Connecticut 2021 Resident FORM Income Tax

2021

Connecticut Resident

FORM Income Tax

CT-1040 Return Instructions

This booklet contains information or instructions for the following forms and schedules:

? Form CT-1040

? Schedule CT-EITC

Dear Taxpayer,

The 2021 Form CT-1040, Connecticut Resident Income Tax Return Instructions, contains information about the Department of Revenue Services' (DRS) Taxpayer Service Center (TSC). Using the TSC enables you to file your return and pay your Connecticut taxes quickly and accurately on the DRS user-friendly electronic filing and paying online system.

? Schedule CT-PE

? Schedule CTCHET

? Tax Tables

? Tax Calculation Schedule

? Use Tax Information

The goal of DRS is to provide taxpayers with world-class customer service and a user-friendly approach to tax administration. If you have any questions about filing this return or any Connecticut tax matter, visit the DRS website at portal.DRS to use the robust search engine tool to get the most up-to-date tax information, forms, and publications.

As always, we welcome your comments and ideas about how we can improve our products and the way we do business.

Sincerely,

Mark D. Boughton Commissioner of Revenue Services

Tax information is available on the DRS

website at

portal.DRS

File early to protect your refund from identity thieves.

Table of Contents

What's New 3

Property Tax Credit 3 Earned Income Tax Credit Increase 3 Subtraction Modification for Certain IRA Distributions 3 Connecticut Teachers' Retirement System Income 3

Q & A About the Connecticut Individual Use Tax 4

Sample Use Tax Table 5

Refund Options 5

Contributions to Designated Charities 6

General Information 7

Tax Assistance 7 Connecticut Form 1099-G 7 Avoid Delaying Your Refund 7 Who Must File a Connecticut Resident Return 8 Filing the Connecticut Income Tax Return

Electronically 8 Relief From Joint Liability 9 Title 19 Recipients 9 Deceased Taxpayers 9 Special Information for Nonresident Aliens 9 Resident, Part-Year Resident, or Nonresident 10 Military Personnel Filing Requirements 10 Combat Zone 11 Connecticut Adjusted Gross Income 11 Taxable Year and Method of Accounting 11 When to File 11 Extension Requests 11 Mailing Addresses for Form CT1040 12 Estimated Tax Payments for Tax Year 2022 12 Annualized Income Installment Method 12 Filing Form CT-2210 13 Interest and Penalties 14 Refund Information 14 Refund Status 14 Protecting Taxpayer Security 14 Income Tax Fraud 15 Nonobligated Spouse 15 Payment Options 15 Rounding Off to Whole Dollars 15 Income Tax Credits 15 Angel Investor Income Tax Credit 15

Taxpayer Service Center (TSC) 16

Completing Form CT-1040 17

1. Taxpayer Information 17 2. Calculate Your Tax 17 3. Payments 19 4. Overpayment 20 5. Amount You Owe 21 6. Sign Your Return 21 Order of Attachments 22 Filing Your Return 22 Recordkeeping 22 Copies of Returns 22

Form CT-1040 Schedules 23

Schedule 1 ? Modifications to Federal Adjusted Gross Income 23

Schedule 2 ? Credit for Income Taxes Paid to Qualifying Jurisdictions 27

Schedule 2 ? Worksheet Instructions 28 Schedule 2 ? Line Instructions 29 Schedule 3 ? Property Tax Credit 30

Property Tax Credit Table 31

Schedule 3 ? Line Instructions 31

Connecticut Individual Use Tax Worksheet 32

Schedule 4 ? Individual Use Tax 33

Schedule CT-EITC - Connecticut Earned Income Tax Credit 34

Who qualifies? 34 How to Claim the Connecticut

Earned Income Tax Credit 34 Protect Yourself 34 Eligibility Reviews 34 Schedule CT-EITC - Line instructions 34

Amended Returns 36

2021 Connecticut Income Tax Tables 37

Tax Calculation Schedule 47

Table A - Personal Exemptions 47 Table B - Initial Tax Calculation 48 Table C - 3% Tax Rate Phase-Out Add-Back 49 Table D - Tax Recapture 50 Table E - Personal Tax Credits 51

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What's New

Property Tax Credit

The maximum amount of property tax credit that a taxpayer may claim and the eligibility requirements, both of which currently apply to taxable year 2020, have been extended to taxable years 2021 and 2022. Specifically, the maximum amount of property tax credit is $200. Additionally, to qualify for the property tax credit, a taxpayer, or the taxpayer's spouse if married filing jointly, must be 65 years of age or older by the end of the taxable year, or the taxpayer must have claimed at least one dependent on your federal income tax return.

Earned Income Tax Credit Increase

For taxable years beginning on or after January 1, 2021, the earned income tax credit for Connecticut residents has been increased to 30.5% of the federal earned income credit.

Subtraction Modification for Certain IRA Distributions

Beginning with taxable year 2023, a subtraction modification for distributions from individual retirement accounts (IRAs), other than Roth IRAs, will be phased in over a four year period. The subtraction modification may be claimed by taxpayers whose federal adjusted gross income is less than $75,000 (for single, married filing separately, and head of household) or $100,000 (for married filing jointly).

The subtraction modification will be allowed to the extent the IRA distributions are included in federal adjusted gross income and will be phased in as follows:

Taxable Year 2023 2024 2025 2026 and after

Subtraction Equal to: 25% of IRA distribution 50% of IRA distribution 75% of IRA distribution 100% of IRA distribution

Connecticut Teachers' Retirement System Income

Under prior law, retired teachers were only allowed to claim the teachers' pension subtraction on the income they received from the Connecticut Teachers' Retirement System.

For taxable years beginning on or after January 1, 2021, retired teachers are now allowed to claim either the teachers' pension subtraction or the pension and annuity subtraction (if their adjusted gross income is below the applicable threshold) on the income they receive from the Connecticut Teachers' Retirement System.

For more information, see Special Notice 2021(6), 2021 Legislative Changes Affecting the Income Tax.

Due Date ? April 18, 2022

The 2021 Connecticut income tax return (and payment) will be considered timely if filed on or before Monday, April 18, 2022. For more information, see When to File on Page 11.

COMING SOON

E-Services Update

DRS myconneCT will replace the TSC as part of a multiyear, multiphase project. Each year, additional tax types will be transitioned out of the TSC and into myconneCT. Using myconneCT, taxpayers will be able to file taxes, make payments, view filing history, and communicate with the agency simply and more efficiently on virtually any mobile device, including laptops, tablets, and smartphones, 24 hours a day, 7 days a week. For updated information as to the progress of this project and the transition schedule for specific taxes, please visit the DRS website at portal.DRS-myconneCT.

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Q & A About the Connecticut Individual Use Tax

1. What is use tax?

Connecticut taxpayers owe use tax on purchases of taxable goods or services when Connecticut sales tax is not collected at the time of sale. Most often, this results from purchases made online or out-of-state. Together, sales and use taxes ensure that taxable purchases of goods and services used in Connecticut are treated equally and fairly.

2. Who pays use tax?

If Connecticut sales tax is not paid to the retailer at the time of purchase, Connecticut law requires that the purchaser pay use tax directly to DRS.

3. On what kinds of goods or services must I pay use tax?

You must pay use tax on taxable goods, whether purchased, leased or rented, and taxable services. Taxable goods include: furniture, jewelry, automobiles, appliances, cameras, computers, and computer software. Taxable services include: repair services to your television, motor vehicle, or computer; landscaping services for your home; and reupholstering services for your household furniture.

4. Are there exemptions from the use tax?

Yes. Generally, any purchase or lease of goods or services exempt from Connecticut sales tax is also exempt from Connecticut use tax. Some examples are newspapers, magazines by subscriptions, Internet access services, and repair and maintenance services to vessels.

5. Do I owe Connecticut use tax on all my outofstate purchases of goods that are taxable in Connecticut?

No. If all the goods purchased and brought into Connecticut at one time

total $25 or less, you do not have to pay Connecticut use tax ? but the $25 exemption does not apply to goods shipped or mailed to you.

Generally, if you purchase taxable goods from mail order companies, over the Internet or at an out-of-state location and had those goods shipped to Connecticut or brought back into Connecticut for use in Connecticut and did not pay Connecticut sales tax, you must pay the Connecticut use tax.

6. What are the use tax rates?

Use tax rates are the same as sales tax rates. The general rate is 6.35% for purchases of taxable goods or services, which includes digital goods effective. However, the sales tax rate on certain items of tangible personal property is 7.75%. The rate on computer and data processing services is 1%. The rate for vessels, motors for vessels, and trailers used for transporting a vessel is 2.99%. (See Schedule 4, Individual Use Tax, on Page 33.)

7. When must individuals pay use tax?

You must pay use tax no later than April 15 for purchases made during the preceding calendar year (January - December). Report your use tax liability on Form CT1040, Connecticut Resident Income Tax Return, Form CT1040NR/PY, Connecticut Nonresident and PartYear Resident Income Tax Return, or Form CT1040X, Amended Connecticut Income Tax Return for Individuals. If you are not required to file a Connecticut income tax return, you must file and pay your use tax liability using Form OP186, Connecticut Individual Use Tax Return, no later than April 15. You may file one Form OP186 for the entire year or you

may file several returns throughout the year. If you are engaged in a trade or business, you must register with DRS for business use tax and report purchases made in connection with your trade or business on Form OS114, Connecticut Sales and Use Tax Return. Use Form OS114 to report both sales tax and business use tax.

8. Are there penalties and interest for not paying the use tax?

Yes. The penalty is 10% of the tax due. Interest is charged at the rate of 1% of the tax due per month from the due date of the tax return. There are also criminal sanctions for willful failure to file a tax return. When you sign an annual income tax return, you are legally declaring the truthfulness, completeness, and correctness of all information ? including the section for use tax payment.

9. How does an individual calculate their use tax liability?

Calculate the use tax by multiplying the total cost of the taxable goods or services purchased, including separately stated charges such as shipping and handling, by the applicable sales tax rate (1%, 2.99%, 6.35%, or 7.75%).

10. What if I buy taxable goods or services in another state and the vendor charges sales tax for the other state?

If goods or services are purchased for use in Connecticut and the tax paid in the other state is less than the Connecticut tax, you must report and pay Connecticut use tax equal to the difference between the Connecticut tax and the tax paid to the other state.

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11. What if I do not report and pay the use tax I owe?

You and your preparer must sign and declare that your income tax filing is "true, complete, and correct." That includes calculating and reporting on Line 15 all purchases of goods or services, whether in Connecticut or from outside the state, on which Connecticut sales tax was due but not paid. Failure to report use tax due on Line 15 and include that amount in the total amount due on Line 30 may subject you to a penalty of up to $5,000, imprisonment for up to 5 years, or both. For more information on Connecticut Individual Use Tax, please review Informational Publication 2020(10), Q & A on the Connecticut Individual Use Tax.

Sample Use Tax Table

Total Purchases

Subject to Use Tax

$25 50 75

100 150

200 250 300 350 400

450 500 550 600 650

700 750 800 850 900

1,000 1,100 1,200 1,300 1,400

1,500 1,600 1,700 1,800 1,900 $2,000

Use Tax Due at: 6.35%

$1.59 3.18 4.76 6.35 9.53

12.70 15.88 19.05 22.23 25.40

28.58 31.75 34.93 38.10 41.28

44.45 47.63 50.80 53.98 57.15

63.50 69.85 76.20 82.55 88.90

95.25 101.60 107.95 114.30 120.65 127.00

7.75%

85.25 93.00 100.75 108.50

116.25 124.00 131.75 139.50 147.25 155.00

Total Purchases

Subject to Use Tax

2,100 2,200 2,300 2,400

2,500 2,600 2,700 2,800 2,900

3,000 3,100 3,200 3,300 3,400

3,500 3,600 3,700 3,800 3,900

4,000 4,100 4,200 4,300 4,400

4,500 4,600 4,700 4,800 4,900 5,000

Use Tax Due at: 6.35%

133.35 139.70 146.05 152.40

158.75 165.10 171.45 177.80 184.15

190.50 196.85 203.20 209.55 215.90

222.25 228.60 234.95 241.30 247.65

254.00 260.35 266.70 273.05 279.40

285.75 292.10 298.45 304.80 311.15 317.50

7.75%

162.75 170.50 178.25 186.00

193.75 201.50 209.25 217.00 224.75

232.50 240.25 248.00 255.75 263.50

271.25 279.00 286.75 294.50 302.25

310.00 317.75 325.50 333.25 341.00

348.75 356.50 364.25 372.00 379.75 387.50

REFUND OPTIONS

Direct Deposit

The fastest way to get your refund is to file your return electronically and elect direct deposit. Choosing direct deposit allows the money to go directly into your bank account; it eliminates the possibility of the refund being lost, stolen or returned as undeliverable; and it saves tax dollars by costing the government less. Make your direct deposit successful by: ? Confirming your account number and routing number with your financial institution and entering them clearly on your

tax return; ? Entering the direct deposit information separately for both your federal and state electronically filed returns; and ? Printing your software-prepared paper return only after you have entered the direct deposit information into the

program. Some financial institutions do not allow a joint refund to be deposited into an individual account. In an effort to reduce fraud, direct deposit is not available to first-time Connecticut income tax filers.

Paper Check

If you do not elect or qualify for direct deposit, a refund check will be issued and processing may be delayed. DRS recommends that taxpayers who are not first time Connecticut income tax filers choose direct deposit, the most reliable and fastest way to receive your refund.

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