Connecticut Administrative Code › Title 12 - Taxation › 740(a) - INCOME TAX › Part IX - Withholding › Section 12-705(a)-2 - Determining Connecticut income tax to be deducted and withheld from wages paid to resident employees

Current through July 10, 2024
(a) Every employer
				maintaining an office or transacting business in Connecticut and making
				payments of wages shall, as provided in this section, deduct and withhold from
				such wages an amount of Connecticut income tax as determined in accordance with
				the current edition of the Connecticut Circular CT (Employer Tax Guide and
				Withholding Tables), except that if the department issues income tax
				withholding tables subsequent to the publication of the current edition of the
				Connecticut Circular CT, then the employer shall use those income tax
				withholding tables to determine how much Connecticut income tax to deduct and
				withhold from wages.
(b)
(1) Except as otherwise provided in
				subdivision (2) of this subsection, an employer maintaining an office or
				transacting business in Connecticut shall deduct and withhold Connecticut
				income tax from all wages paid to an employee who is a resident individual,
				even if some or all of the services for which the wages are paid were performed
				outside Connecticut.
(2)
(A) Employee working in one qualifying
				jurisdiction. If an employee who is a resident individual works for an employer
				solely in one qualifying jurisdiction, as defined in part VI of these sections,
				and the employer maintains an office or transacts business both in Connecticut
				and in that qualifying jurisdiction, the employer shall first deduct and
				withhold from the wages paid to an employee who is a resident individual
				working in that qualifying jurisdiction the income tax required to be deducted
				and withheld from such wages for that qualifying jurisdiction. If the
				Connecticut income tax otherwise required to be deducted and withheld from such
				wages exceeds the income tax required to be deducted and withheld from such
				wages for that qualifying jurisdiction, the employer shall then deduct and
				withhold from such wages the difference and pay over that difference to the
				Department. (See examples 1, 2 and 3 in subdivision (3) of this
				subsection.)
(B) Employee working
				in more than one qualifying jurisdiction. If an employee who is a resident
				individual works for an employer in more than one qualifying jurisdiction, but
				not in Connecticut, and the employer maintains an office or transacts business
				both in Connecticut and in the same qualifying jurisdictions in which the
				employee works for the employer, the employer shall first determine the
				Connecticut income tax that would otherwise be required to be deducted and
				withheld from the employee's total wages, and shall prorate such amount
				("prorated tax amount") between the qualifying jurisdictions in which the
				employee works for the employer. The prorated tax amount for a qualifying
				jurisdiction shall be calculated by multiplying the Connecticut income tax that
				would otherwise be required to be deducted and withheld from the employee's
				total wages by a fraction. The numerator of the fraction is the employee's
				wages for work performed in the qualifying jurisdiction. The denominator of the
				fraction is the employee's total wages. The employer shall then deduct and
				withhold from the employee's wages the income tax required to be deducted and
				withheld for each such qualifying jurisdiction. If the prorated tax amount for
				a qualifying jurisdiction exceeds the income tax required to be deducted and
				withheld from such wages for such qualifying jurisdiction, the employer shall
				then deduct and withhold from such wages the difference and pay over that
				difference to the department. (See example 4 in subdivision (3) of this
				subsection.)
(C) Employee working
				in one or more qualifying jurisdictions and in Connecticut. If an employee who
				is a resident individual works for an employer in one or more qualifying
				jurisdictions and in Connecticut, and the employer maintains an office or
				transacts business both in Connecticut and in the same one or more qualifying
				jurisdictions in which the employee works for the employer, the employer shall
				first determine the Connecticut income tax that would otherwise be required to
				be deducted and withheld from the employee's total wages, and shall prorate
				such amount ("prorated tax amount"), between Connecticut and the one or more
				qualifying jurisdictions in which the employee works for the employer. The
				prorated tax amount for a qualifying jurisdiction shall be calculated by
				multiplying the Connecticut income tax that would otherwise be required to be
				deducted and withheld from the employee's total wages by a fraction. The
				numerator of the fraction is the employee's wages for work performed in the
				qualifying jurisdiction. The denominator of the fraction is the employee's
				total wages. The employer shall then deduct and withhold from the employee's
				wages the income tax required to be deducted and withheld for each such
				qualifying jurisdiction. If the prorated tax amount for a qualifying
				jurisdiction exceeds the income tax required to be deducted and withheld from
				such wages for such qualifying jurisdiction, the employer shall then deduct and
				withhold from such wages the difference and pay over that difference to the
				department. The employer shall also deduct and withhold from the employee's
				wages the prorated tax amount for Connecticut, and pay over that amount to the
				department. The prorated tax amount for Connecticut shall be calculated by
				subtracting the prorated tax amount for each qualifying jurisdiction in which
				the employee works for the employer from the Connecticut income tax that would
				otherwise be required to be deducted and withheld from the employee's total
				wages. (See example 5 in subdivision (3) of this subsection.)
(3) The following examples
				illustrate the application of this section:
Example 1
: A resident individual is employed in
				  Rhode Island by an employer maintaining an office or transacting business both
				  in Connecticut and in Rhode Island. Assuming that the Rhode Island income tax
				  required to be deducted and withheld from the employee's wages is $100 and that
				  the Connecticut income tax that would otherwise be required to be deducted and
				  withheld from such wages is $160. The amount of Connecticut income tax that
				  would be required to be deducted and withheld is $60.
Example 2
: A resident individual is employed in
				  Massachusetts by an employer maintaining an office or transacting business both
				  in Connecticut and in Massachusetts. Assuming that the Massachusetts income tax
				  required to be deducted and withheld from the employee's wages is $200 and that
				  the Connecticut income tax that would otherwise be required to be deducted and
				  withheld from such wages is $200, no Connecticut income tax would be required
				  to be deducted and withheld from such wages.
Example 3
: A resident individual is employed in
				  New York by an employer maintaining an office or transacting business both in
				  Connecticut and in New York. Assuming that the New York income tax required to
				  be deducted and withheld from the employee's wages is $300 and that the
				  Connecticut income tax that would otherwise be required to be deducted and
				  withheld from such wages is $250, no Connecticut income tax would be required
				  to be deducted and withheld from such wages.
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 in $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.
Example 5
: A resident individual is employed in
				  Connecticut and New York by an employer maintaining an office or transacting
				  business in Connecticut and New York. Assume that the Connecticut income tax
				  that would otherwise be required to be deducted and withheld from the
				  employee's total wages for work performed in Connecticut and New York is $450,
				  and that two-thirds of the employee's wages are for work performed in
				  Connecticut and the other one-third are for work performed in New York.
Therefore, the prorated tax amount for New York is $150. The
				  prorated tax amount for New York ($150) is subtracted from the Connecticut
				  income tax that would otherwise be required to be deducted and withheld from
				  the employee's total wages ($450) to calculate the prorated tax amount for
				  Connecticut ($450-$150 = $300).
Assuming that the New York income tax that would be required
				  to be deducted and withheld from the employee's New York wages is $210, 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 New York wages exceeds the prorated
				  tax amount for New York. The amount of Connecticut income tax that would be
				  required to be deducted and withheld from the employee's Connecticut wages is
				  $300 (the prorated tax amount for Connecticut). Therefore, the amount of
				  Connecticut income tax that would be required to be deducted and withheld from
				  the employee's total wages is $300.
Example 6
: A resident individual is employed in
				  Connecticut, Rhode Island and Massachusetts by an employer maintaining an
				  office or transacting business in Connecticut, Rhode Island and Massachusetts.
				  Assume that the Connecticut income tax that would otherwise be required to be
				  deducted and withheld from the employee's total wages for work performed in
				  Connecticut, Rhode Island and Massachusetts is $800, and that one-fifth of the
				  employee's wages are for work performed in Connecticut, one-fifth of the
				  employee's wages are for work performed in Massachusetts, and the other
				  three-fifths of the employee's wages are for work performed in Rhode Island.
				  Therefore, the prorated tax amount for Massachusetts is $160, and the prorated
				  tax amount for Rhode Island is $480. The prorated tax amount for Massachusetts
				  ($160) and the prorated tax amount for Rhode Island ($480) are subtracted from
				  the Connecticut income tax that would otherwise be required to be deducted and
				  withheld from the employee's total wages ($800) to calculate the prorated tax
				  amount for Connecticut ($800 - ($160 + $480) = $160). Assuming that the
				  Massachusetts income tax that would be required to be deducted and withheld
				  from the employee's massachusetts wages is $200, no Connecticut income tax
				  would be required to be deducted and withheld from the employee's Massachusetts
				  wages, because the Massachusetts income tax required to be deducted and
				  withheld from the employee's Massachusetts wages exceeds the prorated tax
				  amount for Massachusetts. Assuming that the Rhode Island income tax that would
				  be required to be deducted and withheld from the employee's Rhode Island wages
				  is $450, the amount of Connecticut income tax that would be required to be
				  deducted and withheld from the employee's Rhode Island wages is $30. (This is
				  the amount by which the prorated tax amount for Rhode Island ($480) exceeds the
				  Rhode Island income tax required to be deducted and withheld from the
				  employee's Rhode Island wages. Therefore, the amount of Connecticut income tax
				  that would be required to be deducted and withheld from the employee's total
				  wages is $190 ($160 + $30).