE. A PE may be both a parent PE (with respect to one or more PEs) and a subsidiary PE (with respect to one or more PEs).

Subsidiary pass‑through entity (subsidiary PE) is a PE which has at least one member which is itself a PE. A PE may be both a subsidiary PE (with respect to one or more PEs) and a parent PE (with respect to one or more PEs).

S corporation means a corporation which is an S corporation for federal income tax purposes.

Member means and includes a partner of a partnership, a member of an LLC treated as a partnership for federal income tax purposes, or a shareholder of an S corporation.

Member’s share means a partner’s distributive share of partnership income, gain, loss, or deduction; a member’s distributive share of LLC income, gain, loss, or deduction; or a shareholder’s pro‑rata share of S corporation income, gain, loss, or deduction.

Noncorporate member means each member that is a resident individual, resident trust, resident estate, nonresident individual, nonresident trust, nonresident estate, part‑year resident individual, or part‑year resident trust.

Nonresident noncorporate member means each noncorporate member who is a nonresident individual, nonresident trust, nonresident estate, part‑year resident individual, or part-year resident trust.

Corporate member means each member which is a C corporation for federal income tax purposes, LLC which has elected to be taxed as a C corporation for federal income tax purposes, real estate investment trust, real estate mortgage investment conduit, regulated investment company, individual retirement account described in 26 U.S.C. § 408(a), trust described in 26 U.S.C. § 401(a), or organization exempt from federal income tax (including organizations described in 26 U.S.C. § 501(c) or (d)).

Who Must File a Composite Income Tax Return

Every PE that does business in Connecticut or has income derived from or connected with sources within Connecticut must file Form CT-1065/CT-1120SI, regardless of the amount of its income (loss). The PE must first complete either federal Form 1065, U.S. Return of Partnership Income, or federal Form 1120S, U.S. Income Tax Return for an S corporation. Information on the federal return is needed to complete Form CT-1065/CT-1120SI.

PEs that receive a Schedule CT K‑1, Member's Share of Certain Connecticut Items, from another PE must also file Form CT-1065/CT-1120SI.

Substantial Economic Presence

A PE having a substantial economic presence in Connecticut will be deemed to be doing business in Connecticut. A PE has substantial economic presence in Connecticut if it purposefully directs business toward the state. The purpose can be determined by the frequency, quantity, and systematic nature of its economic contact with Connecticut. See Informational Publication 2010(29.1), Q & A on Economic Nexus.

How to File

File Electronically

Form CT-1065/CT-1120SI, Connecticut Composite Income Tax Return, and Form CT-1065/CT-1120SI EXT, Application for Extension of Time to File Connecticut Composite Income Tax Return, must be filed and paid electronically. These returns can be filed and paid through myconneCT or the MeF Program.

Click here to File, Pay, or Register Now on myconneCT!

Modernized e-File Program (MeF)

DRS accepts PE Tax returns, extensions and estimated payments through the MeF Program. Check with your software provider for availability.

When to File (Tax Due Date and Extensions)

Form CT-1065/CT-1120SI is due on or before the fifteenth day of the third month following the close of the taxable year (March 15 for calendar year filers).

If the due date falls on a Saturday, Sunday, or legal holiday, the return will be considered timely if filed by the next business day.

If Form CT-1065/CT-1120SI is filed late or all the tax due is not paid with the return, see Interest and Penalties to determine if interest and penalty must be reported with this return.

To request additional time to file, use Form CT-1065/CT-1120SI EXT, Application for Extension of Time to File Connecticut Composite Income Tax Return. For detailed information, see the Form CT-1065/CT-1120SI EXT instructions.

To request additional time to pay, use Form CT‑1127, Application for Extension of Time for Payment of Income Tax. For detailed information, see the Form CT-1127 instructions.

Electronic Payment Options

Visit myconneCT to make an electronic payment. After logging into myconneCT, find your tax account on the Summary screen, select the Make a Payment link and choose your payment method.

  • Pay by Direct Payment: Using this option authorizes DRS to electronically withdraw a payment from your bank account (checking or savings) on a date you select up to the due date.
  • Pay by Credit Card or Debit Card: You may elect to pay your tax liability using a credit card (American Express®, Discover®, MasterCard®, VISA®) or comparable debit card. A convenience fee will be charged by the credit card service provider.  You will be informed of the amount of the fee and may elect to cancel the transaction. Your payment will be effective on the date you make the charge.

At the end of the transaction, you will be given a confirmation number for your records. As a reminder, even if you pay electronically, you must still file your return by the due date. Tax not paid on or before the due date will be subject to penalty and interest.

Interest and Penalties

In general, interest and penalty apply to any portion of the tax not paid on or before the original due date of the return.

Interest

If the PE does not pay the tax when due, it will owe interest at the rate of 1% per month or fraction of a month until the tax is paid in full.

Interest on underpayment or late payment of tax cannot be waived.

Penalty for Late Payment or Late Filing

The penalty for late payment or underpayment of tax is 10% of the tax not paid on or before the original due date of the return. The PE can avoid a penalty for failure to pay the full amount due by the original due date if:

  • The PE files Form CT-1127;
  • An extension of time to pay is granted; and
  • The PE pays all the tax due in full by the end of the extension period.

For detailed information, see the Form CT-1127 instructions.

If no tax is due, the Commissioner of Revenue Services may impose a $50 penalty for the late filing of any return or report required by law to be filed.

Electronic Payment Penalties

The following graduated penalty amounts will apply if you fail to remit payments electronically:

  • First offense – 10% penalty on the amount of the tax payment, but not more than $2,500;
  • Second offense – 10% penalty, but not more than $10,000; and
  • Third and subsequent offenses – 10% penalty.

When initiating a payment through your financial institution’s online banking system you must verify that your financial institution is sending an EFT, not a check.

Penalty for Failure to File

If the PE does not file its return and the Commissioner of Revenue Services files a return for it, the penalty for failure to file is 10% of the balance due or $50, whichever is greater.

If the PE is required to file an amended Form CT‑1065/CT‑1120SI and fails to timely do so, a penalty may be imposed.

Penalty for Willful Failure to File or Pay

If you willfully fail to pay the tax or file a return, you may be fined up to $1,000 or imprisoned up to one year, or both, in addition to any other penalty.

Penalty for Willful Filing of a Fraudulent or Materially False Return

If you willfully file a tax return you know to be fraudulent or false in any material matter, you may be fined up to $5,000 or imprisoned for not more than five years, or both.

Disregarded Entities

If the PE reports income or loss from a disregarded entity (DE), prepare a statement to include the DE’s name and Federal Employer Identification Number (FEIN).

The PE filing Form CT‑1065/CT‑1120SI electronically should retain a copy of the completed statement for three years from the date of filing. The statement must be provided to DRS upon request. Taxpayers filing by paper, must attach the statement to their paper return.

A PE Must Provide Schedule CT K‑1s to All Members

A PE must furnish Schedule CT K‑1, Member’s Share of Certain Connecticut Items, to all members on or before the fifteenth day of the third month following the close of the taxable year (March 15 for calendar year filers).

If the PE requested an extension of time to file Form CT‑1065/CT‑1120SI by timely electronically filing Form CT‑1065/CT‑1120SI EXT, Application for Extension of Time to File Connecticut Composite Income Tax Return, the deadline for furnishing Schedule CT K‑1 to members is automatically extended to the fifteenth day of the ninth month following the close of the taxable year (September 15 if the PE’s taxable year for federal purposes is the calendar year).

Do not file Schedule CT K-1s with DRS when Form CT‑1065/CT‑1120SI is electronically filed with DRS. If Form CT‑1065/CT‑1120SI is filed by paper with DRS, attach Schedule CT K‑1s to the end of Form CT‑1065/CT‑1120SI. Regardless of how Form CT‑1065/CT‑1120SI is filed, Schedule CT K‑1s must still be issued to all members.

How Members Report Income

If the member is a resident individual, his or her share of PE income or loss is included in his or her federal adjusted gross income and, therefore, is includable in the federal adjusted gross income reported on the member’s Form CT‑1040, Connecticut Resident Income Tax Return. The PE must provide the member with Schedule CT K‑1 reporting Connecticut modifications that the member must include on Form CT‑1040, Schedule 1, and any applicable PE Tax credits and Connecticut income tax credits.

If the member is a resident trust or estate, its share of PE income or loss is included in its federal taxable income and, therefore, is includable in the federal taxable income reported on the member’s Form CT-1041, Connecticut Income Tax Return for Trusts and Estates. The PE must provide the member with a Schedule CT K‑1 reporting Connecticut modifications that the member must include on Form CT‑1041, Schedule A, and any applicable PE Tax credits and Connecticut income tax credits.

If the member is a nonresident individual, his or her share of PE income or loss is included in federal adjusted gross income and, therefore, is includable in the federal adjusted gross income reported on the member’s Form CT‑1040NR/PY. The PE must provide the member with a Schedule CT K-1 reporting Connecticut modifications that the member must include on Form CT-1040NR/PY, Schedule 1, amounts of PE income or loss derived from or connected with Connecticut sources the member must include on Schedule CT-SI, Nonresident or Part Year Resident Schedule of Income From Connecticut Sources, assuming the member is required to file Form CT-1040NR/PY, and any applicable Connecticut income tax paid, PE Tax credits, and Connecticut income tax credits.

A member who is a nonresident individual is expressly relieved of the obligation to file his or her own Connecticut income tax return if the member’s only Connecticut‑sourced income is from one or more PEs and the total is less than $1,000.

If a nonresident member’s Connecticut-sourced income from one or more PEs is not the member’s only Connecticut-sourced income, the filing of a composite income tax return by the PE and the making of an income tax payment by the PE on the member’s behalf does not excuse the member from the obligation to file his or her own separate Connecticut income tax return.

If a nonresident member’s only Connecticut-sourced income is from one or more PEs, the filing of a composite income tax return by each PE and the making of an income tax payment by each PE on the member’s behalf fulfills the Connecticut income tax filing and payment requirements otherwise separately imposed on the member by Chapter 229 of the Connecticut General Statutes.

If the member is a nonresident trust or estate, its share of PE income or loss is included in federal taxable income and, therefore, is includable in the federal taxable income reported on the member’s Form CT-1041. The PE must provide the member with a Schedule CT K-1 reporting Connecticut modifications the member must include on Form CT-1041, Schedule A, and amounts of PE income or loss derived from or connected with Connecticut sources that the member must include on Schedule CT-1041FA, Fiduciary Allocation, and any applicable Connecticut income tax paid, PE Tax credits, and Connecticut income tax credits.

For filing requirements of a nonresident trust or estate, see instructions for Form CT‑1041, Connecticut Income Tax Return for Trusts and Estates.

If the member is a PE, it is referred to as a parent PE and the PE of which it is a member is referred to as a subsidiary PE. The parent PE’s share of the subsidiary PE’s income or loss is included in the income or loss reported on the parent PE’s federal Form 1065 or federal Form 1120S, and is, therefore, included in the income or loss reported on the parent PE’s Form CT-1065/CT-1120SI. The subsidiary PE must furnish a Schedule CT K‑1 to the parent PE and report:

  • Connecticut modifications that the parent PE must include on its Form CT-1065/CT-1120SI, Part 5;
  • Amounts of the subsidiary PE’s income or loss derived from or connected with Connecticut sources that the parent PE must include on its Form CT-1065/CT-1120SI, Part 6;
  • Amounts of income tax credits that the parent PE must include on Form CT-1065/CT-1120SI, Part 7;
  • The Connecticut income tax that the parent PE must report on its Form CT-1065/CT-1120SI, Part 1, Schedule D, Column C; and
  • Amounts of PE Tax Credits allocated by the subsidiary PE to the parent PE that the parent PE should report on its Form CT-1065/CT-1120SI, Part 1, Schedule D, Column D and should allocate to its members on Part 8, Column C.

The parent PE must, in turn, provide its members with:

  • A Schedule CT K-1 reporting their share of the Connecticut modifications as reported on the parent PE’s Form CT-1065/CT-1120SI, Part 5;
  • Their share of the amounts of the income or loss derived from or connected with Connecticut sources as reported on the parent PE’s Form CT-1065/CT-1120SI, Part 6;
  • Their share of the income tax credits as reported on the parent PE’s Form CT-1065/CT-1120SI, Part 7;
  • Their share of the Connecticut income tax liability paid by the parent PE on behalf of its members as reported on the parent PE’s Form CT-1065/CT-1120SI, Part 1, Schedule B, Column F less Column G; and
  • Their share of the PE Tax Credit reported on the parent PE’s Form CT-1065/CT-1120SI, Part 1, Schedule B, Column G for NI, NT, NE and PE members and Part 8, Column D for RI, RT, RE members.