Registering a Business in Connecticut
Most businesses in Connecticut will have to register with the Connecticut Secretary of State and the Connecticut Department of Revenue Services. The Secretary of State offers business owners a Business Startup Tool for registration assistance.
S-Corporation Income Tax
Connecticut recognizes the federal S-election, and Connecticut S corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income. S corporations file Form CT-1065/CT-1120SI Pass-Through Entity Tax.
LLC/Partnership Income Tax
LLCs and partnerships are not required to pay income tax to Connecticut. Instead, income from the business is distributed to individual LLC members or partners, who then pay Colorado income tax on that amount with their personal return. Partnerships file Form CT-1065/CT-1120SI Pass-Through Entity Tax.
Business Entity Tax
The Business Entity Tax (BET) is a $250 tax that is imposed on s corporations, LLCs, LLPs, and LPs. It is due every other year. BET is filed on Form OP-424.
Individual Income Tax
Connecticut generally conforms to the Internal Revenue Code on a rolling basis, and therefore adopts most federal provisions, unless otherwise modified.
The starting point for computing Connecticut's personal income tax liability is the federal adjusted gross income.
Connecticut does not offer a standard or itemized deduction.
You can claim personal and dependent exemptions of $15,000 for each qualifying individual.
Connecticut does not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.
Individual income tax rates vary by income and filing status and range from 3% to 6.99%. Individual income tax is filed on Form CT-1040.
Individual tax rates are as follows.
CARES Act Guidance
Rolling conformity states generally adopt changes to the IRC as they are enacted at the federal level, unless otherwise modified.
Connecticut mostly conforms to the CARES Act provision, with a few minor exceptions. It specifically decouples the IRC Section 172 of the CARES Act regarding business net operating loss (NOL) provisions. Instead, Connecticut will retain its treatment of business NOLs, not allowing any carryback and allowing only a 20-year carryforward.
Pass through entity tax returns are due on the 15th day of the third month following the close of the tax season. For most taxpayers, this will be March 15th.
Business entity tax and individual income tax returns are due on the 15th day of the fourth month following the close of the tax season. For most taxpayers, this will be April 15th.
If the due date falls on a weekend or holiday, the return is due on the next business day.
Pass through entities must make estimated payments which equate to the lesser of:
90% of the tax shown on the return for the taxable year, or, if no return is filed, 90% of the tax for such year; or
100% of the tax shown on the return for the previous taxable year, if the previous taxable year was a taxable year of 12 months and if the PE filed a return for the previous income year showing a liability for tax.
Pass through entities use Form CT-1065/CT-1120SI ES to make estimated payments.
Individuals need to make estimated payments if they expect to owe $1,000 or more in income tax. Individuals use Form CT-1040ES.
Filing an Extension
Pass through entities who requesting an extension to file will need to file form CT-1065/CT-1120SI EXT by the original due date of the return. This extension must be filed electronically. A six month extension will be granted only if federal Form 7004 has been filed with the IRS.
Individuals who request an extension to file their income tax will use Form CT-1040 EXT. This will allow for a six month extension.
Requesting an extension to file your return does not allow an extension for making your payment. Taxpayers can request an extension to pay their tax by using Form CT-1127.
Pass through entities and individuals may be assessed a late filing penalty for returns not filed timely. The penalty is 10% of the tax due on the original date. If no tax is due, the entity may be assessed a $50 fine.
If your business was formed or is located in another state, but generates income in Connecticut, it may be subject to Connecticut taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Connecticut Secretary of State:
Connecticut Department of Revenue Services: