Morning: Small Business Tax Tips (New Haven)

August 26, 2026 • News

NEW HAVEN, CONNECTICUT , JOSE’S TAX SERVICE , AUGUST 26, 2026

Connecticut’s Pass-Through Entity Tax (PTET) requires immediate review for New Haven partnerships, S corporations, and eligible multi-member limited liability companies (LLCs). The tax is optional, but the election is made annually and becomes irrevocable for the applicable tax year.

For calendar-year entities, September 15, 2026 carries two separate planning implications:

It is the third estimated Connecticut PTET payment deadline for the 2026 income year.
It may be the extended filing deadline for the 2025 Connecticut Pass-Through Entity Tax Return election when a valid extension was obtained.

These dates must not be confused. Use the correct tax year, form, payment type, and entity information.

Understand Who May Elect PTET!

Connecticut defines a pass-through entity (PE) as a partnership or an S corporation. The definition generally includes:

General and limited partnerships.
Limited liability partnerships.
S corporations.
Multi-member LLCs treated as partnerships for federal income tax purposes.
Other entities treated as partnerships for federal income tax purposes.

An LLC’s legal name does not determine its eligibility. Its federal tax classification matters. A single-member LLC may be treated differently from a multi-member LLC. Review the entity’s federal election, Form 1065 or Form 1120-S filing obligation, ownership structure, and Connecticut activity before proceeding.

A PE that does business in Connecticut or has income derived from or connected with Connecticut sources may elect to file Form CT-PET. Substantial economic presence can also apply when a business purposefully directs activity toward Connecticut.

Read the official Connecticut Department of Revenue Services (DRS) Pass-Through Entity Tax Information before making a decision.

Treat the Election as an Annual Decision!

The Connecticut PTET election is optional and annual. It is not a permanent classification election.

To make the election, the entity must provide written notice to the Commissioner of Revenue Services by the original or extended due date of the applicable return. Checking the PTET election box on a timely filed Form CT-1065/CT-1120SI, Connecticut Composite Income Tax Return, constitutes written notice under DRS guidance.

The election is generally made in connection with the entity’s Form CT-PET, Connecticut Pass-Through Entity Tax Return. Once made, the election is irrevocable for that tax year. It cannot be added later through an amended return if the election was omitted.

For a calendar-year entity:

The 2025 CT-PET return was generally due March 16, 2026.
A valid extension may move the filing deadline to September 15, 2026.
The 2026 PTET election will generally be made with the 2026 filing completed in 2027.

Action required: Determine whether September 15 relates to your 2025 extended return, your 2026 estimated payment, or both.

The DRS forms page currently provides the 2025 Form CT-PET Instructions, the 2025 Form CT-PET, and the Pass-Through Entity Tax Forms page. Verify the current DRS instructions before filing. Forms and procedures may be updated.

Meet the September 15, 2026 Estimated Payment Requirement!

A PE whose required annual PTET payment is $1,000 or more must generally make four estimated payments.

For a calendar-year entity paying 2026 PTET, the scheduled dates are:

April 15, 2026.
June 15, 2026.
September 15, 2026.
January 15, 2027.

The September payment is the third installment. The cumulative payment requirement through that date is generally the lesser of:

75% of the prior-year PTET, or
67.5% of the current-year PTET.

These are cumulative thresholds. They include all prior estimated payments made for the year. The 67.5% amount represents three-fourths of the 90% current-year required annual payment standard.

For example, assume a New Haven architectural partnership had:

2025 PTET of $40,000.
Projected 2026 PTET of $48,000.
Required annual payment based on the lesser applicable method of $40,000.

By September 15, the entity should generally have paid at least $30,000, representing 75% of the prior-year amount. If the current-year method applies instead, 67.5% of $48,000 equals $32,400. The correct comparison depends on the required annual payment calculation and the entity’s facts.

Failing to meet the applicable cumulative threshold may lead to underpayment interest. Review Worksheet CT-2210 PE, Underpayment of Estimated Income Tax by Pass-Through Entities, when determining whether an installment shortfall exists.

File and Pay Form CT-PET ES Electronically!

Use Form CT-PET ES, Estimated Connecticut Pass-Through Entity Tax Payment Coupon, for estimated PTET payments.

DRS requires Form CT-PET ES to be filed and paid electronically. Paper submission is not the standard method. Electronic filing and payment are available through:

myconneCT.
The Connecticut Modernized e-File (MeF) program, when supported by the entity’s software provider.

Access the official 2026 Form CT-PET ES before initiating the payment.

When using myconneCT:

Log in to the entity’s account.
Select the Pass-Through Entity Tax account.
Choose “Make a Payment.”
Select the payment method.
Enter the correct tax year and payment period.
Save the confirmation number.

An electronic filing waiver may be available through Form DRS-EWVR, Electronic Filing and Payment Waiver Request. Do not mail a paper coupon unless DRS has approved the applicable waiver.

A payment sent through a bank’s online bill-pay system must be confirmed as an electronic funds transfer (EFT). A bank-generated paper check may not satisfy the electronic payment requirement.

Coordinate the Federal SALT Workaround and Owner Credit!

The federal PTET strategy is commonly associated with the state-and-local-tax (SALT) deduction limitation. Under IRS Notice 2020-75, certain state and local income taxes imposed on and paid by a partnership or S corporation may be deducted at the entity level when computing eligible federal income.

This entity-level treatment can avoid having the payment treated solely as an itemized deduction subject to the individual SALT limitation. It is commonly described as a federal SALT workaround.

The federal result is not automatic for every owner or every entity. Review the entity’s accounting method, tax classification, ownership, federal return, state sourcing, and payment timing. Also review the current IRS guidance on estimated taxes.

Connecticut generally provides a PTET credit to eligible noncorporate members. Under current DRS rules, the credit is generally 87.5% of the member’s direct and indirect pro rata share of PTET paid. The credit is not necessarily 100% of the owner’s allocated tax.

Owner-specific factors include:

Connecticut residency.
Part-year or nonresident status.
Direct and indirect ownership.
Corporate or noncorporate member classification.
Connecticut-source income.
Other Connecticut credits.
Individual estimated tax payments.
Whether the entity actually paid the PTET.

A C corporation, corporate member, trust, estate, or other owner may be treated differently. Do not distribute or estimate the owner credit without reviewing the applicable DRS schedules and instructions.

Coordinate Federal and Connecticut Estimates Separately!

PTET does not replace all other estimated tax obligations.

A New Haven S corporation may pay PTET at the entity level while its shareholder remains responsible for:

Federal individual estimated income tax.
Connecticut individual estimated income tax after considering the expected PTET credit.
Self-employment tax when applicable.
Payroll withholding and employment tax obligations.
Tax on wages, investment income, rental income, or other personal income.

A partnership owner receiving Schedule K-1 income must coordinate the expected Connecticut PTET credit with the owner’s individual Form CT-1040ES payments. The owner may still need to make individual estimates if the credit does not cover the projected Connecticut liability.

Federal payments generally use Form 1040-ES, Estimated Tax for Individuals. Connecticut individual payments generally use Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon for Individuals. Entity PTET payments use Form CT-PET ES. These are separate obligations.

Do not combine federal, Connecticut individual, and Connecticut entity payments. Use the correct account, form, taxpayer identification number, tax year, and payment type.

Apply This New Haven Action Checklist!

Complete the following steps before September 15, 2026:

Identify the entity type. Confirm whether the business is a partnership, S corporation, or multi-member LLC taxed as a partnership.
Separate the tax years. Determine whether you are addressing a 2025 extended return, a 2026 PTET estimate, or both.
Review prior PTET. Locate the 2025 Form CT-PET and Schedule CT-PE records.
Close the books. Reconcile New Haven business bank accounts, credit cards, income, expenses, and owner transactions through the latest available month.
Project annual PTET. Compare the prior-year and current-year methods.
Calculate cumulative payments. Confirm whether at least 75% of prior-year PTET or 67.5% of current-year PTET has been paid.
File Form CT-PET ES electronically. Use myconneCT or an approved MeF provider.
Review owner credits. Coordinate the expected 87.5% credit with each owner’s Connecticut estimate.
Calculate federal estimates separately. Review Form 1040-ES and IRS requirements.
Retain documentation. Save payment confirmations, calculations, ownership schedules, and DRS correspondence.

For a Westville consulting LLC, an East Rock professional practice, or a downtown New Haven S corporation, the best result depends on accurate books and entity-specific modeling. Jose’s Tax Service provides personalized tax preparation, bookkeeping, estimated tax planning, and business support in person and virtually. Review the Small Business Learning Center, then schedule a tax appointment.

The September 15, 2026 deadline is approaching. Verify the current Connecticut DRS instructions, calculate the correct cumulative payment, file Form CT-PET ES electronically, and coordinate the entity payment with every owner’s federal and Connecticut tax plan.

Category: Tax Planning | Tags: small business tax, New Haven business, deductions, tax strategy