Kenneth M. Griffin, Vice President and Senior Trust Officer, First County Bank | Tax season tips

As Connecticut residents and business people prepare to file their taxes, are there any new rules they should be aware of?

Businesses involved in film production or digital animation in Connecticut should carefully review the Film Production, Film Production Infrastructure and Digital Animation Credits for 2008. They have been amended. 

Those businesses involved in the rehab of historic buildings, especially mixed use buildings, should investigate the Historic Rehabilitation, Historic Structures Rehabilitation and Historic Investment Tax Credits available for the 2008 tax year.

Changes of interest to individual residents and business people, for 2008, include:  Filing requirements for partners in a recognized Connecticut civil union, residents contributing to an account under the Connecticut Homecare Option Program for the Elderly, and retired U.S. Armed Forces and National Guard pensioners.  Consult your tax advisor if any of the above apply.

What other areas should Connecticut individuals and businesses monitor for 2008 and early 2009?

Individuals and employers should be vigilant as to federal stimulus related, reductions in tax withholding for 2009.

Those using tax preparation software should be sure to update the software at their producers Web site to capture late breaking changes in calculations and tax forms.

Connecticut business owners should have a working knowledge of the Connecticut estate tax, including the $2 million exemption and the “cliff” application of the tax just $1 over the exemption.  The decoupling of Federal and Connecticut estate taxes  is also an issue to be considered.

As the economy worsens, are more or less people and businesses going to experts to assist with their taxes?

Let’s say that more individuals, business owners and businesses should seek advice this year.  With the dramatic depreciation of personal and business assets in 2008, the changes being implemented for 2009, by the federal stimulus package and the state’s budget pressures, both opportunities and pitfalls exist that the average taxpayer might miss.  Professional advice is an important consideration.

Any words to the wise?

Yes.  The Taxpayer Answer Center at www.ct.gov/drs has more than 650 questions and answers to common Connecticut tax questions – nearly 500 of those relating to Connecticut business taxes.

For non-filers … Connecticut has set May 1, 2009 to June 25, 2009 as a tax amnesty period.  If, for any reason a return was not filed, or income was underreported, this is the opportunity to own up and receive a possible break on penalties, interest and prosecution. 

The state tax department reminds employers that employee tax withholding (and sales tax receipts, for that matter) are being held by a business in trust for the employee / taxpayers.   Temporary “borrowings” from these accounts (in these difficult times) is risky and exposes the business to penalties potentially beyond the routine interest and late payment fees.