Key takeaways
- Every S corporation doing business in Connecticut or with Connecticut-sourced income files Form CT-1065/CT-1120SI, whether it shows income or a loss.
- The pass-through entity (PE) tax on Form CT-PET is optional, elected each year, and the election is irrevocable.
- The fourth CT-PET estimated installment for calendar-year 2026 is due January 15, 2027, which is before most firms start these returns.
- Connecticut filing and payment are electronic only, through myconneCT or the MeF program.
- DRS had posted only 2025 forms when this was checked, so confirm the 2026 forms and instructions before filing.
The return Connecticut expects
Connecticut calls the S corporation return the Connecticut Composite Income Tax Return, Form CT-1065/CT-1120SI. The Department of Revenue Services (DRS) says every pass-through entity that does business in Connecticut or has Connecticut-sourced income must file it, regardless of the amount of its income or loss. A loss year with a Connecticut office still needs the return.
The same form carries three jobs. It reports Connecticut-source income by member on Schedule B, it makes the composite payment for certain nonresident members, and it carries the box that elects the PE tax. Members receive a Schedule CT K-1, Member's Share of Certain Connecticut Items, alongside the federal Schedule K-1 (Form 1120-S).
Start from the federal Form 1120-S. The PE tax materials say the entity must complete the federal return first, so the Connecticut return should never be prepared from the client's books alone.
Due dates for tax year 2026 and the 2025 comparison
Form CT-1065/CT-1120SI is due on the fifteenth day of the third month after year end, which is March 15 for a calendar-year S corporation. If that date falls on a weekend or legal holiday, the next business day applies. For tax year 2025 the federal Form 1120-S was due March 16, 2026, because March 15, 2026 was a Sunday. For tax year 2026 the same rule gives March 15, 2027, assuming no change in law.
Extensions are separate from the federal one. The federal Form 7004 gives an automatic 6-month extension and must generally be filed by the regular due date, but Connecticut has its own application, Form CT-1065/CT-1120SI EXT. File it before the original due date, and do not assume the federal extension covers the state return. The Schedule CT K-1 deadline moves from March 15 to September 15 only if the EXT was filed on time.
The extension does not extend payment. Any composite or PE tax is due with the original deadline. If the client cannot pay, DRS has Form CT-1127, Application for Extension of Time for Payment of Income Tax.
Connecticut does not require estimated payments with Form CT-1065/CT-1120SI. The PE tax is different, and is covered below.
Composite payments and nonresident shareholders
The composite payment is made by the S corporation on behalf of nonresident noncorporate members. DRS gives the amount as Schedule B, Column F minus Column G, meaning the income tax liability less the PE tax credit offset. It is not called withholding, and it is not a tax on the corporation.
A nonresident individual whose only Connecticut-sourced income comes from pass-through entities, and totals less than $1,000, is relieved from filing a personal return. If the shareholder has any other Connecticut-sourced income, such as a rental in Hartford or wages for work done in the state, the composite filing does not excuse the personal return. That shareholder files Form CT-1040NR/PY with Schedule CT-SI.
Decision rule for the intake call: if a shareholder lives outside Connecticut, ask three things. Do you have any other Connecticut income? Do you work in Connecticut or have a rental here? Do you hold shares in another pass-through that reports Connecticut income to you? A yes to any one means the composite payment does not close out that person's Connecticut filing.
The optional PE tax on Form CT-PET
A pass-through entity may elect to pay Connecticut tax at the entity level on Form CT-PET. DRS describes the election as optional, made annually, and irrevocable. Checking the box on a timely filed Form CT-1065/CT-1120SI serves as written notice of the election, and the election must be made by the return's due date or extended due date.
Members then receive a PE tax credit, allocated on Schedule D of the CT-PET. The credit percentage and the computation are in the CT-PET instructions, and the member claims it on the individual or fiduciary return. The point of electing is usually the federal side: tax paid by the entity is deducted at the entity level, which gets around the federal limit on individual state and local deductions. Run both scenarios on the actual shareholders before recommending it, because a shareholder with little Connecticut income gains little.
Because the election cannot be revoked, get it in writing. A short email works: "We are electing to pay Connecticut pass-through entity tax for tax year 2026 and understand the election cannot be amended. Please reply yes by February 15." Keep the reply in the file.
Estimated payments if the client elects PE tax
A PE with a required annual payment of $1,000 or more pays on Form CT-PET ES in four installments. For a calendar year the dates are April 15, June 15, September 15 and January 15. Each installment is the lesser of a percentage of the prior year's tax or a percentage of the current year's: 25% or 22.5% for the first, 50% or 45% for the second, 75% or 67.5% for the third, and 100% or 90% for the fourth. Later installments account for earlier payments.
Worked example: the client's profit is growing, so the current-year tax is projected at 1.5 times the prior-year tax. The prior-year test is the lesser number every time, because 25% of the prior year is below 22.5% of 1.5 times it. By January 15 the cumulative payment is just the prior-year tax, and the balance comes with the return.
As of November 9, 2026, the first three 2026 installments have passed. Ask now whether the client made them, because the January 15, 2027 payment is the last cheap chance to cure a shortfall. DRS charges 1% interest per month or fraction of a month on unpaid tax and a 10% penalty for late payment or underpayment.
Penalties and electronic filing
The failure-to-file penalty on the composite return is 10% of the balance due or $50, whichever is greater. DRS also states that a $50 penalty may apply for late filing when no tax is due, so a clean loss-year return is not exempt.
Form CT-1065/CT-1120SI, its EXT, and the CT-PET forms must be filed and paid electronically through myconneCT or the MeF program. Do not file the Schedule CT K-1s with DRS when e-filing. Send them to members yourself.
The federal side carries its own exposure. The Form 1120-S late-filing penalty is $255 per shareholder per month for up to 12 months, and failing to furnish Schedule K-1 (Form 1120-S) can cost $340 per schedule. A late state return usually follows a late federal one, so fix the federal timeline first.
Documents to collect from the client
Entity facts: the Form 2553 acceptance letter, if the S election is new or the client cannot say when it took effect, and a statement of where the company has employees, property or customers in Connecticut. Shareholder facts: each shareholder's state of residence, a current mailing address, and for any nonresident a note of other Connecticut income. Ownership changes: the stock transfer dates, since the Schedule CT K-1 follows the same allocation as the federal K-1.
Payment facts: confirmation of any CT-PET ES installments paid, the myconneCT account login owner, and last year's CT-1065/CT-1120SI with its Schedule CT K-1s. If the client had a Schedule CT K-1 from another pass-through, ask for that too, because DRS lists PEs that receive one among those who must file.