State Tax Codes
Four special tax tables must be set up for the Connecticut state tax calculation. To access the State Tax reference table, select the menu option: Main Menu -> Human Resources -> Reference Tables -> Payroll -> State Tax Codes.
Because the Connecticut Form TPG-211 only shows Annual values for each of the special state tax tables, it is recommended that you set up the Annual entries and use the Generate item to convert them to the values required for the pay frequencies that you use. The Generate item is explained in the standard Human Resources manual. This option has been modified for the state of Connecticut to also create or update the State Tax Exemptions, 3% Phase-Out, Tax Recapture, and Personal Credits tables, in addition to the other tables that are currently generated. If the code you are trying to generate already exists, the system will ask you if you want to replace it, so you can use this method to update the existing state tax tables at the beginning of each year.
To set up the Connecticut special tax tables, either click New to add a new record, or search for the desired state tax code, click OK to update the record, and then click on each of the items for Tax Detail, Exemptions, 3% Phase-Out, Recapture, and Credits.
Tax Detail
The Tax Detail page lets you define state tax withholdings based on earnings ranges. The entries should be taken from Table B – Withholding Tax in the Connecticut Form TPG-211, after dividing the dollar amounts by the number of pays that correspond to the Pay Frequency. Use the "less than or equal to" salary figure divided by the number of pays for each earnings entry. The last earnings entry should be 9,999,999.99.
Exemptions
The Exemptions page lets you define personal exemption amounts based on earnings ranges. The entries for each line represent the maximum state gross earnings subject to the exemption amount. When an employee's state gross earnings exceeds the maximum for one line, the system references the next line. Your entries should be taken from the Less Than or Equal To columns for the Table A - Exemptions tables in the Connecticut Form TPG-211, after dividing by the number of pays that correspond to the Pay Frequency. The last earnings entry should be 9,999,999.99.
3% Phase-Out
The 3% Phase-Out page lets you define the Connecticut 3% Phase-Out Add Back amount based on earnings ranges. The entries for each line represent the maximum state gross earnings subject to the amount to be added back to the state taxes. When an employee's state gross earnings exceeds the maximum for one line, the system references the next line. Your entries should be taken from the Less Than or Equal To columns for the Table C – 3% Tax Rate Phase-Out Add-Back tables in the Connecticut Form TPG-211, after dividing by the number of pays that correspond to the Pay Frequency. The last earnings entry should be 9,999,999.99.
Tax Recapture
The Tax Recapture page lets you define the Connecticut Tax Recapture amount based on earnings ranges. The entries for each line represent the maximum state gross earnings subject to the recapture amount to be added to the state taxes. When an employee's state gross earnings exceeds the maximum for one line, the system references the next line. Your entries should be taken from the Less Than or Equal To columns for the Table D – Tax Recapture tables in the Connecticut Form TPG-211, after dividing by the number of pays that correspond to the Pay Frequency. The last earnings entry should be 9,999,999.99.
Personal Credits
The Personal Credits page lets you define the Connecticut Personal Tax credit percentages based on earnings ranges. The entries for each line represent the maximum state gross earnings subject to percentage to be subtracted from the state taxes. When an employee's state gross earnings exceeds the maximum for one line, the system references the next line. Your entries should be taken from the Less Than or Equal To columns for the Table E – Personal Tax Credits tables in the Connecticut Form TPG-211, after dividing the salary by the number of pays that correspond to the Pay Frequency. The last earnings entry should be 9,999,999.99.
Future Changes
The Future Changes for State Tax Codes can also be used to set up the new Connecticut State Tax Exemptions, 3% Phase-Out, Tax Recapture, and Personal Credits tables. To access Future Changes for state tax codes, select the menu option: Main Menu -> Human Resources -> Reference Tables -> Future Changes -> State Tax Codes. Please refer to the standard Human Resources manual for an explanation of how to use Future Changes.
Additional State Tax Setup Information
The Withholding Calculation Rules listed in the TPG-211 and in the CT Tax Circular say to annualize the employee's salary, use annual figures for each of the calculations, and then to divide the final result by the pay periods per year. However, if all the dollar amounts in the tables are divided by the number of pays, and the employee's per-period gross wages are used, the state tax that is calculated is the same within a few cents as what would result from annualizing it and dividing by the number of pays at the end.
When calculating the dollar values for the earnings and tax amounts for the State Tax Detail table and all the new Connecticut state tax tables, be sure to NOT round to the nearest dollar after you divide the annual amount by the number of pays that correspond to the pay frequency. The figures should be rounded to the nearest 2 decimal places.
If you have an employee who did not fill out a CT-W4 form, Connecticut currently specifies that their tax should be withheld at a rate of 6.7%, without allowance for exemption. You may want to set up a Tax Filing Status to be used only for this purpose, where there is only one entry in the Tax Detail table using a percent of .067 and earnings value of 9,999,999.99 and Tax Amount equal to zero. All the new tables would need to contain one entry per pay frequency for this special tax filing status. The earnings would need to be 9,999,999.99. The Exemption Amount, 3% Phase-Out Amount, Recapture Amount, and Personal Credit Percent would all be equal to zero.
The database table st3table (Credits) is not applicable to Connecticut since the state does not allow credits to be based on the number of dependents. If there are any entries in the st3table they will be ignored.
If you currently have data in the State Tax Detail page with flat tax amounts from the 2012 Withholding Tables that are listed in pages 41 - 48 of the CT Tax Circular, you will need to delete that information and replace it with the information from Table B – Withholding Tax (after dividing by the number of pays that correspond to the pay frequency).