In Feb, 2018, I signed a separation agreement that where payment was contingent on future obligations (non compete, non solicit, non disparagement, etc.) I was NOT laid off, but initiated the separation. When I signed the agreement, I lived in NY by worked in CT. After I signed the agreement, I NEVER worked a day in CT again.
In August 2019, I received my payment and CT is now auditing me claiming I owe them tax on the money. Initially, they claimed it was severance, then backed off. Then they claimed it was deferred compensation and then backed off given it was not highlighted as such on my 2019 W2 (box 12, code Z). Obviously, I have been providing them with reasons it was not either issue.
Now they moved the Audit to another department, and I feel that they are gonna claim its severance again.
CT has NO mention of taxation of non-resident severance payments in any of the tax codes.
Any advice?
@CTTax
