Connecticut Revises Certain Publications and Forms for Tax Year 2018

January 25, 2019 Tom Hospod

The Connecticut has published Informational Publication 2018(8), Connecticut Tax Guide For Payers of Nonpayroll Amounts, in addition to revising AU-408, Specifications for Submission of 2018 State and Local Government Tax Exempt Income (TEI) Information and AU-409, Transmittal Form for Submission of State and Local Government Tax Exempt Income (TEI) Information.

 The following changes have been made to Informational Publication 2018(8):

  • Reminder that the due date for  is January 31.
  • 1099-R filings are required for all Connecticut residents, regardless of whether Connecticut income tax was withheld.
  • Pension and annuity payors that maintain an office or transact business in Connecticut are now required to withhold income tax from certain distributions to Connecticut residents.
  • Any payors required to withhold Connecticut income tax from non-payroll amounts are required to file Form REG-1, indicating they intend to make payments of pensions, annuities or retirement distributions to Connecticut residents.
  • Form CT- W4P has been revised to include the withholding codes necessary to calculate the correct amount of withholding. 

 Publication AU-408 has been revised to include the following information:

  • The reporting requirements for individual clients who have $10 or more in federally tax-exempt interest and/or dividends from bonds, mutual funds, money market funds or unit investment trusts previously only applied to payees with a Connecticut address. It now includes payees that are otherwise known to have a Connecticut tax filing obligation relative to these types of income.
  • 1099-B should also be used to report income from bonds. Federally tax-exempt 1099-B income should be reported as if it was 100% taxable for federal purposes.
  • Positions 44- 46 of the payer “A” record should report the total percentage of income that is exempt from Connecticut taxation, including income from bonds directly owned that were issued by Connecticut or any US territorial possessions, in addition to mutual fund distributions attributable to such jurisdictions.
  • Positions 55- 66 Payment Amount 1 of the payee “B” record has been clarified to include interest and interest-dividend amounts received at the time of sale, in addition to accrued interest received from buyer.
  • Positions 79-90 Payment Amount 1 of the payee “B” record has been clarified to only include tax-exempt OID as reported on federal 1099-OID.
  • The due date for this transmittal is January 31, 2019; however, an automatic three-month extension will be made to April 30, 2019 without the need for a formal request.

 Form AU-409 contains the following revisions:

  • This form has been expanded to include general tax-exempt income information; previously, it was specifically tax-exempt bond interest information. 

About the Author

Tom Hospod

Tom Hospod is a member of the Tax Research Team for the Direct Tax division at Sovos Compliance, where his main areas of focus are Tax Withholding and Automatic Exchange of Information (AEOI). Prior to Sovos, Tom worked as a legislative aide in the Massachusetts House of Representatives. He also has experience in securities law—focusing on broker-dealer disputes and representing clients in FINRA arbitration. Tom is a member of the Massachusetts Bar, earned his B.A. from Boston College and his J.D. from the University of Miami.

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