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Category: Connecticut

Connecticut Credit for Taxes Paid to Another State

Am I Eligible for the Credit for Income Taxes Paid to Qualifying Jurisdictions

If you are a resident of Connecticut and if any part of your income was taxed by a qualifying jurisdiction, you may be able to claim a credit against your Connecticut income tax liability for qualifying income tax payments you have made.

This will be automatically calculated within your TaxSlayer account when you add a Nonresident return for the state in which you paid income taxes.

You must also attach a copy of your return filed with the qualifying state(s) or the credit will be disallowed.

 NoteTaxSlayer will automatically submit the additional return on your behalf when you electronically file your return.

 

Qualifying Jurisdiction

A qualifying jurisdiction includes another state of the United States, a local government within another state, or the District of Columbia. A qualifying jurisdiction does not include the State of Connecticut, the United States, or a foreign country or its provinces (for example, Canada and Canadian provinces).

 

Qualifying Income Tax Payments

Qualifying income tax payments are income taxes you actually paid on income:

* Derived from or connected with sources within the qualifying jurisdiction; and

* Subject to tax in the qualifying jurisdiction

 

Income Derived From or Connected With Sources Within a Qualifying Jurisdiction (State)

* Compensation received for personal services performed in a qualifying jurisdiction;

 

* Income from a business, trade, or profession carried on in a qualifying jurisdiction;

 

* Gambling winnings from a state-conducted lottery; or

 

* Income from real or tangible personal property situated in a qualifying jurisdiction.

Note: Income from intangibles, such as stocks and bonds, is not considered derived from or connected with sources within a qualifying jurisdiction unless the income is from property employed in a business, trade, or profession carried on in that jurisdiction.

 

What Payments Do Not Qualify

* Income tax payments made to a qualifying jurisdiction (state) on income not derived from or connected with sources within the qualifying state or jurisdiction (such as wages not derived from or connected with sources within the qualifying jurisdiction);

* Income tax payments made to a qualifying jurisdiction (state) on income not included in your Connecticut adjusted gross income (AGI);

* Income tax paid to a jurisdiction (state) that is not a qualifying jurisdiction, including a foreign country or its provinces (for example, Canada and Canadian provinces;

* Alternative minimum tax paid to a qualifying jurisdiction (state);

* Income tax paid to a qualifying jurisdiction (state) if you claimed credit on that jurisdiction's income tax return for income tax paid to Connecticut; or

* Penalties or interest on income taxes you paid to a qualifying jurisdiction.

 

Limitations to the Credit

The total credit is limited to whichever of the following amounts is least:

* The amount of income tax paid to the qualifying jurisdiction (state);

* The portion of Connecticut income tax due on the Connecticut adjusted gross income sourced in the qualifying jurisdiction (state); or

* The amount of your Connecticut income tax entered on Form CT-1040, Line 6.

 

For additional assistance, please see Form CT-1040, Schedule 2 Worksheet