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Important Withholding Tax Information for Employers

Recently enacted legislation makes significant changes to Section 12-700(a) of the General Statutes retroactive to January 1, 2011. Employers and taxpayers need to perform catch-up withholding for the current tax year.  The following is a brief overview of the changes which may affect your employees:

  • The number of tax brackets has increased from three to six. The new brackets are: 3%, 5%, 5.5%, 6%, 6.5% and 6.7%. 
  • The 3% tax rate is phased out for taxpayers with Connecticut adjusted gross income:
    • Over $100,500 filing jointly
    • Over $56,500 filing single
    • Over $78,500 filing as head of household
    • Over $50,250 married filing separately

 

The amount excluded from the 3% rate is taxed at the 5% rate.  

           

  • Additional tax provisions require a recapture of tax from taxpayers over certain income brackets. The recapture amounts are:
    • $150 per $10,000 of Connecticut adjusted gross income over $400,000 for taxpayers filing jointly, with a maximum total recapture of $4,500.
    • $75 per $5,000 of Connecticut adjusted gross income over $200,000 for taxpayers filing single, with a maximum total recapture of $2,250.
    • $120 per $8,000 of Connecticut adjusted gross income over $320,000 for taxpayers filing as head of household, with a maximum total recapture of $3,600.
    • $75 per $5,000 of Connecticut adjusted gross income over $200,000 for married taxpayers filing separate, with a maximum total recapture of $2,250.

These income tax changes are in effect for the entire tax year. Employers are required to adjust the withholding amount for employees affected by the new rates and additional provisions. The withholding tax tables have been revised to include the catch-up amount effective August 1, 2011. The withholding calculation rules have also been revised.

 

To download the revised withholding tax tables.

 

To calculate the additional withholding tax using the new withholding calculation rules.

 

Tax Tips Small Business

Determining Qualified Business Expenses

Be sure to deduct every legitimate expense

Amounts you spend in the course of conducting business are generally deductible from the gross income of that business. This includes any start-up expenses. You can claim amounts spent for items ordinary and necessary in your trade or business as a deduction against your income. Otherwise, the amounts are amortized, depreciated, or expensed depending on the nature of the purchases.

Read more...

Small Business Quick Tip

Use your credit card to buy equipment and supplies that you will need in the upcoming year. Charges on your credit card for deductible business expenses are allowed in the year you make the purchase, not in the year the charge is paid. Pay off your credit card after the beginning of the year and avoid finance charges.
Saturday, 19th May 2012
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Tax Tips Personal

HSA Funding Options

For a limited time only, there are more options

Health Savings Accounts (HSAs) are a great tax vehicle for making the most of your medical expenses. However, it's not always easy to come up with the money to fund an HSA. Well, now there are more options available to HSA owners. At any time before 2012, you can make a one-time only tax-free rollover from an IRA to an HSA. This rollover amount may not be more than your HSA maximum contribution for your type of coverage, whether individual or family.

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Personal Quick Tip

If by year-end you haven't contributed funds to your 2010 IRA, or if you've put in less than the maximum allowed, don't worry. You can contribute to either a traditional or Roth IRA until the April due date for filing your tax return for 2010 not including extensions. You can contribute up to $5,000 to your IRA each year. If you are age 50 or older, you are allowed to contribute an additional $1,000.