@alisonjhade
Connecticut has a "convenience of the employer" rule. That means that the state treats a telecommuter employed by a Connecticut company the same as an employee who actually works in Connecticut. The only exception would be if the employer has a specific business need for the employee to be located elsewhere. Under this rule, the employer is required to withhold Connecticut tax, and the employee must file a Connecticut tax return and pay Connecticut tax as if all his income was earned in Connecticut.
The convenience of the employer rule puts the employee in a difficult position, because Colorado considers the income to be earned in Colorado if that's where the employee is actually working. You should probably seek professional tax advice.
