Determining Connecticut income tax to be deducted and withheld from wages paid to resident employees

resident employees (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). (c) To determine the amount required to be deducted and withheld from wages paid to employees who are nonresident individuals, see § 12-705(a)-6. Notes: Full section history for 2002 amendment reads as follows: "Amended February 28, 2002, applicable to taxable years beginning on or after January 1, 2002." Abbreviated note in section history inserted 11/4/2014 as a result of automated publishing restrictions. (November 4, 2014)