I live in NY with wife, and wife works in CT. We file a nonresident CT return and then a resident NY return. For the resident NY return, we normally take the income tax paid to CT as a credit. However, since there is a new paid family leave payroll tax in CT, I would think that this payroll tax should be deducted as well. That is, the total credit for taxes paid to CT should equal the CT income tax + the CTPFL payroll tax. The IRS has previously ruled the PFL payroll taxes are income taxes. However, Turbotax does not seem to know about this at all. Turbotax wants to just have my NY credit for taxes paid to CT be equal to my CT income tax. Turbotax lets you override this, but I find it odd that Turbotax does not know about the CTPFL, since this must be a common situation.
Has anybody else encountered this issue? Is Turbotax just not caught up to how to handle CTPFL, or am I misinterpreting that CTPFL premiums can be treated as an income tax paid to another state?
