Key figures
Connecticut payables
2026, with sources
1099s go to Connecticut directly
Connecticut is in the IRS Combined Federal/State Filing program, but DRS still requires every state copy of Form 1099-NEC it covers: payments to Connecticut residents, and to nonresidents for services performed wholly or partly in the state, with or without Connecticut withholding. Copies and the Form CT-1096 transmittal are due January 31, uploaded through myconneCT; 25 or more forms must be filed electronically. Form 1099-K is due 30 days after it is filed with the IRS.
In practice: a New York startup that pays a Hartford-based designer $12,000 files the federal 1099-NEC and, separately, the Connecticut copy by January 31. Payroll providers rarely do this for contractors paid through accounts payable, so it falls to whoever runs the 1099s.
Use tax on software and services
Connecticut taxes canned software accessed or transferred electronically and bought by a business for business use at 1%, the same rate it applies to computer and data processing services. When an out-of-state vendor doesn’t collect it, the buyer owes it as use tax. Software delivered with tangible property, and most other goods and taxable services, are 6.35%. There are no local sales taxes.
A company that is not registered to collect sales tax still registers for business use tax and reports taxable purchases on Form OS-114 for the period in which it made them. At 1%, a $200,000 software stack owes $2,000 a year, small enough to be ignored and large enough to show up in an audit with interest.
Classification
Connecticut’s unemployment law uses the ABC test to decide whether a worker is an employee, which is harder to pass than the federal common-law test. A contractor who does the company’s core work under its direction is likely an employee for unemployment purposes, and the misclassification surfaces when that person files for benefits.
Deadlines
- Jan 31File state copies with DRS via myconneCTForms 1099-NEC, 1099-MISC with CT-1096
The federal baseline
This page covers what Connecticut adds. The federal rules underneath it apply here too.
Common questions
Do we file 1099s with Connecticut if we filed them with the IRS?
Yes. DRS requires the state copy of Form 1099-NEC for payments to Connecticut residents, and to nonresidents for services performed wholly or partly in Connecticut, even if no Connecticut tax was withheld. It is due January 31 with Form CT-1096, and you must file electronically once you have 25 or more forms.
What do we owe on software bought from vendors that don’t charge Connecticut tax?
Use tax, at 1% for canned software accessed electronically and bought for business use, and 6.35% for most other taxable purchases. A business that isn’t registered to collect sales tax registers for business use tax and reports purchases on Form OS-114 for the period of the purchase.
Payables next door
- MAMassachusetts payablesMassachusetts wants 1099s filed directly with DOR, applies a strict ABC test to contractors, and taxes the SaaS a startup buys at 6.25% when the vendor doesn’t collect.
- NYNew York payablesNew York wants a written contract for freelancers and a new-hire report for contractors over $2,500. Untaxed software purchases owe use tax, and stale vendor checks escheat after three years.
- RIRhode Island payablesFrom tax year 2025, Rhode Island requires every 1099 over $100 to be filed with the Division of Taxation, withholding or not. SaaS bought from vendors that don’t collect owes 7% use tax.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
More of the Connecticut guide
- AccountingAccounting and state tax in ConnecticutCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in ConnecticutSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayrollPayroll taxes and employer rules in ConnecticutWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in ConnecticutRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in ConnecticutCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.