Managing Withholding Tax

Withholding is the money an employer withholds from each employee's wages to help prepay the state income tax of the employee.  An employer must withhold Connecticut tax if the employee is a resident of Connecticut, performing services in the state.  Wages of a nonresident are subject to Connecticut income tax withholding if the wages are paid for services performed in Connecticut.  The employer remits the withholding to the state and will issue the employee a W-2 statement indicating the amount of state income tax withheld for the employee.

1. How to file Withholding Tax
2. What Forms do I File and When Are They Due?
3. Withholding Tax Penalty and Interest
4. Withholding Tax payment options
5. Common Filing Errors to Avoid
6. Filing Amended withholding returns
7. Related Withholding Publications
8. General Withholding information
9. Withholding information for Athletes & Entertainers
10. Withholding information for Nonresidents Who Work in Connecticut
11. Withholding information for Connecticut Residents Who Work in Another State
12. Withholding Tax Forms
13. Closing a Withholding Account

How to File Withholding Tax

1. Online using the TSC
2. Over the telephone using the Business Telefile System
3. W-2 and 1099 Electronic Filing Specifications
4. Federal/State Employment Taxes (FSET) Program 

What Forms Do I File and When Are They Due?

Weekly Remitter:  If the payday falls on a Saturday, Sunday, Monday, or Tuesday, the due date is the second Wednesday following the payday. 

Example: If payday falls on Monday the 8th the due date is Wednesday the 17th.

Weekly Remitter: If the payday falls on a Wednesday, Thursday, or Friday, the due date is the Wednesday following the payday. 

Example: If payday falls on Thursday the 4th the due date is Wednesday the 10th.

Quarterly and Annual Reconciliation Forms

* You must request and receive permission from DRS to file as a seasonal or agricultural filer.

Employer Quarterly and Annual Reconciliation Due Dates

Household Employers Due Dates 

*You must request permission from DRS to file as a seasonal or agricultural filer.

Nonpayroll Payers

Weekly, Monthly, and Quarterly Remitter Due Dates

Example: Withholding for nonpayroll amounts paid on Monday the 8th is due Wednesday the 17th.

Weekly Remitter:  Withholding for nonpayroll amounts paid on a Wednesday, Thursday, or Friday, is due the Wednesday following the payment. 

Example: Withholding for nonpayroll amounts paid on Thursday the 4th is due Wednesday the 10th.

Athletes and Entertainers Due Dates

Withholding Tax Penalty and Interest

Late Payment Penalty

The penalty for late payment or underpayment of tax due is 10% of the amount due on all returns.

Penalty for Failure to Pay Electronically

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

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

Late Filing Penalty

In the event no tax is due, the Commissioner of Revenue Services may impose a $50 penalty for failure to file any return or report that is required by law to be filed.

Interest

If you are filing a late or amended return, interest is computed on the underpayment at the rate of 1% per month or fraction of a month from the due date until the date of payment.

Required Information Returns

A penalty of $5 per statement (up to a total of $2,000 per calendar year) is imposed for failure to provide federal Form W-2 to each employee and a copy to DRS, unless such failure is due to reasonable cause. 

Common Filing Errors to Avoid

1. Not filing and paying electronically. Employers and payers are required to file all withholding forms and remit withholding payments electronically.
2. Not filing a return.  Do not skip filing a return because you have no withholding to report. You MUST file a ZERO return.
3. Registering for withholding prior to hiring employees.  Do not register for withholding because you anticipate hiring employees in the future. You will be required to begin filing returns once you are registered, so do not register for withholding until you are absolutely certain you are ready to hire employees.

Filing amended withholding returns

FORMS CT-941, CT-945: All withholding forms, including amended forms, must be electronically filed and paid.  Amend Forms CT-941 or CT-945 using the TSC-BUS by logging into your account.  You must amend Form CT-941 for each quarter that was filed in error.  To claim a refund, the return must be filed within 3 years of the original due date of the return. However, no refund will be made to an employer of tax deducted and withheld from the wages of employees.  If you file an amended federal Form 941 or 945 or if your return is changed or corrected by the IRS, you must file Form CT-941X within 90 days.  

Related withholding publications

1. AN 2017(7) - Information for Married Individuals Who Are Both Employed and File a Joint Connecticut Income Tax Return
2. IP 2019(1) - Connecticut Circular CT Employer's Tax Guide
3. IP 2018(8) -  Connecticut Tax Guide for Payers of Nonpayroll Amounts
4. IP 2018(12.1) - Forms 1099-R, 1099-MISC, 1099-K, and W-2G Electronic Filing Requirements for Tax Year 2017
5. IP 2018(13) - Form W-2 Electronic Filing Requirements
6. IP 2018(14) - Federal/State Electronic Filing Handbook