No. Income earned by a Missouri non-resident who never works in Missouri is not Missouri Source Income. Your employer should not have withheld MO tax on your spouse’s income.
Missouri says:
I am a Missouri Employer but I have nonresident employees who work in a state other than Missouri. Am I obligated to withhold Missouri tax from these employee’s wages?
No. If a non-resident employee performs all of their services outside of Missouri, the wages paid to that employee are not subject to Missouri withholding.
For additional information, refer to the withholding tax frequently asked questions web page.
You can file a non-resident MO return to get back the tax withheld.
G
- o to screen “Remote Work” in the Missouri section
- Enter all of your spouse’s income in the box Remote Work Income
- On “Income Allocations” Income From Missouri Sources should be $0
MO W-4
Your spouse should fill out and give the employer a copy of Form MO W-4 with the exempt box checked to stop Missouri withholding.
Connecticut Other State Credits
You are correct in skipping the other state tax credit on your CT return. Since you are getting back all your MO withholding, there is no credit for any tax paid to MO.
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