DRS: Nonresidents with Connecticut Source Income

Nonresidents with Connecticut Source Income

A nonresident is anyone whose legal residence (domicile) is outside of Connecticut and who does not maintain a permanent place to live in Connecticut for the entire year at which he or she spends more than 183 days in the taxable year. A nonresident can also be someone whose legal residence is in Connecticut but does not maintain a permanent place to live in Connecticut, maintains a permanent place to live outside of Connecticut, and does not spend more than 30 days in Connecticut in the taxable year.

Nonresidents of Connecticut who are required to file a Connecticut return must complete:

Nonresident Who Must File a Return
A nonresident must file a Connecticut income tax return if any of the following is true for taxable year:

  • Connecticut income tax was withheld from your wages or other payments or
  • You made estimated payments of income tax to Connecticut or
  • You meet the gross income test and had any income (or loss) from Connecticut sources or
  • You were required to pay the federal alternative minimum tax.

A nonresident or part-year resident meets the gross income test if his or her total income for the year, including income earned within and without Connecticut exceeds:

  • $13,000 for single filers or
  • $12,000 for married persons filing separately, or
  • $19,000 for head of household, or
  • $24,000 for married persons filing jointly

What Income Is Subject To Connecticut Income Tax?
The general instructions for Form CT-1040NR/PY include information about who should file this form as well as other helpful advice.

A nonresident's income derived from Connecticut sources is subject to Connecticut income tax.  Connecticut source income includes income from a business, trade, profession or occupation carried on in this state, including but not limited to:

  • income from wages for services performed in Connecticut;
  • payment of accrued sick pay, vacation pay, etc. earned during employment in Connecticut;
  • severance pay;
  • unemployment benefits received as a result of former employment in Connecticut;
  • income from the sale or rental of real or tangible property located in this state; and
  • income of a partner in a partnership or shareholder in an S corporation doing business in Connecticut.

Completing Form CT-1040NR/PY
On Line 1 of Form CT-1040NR/PY you begin with federal adjusted gross income.  (If you are filing a joint federal income tax return, and your spouse was a nonresident who did not have any Connecticut source income, you should file Form CT-1040NR/PY as a "filing separately for Connecticut only" and include only your share of federal adjusted gross income on Line 1.  The instructions to Form CT-1040NR/PY also include information on filing if you are married and your spouse has a different residency status.)

On Schedule CT-SI, only include the income that is from a Connecticut source.  For example, if you worked in Connecticut and the W-2 shows $23,500 in CT wages, enter $23,500 on Line 1 of Schedule CT-SI.  If you do not have any other CT source income, enter the same amount on Line 6 of Form CT-1040NR/PY. 

Figure the amount of tax on Line 8 based upon the greater of the amount on Line 5 (Connecticut adjusted gross income) or the amount on Line 6 (Connecticut source income).  Use the Tax Tables or Tax Calculation Schedule.

Calculation Of The Tax By Nonresidents
Connecticut law requires a nonresident to calculate his or her tax in the same way as a resident of Connecticut.  The nonresident must start with federal adjusted gross income on Line 1 of the return.  Tax is calculated on all income as reported on Line 5.  The nonresident is then required to prorate the tax based upon the percentage of income from Connecticut sources.

For example, if the Connecticut income tax calculated on your entire income (as reported on Line 5 of Form CT-1040NR/PY) was $1,000, but you were a nonresident who earned only 50% of your income from wages earned while working in Connecticut, your tax due to Connecticut would be 50% of $1,000, or $500.

This method of calculation allows the nonresident to be taxed at the same rate as a resident, taking into account the same exemptions and tax credits available to a resident at the same income level, but only requires payment of the tax in relation to the percentage of total income derived from this state.  This method of taxation, also employed by New York and California, as well as other states, is intended to result in a fair collection of only the amount of tax due to Connecticut.

When you file the resident income tax return with your home state, you may be able to claim credit for taxes paid to Connecticut for income earned in this state.  Please contact the tax department in your state of residence to find out if you will be eligible to claim such a credit.

If One Spouse Was a Nonresident with Connecticut source income and the other Spouse is a Nonresident without Connecticut source income
If you file a joint federal income tax return but only one spouse is a nonresident with Connecticut source income, that spouse should file as filing separately for Connecticut only even if they file a joint federal return. The spouses may file a joint Connecticut income tax return only if they both consent to be treated as Connecticut nonresidents with Connecticut source income. 

For example, if you were a nonresident of Connecticut who is required to file a Connecticut return and your spouse was a nonresident of Connecticut with no Connecticut source income, you should file Form CT-1040NR/PY as filing separately for Connecticut only even if you and your spouse file a joint federal income tax return (unless you agree to file a joint nonresident return, including the income of both spouses in the calculation of Connecticut adjusted gross income). 

On Line 1 of Form CT-1040NR/PY you should include only your share of the federal adjusted gross income.  To determine your share of federal adjusted gross income, you should recompute your federal adjusted gross income by completing a pro-forma federal income tax return as if you were filing as married filing separately for federal income tax purposes. 

On Schedule CT-SI, only include the portion of your income that is from a Connecticut source.  For example, if you worked in Connecticut and the W-2 shows $23,500 in CT wages, enter $23,500 on Line 1 of Schedule CT-SI.  If you do not have any other CT source income, enter the same amount on Line 6 of Form CT-1040NR/PY. 

In calculating the tax, use the column for “filing separately”.

If one Spouse is a resident and the other Spouse is a Nonresident
When one spouse is a Connecticut resident and the other spouse is a nonresident, each spouse who is required to file a Connecticut income tax return must file separately for Connecticut unless:

  • They file jointly for federal income tax purposes and
  • They elect to be treated as if both were Connecticut residents for the entire taxable year.

For example, if you were a resident of Connecticut who is required to file a Connecticut return and your spouse is a nonresident of Connecticut with no Connecticut source income, you should file Form CT-1040 as filing separately for Connecticut only even if you and your spouse file a joint federal income tax return.  If your spouse is a nonresident with Connecticut source income, he or she must also file Form CT-1040NR/PY as “filing separately for Connecticut only.”  If, however, you both agree to be treated as if you both were Connecticut residents for the entire taxable year, you can file Form CT-1040 as filing jointly for federal and Connecticut.

A resident is required to file a Connecticut income tax return if:

  • His or her share of federal adjusted gross income exceeds $12,000, or
  • If his or her share is $12,000 or less but he or she had Connecticut income tax withheld from wages or made estimated payments of Connecticut income tax, or
  • He or she had a federal alternative minimum tax liability.

A nonresident is required to file a Connecticut income tax return if he or she had CT source income and met the requirements listed above.

On Line 1 of Form CT-1040NR/PY you should include only your share of the federal adjusted gross income.  To determine your share of federal adjusted gross income, you should recompute your federal adjusted gross income by completing a pro-forma federal income tax return as if you were filing as married filing separately for federal income tax purposes. 

In calculating the tax, use the column for “filing separately”.

 

Are Estimated Payments Required?
A nonresident who will owe $1,000 or more in Connecticut income tax, after subtracting Connecticut income tax withheld during the taxable year, should make estimated income tax payments.  In general, four installments are due: April 15, June 15, September 15, and January 15.  Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupons, is used for this purpose.  The worksheet explains the calculation of tax on Connecticut taxable income for residents, nonresidents, and part-year residents.

Credit from your State of Residence for Tax Paid to Connecticut
You may be entitled to claim credit for taxes paid to income sourced to this state. Check with the tax department in your state of residence to find out more information.

Property Tax Credit
By law, the property tax credit may only be claimed by full year residents.  Nonresidents are not eligible to claim the property tax credit.