Connecticut Withholding Tax Change

QuickPayroll is releasing Payroll Update 20922 on November 2, 2009, to comply with the Connecticut Department of Revenue Services release of the revised Withholding Calculation Rules effective January 1, 2009. To view the announcement from the Department of Revenue Services, click here.

Legislation enacted requires certain individuals in the highest marginal tax bracket to pay catch-up withholding. These individuals have been assessed a tax rate increase of 6.5%. Employers are required to adjust the withholding amounts within the highest marginal tax brackets and pay the difference in the remaining pay periods for 2009.

• Individuals whose Connecticut filing status is “Single” or “Separately” and whose Connecticut taxable income is more than $500,000.
• Individuals whose Connecticut filing status is “Head of Household” and whose Connecticut taxable income is more than $800,000.
• Individuals whose Connecticut filing status is “Jointly” or “Qualifying Widow(er)” and whose Connecticut taxable income is more than $1 million.

If it is determined that you have an employee who is within the highest marginal tax bracket, an action is required. Click here.

Frequently Asked Questions

How do I get the latest Payroll Update?
To get the latest Payroll Update, click on the Help menu, select User’s Guide from the drop down list, click on the Index tab, and type “Updating” in first field.  Help is provided for both downloading and installing Payroll Updates.

What do I need to do?

After downloading and installing Payroll Update 20922, the correct amount of Connecticut withholding taxes will be calculated and withheld from employees’ paychecks going forward except for the following:

· Inclusion of any supplemental compensation previously paid or anticipated to be paid before the end of the year.

· Adjustment of the catch-up withholding tax.

What if I have an employee whose withholding tax needs to be adjusted?

If you have determined that you have an employee who is within the highest marginal tax bracket, you will need to perform a manual calculation to determine the adjusted withholding tax amount to be paid for the remainder of the year.

· To view the Withholding Calculation Rules Effective January 1, 2009 (As Affected by Conn. Pub. Act 09-3 (June Spec. Sess.)) and calculate additional withholding tax for taxable year 2009, click here.

· To view the Table A Exemptions and Table B Personal Tax Credits click here.

· To view FAQs posted by the Department of Revenue Services, click here.

· If you need to contact the Department of Revenue Services, click here.

How do I apply the adjusted withholding tax amount to my employee’s paycheck?

1. Calculate the amount to add to each remaining paycheck by dividing the balance due (from the manual tax calculation) by the number of pay periods remaining in 2009.

2. Add the amount to the employee’s profile under extra withholding. Remember to remove this amount BEFORE you process the first payroll in 2010.

· Note: If you do not wish to add the amount to the employee’s profile, you can edit each paycheck to include the extra amount under Connecticut withholding.