New Connecticut Business Entity Tax Law Affecting Partnerships, LLCs/LLPs, and S-Corporations
Connecticut’s Governor Malloy recently signed a new Business Entity Tax law impacting Partnerships, LLCs/LLPs, and S-Corporations whose owners pay income tax to the State of Connecticut. This law creates a new, business-level tax due on Connecticut-sourced business income which passes through to partners, members or shareholders of the business. This tax is required to be paid by the business entity and is designed to replace the Connecticut income taxes relating to the business income that would normally be paid by the individual owner.
This law affects Connecticut residents and nonresidents. Typically for the resident CT individual taxpayer, the tax due would be included as part of an individual’s quarterly estimated tax payment and/or covered through additional state income tax withholdings from wages. For non-residents of Connecticut, this new rule is similar to business entities who had non-resident owners and paid an annual composite tax with the business annual filing. The change essentially means that the nonresident composite tax is now due on a quarterly basis.
Please contact your Whittlesey advisor to discuss strategies for the new Connecticut tax law.
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