Conncticut Double Taxing Previous Job's Income in Massachusetts

[zhiyuanh]

Hi,

I worked in MA for the first few months of 2022 and then changed to a job in CT, but I moved to NY so I am filing a CT 1040NR/PY as a non-resident. I found that CT would tax my previous job's income because I cannot deduct out-of-state income from total AGI. I cannot get tax credit paid to MA either because that is for part-year residents only. Is there a way to avoid double taxing? Thanks a lot!

Best,

Ben

[MarilynG1]

Yes, you should never be double-taxed on the same income by two states.

Think about where you lived when you earned the income.  If you lived in Massachusetts, then moved to Connecticut, then moved to New York, you may need to file a Part-Year Resident return for all three states, reporting the income you earned while living in each those states. 

Some states ask you to exclude income; others take all income and apply a % based on time lived in that state, so don't be discouraged if the interview doesn't directly ask you to exclude income.  Do your MA return first, then CT, then NY. 

If your W-2's don't break this down properly for you, you may need to do the calculations yourself.   In the MY INFO section, be sure to indicate that you 'earned income in other states' (MA, CT) if your address is a New York address. 

Here's more info on How to File a Part Year Resident Return.

@zhiyuanh 

[zhiyuanh]

Thank you @MarilynG1 ! I have never lived in CT. I just moved from MA to NY, but commute to CT office after moving to NY, would I still be able to file as a part-year resident, instead of a non-resident?

[MarilynG1]

If you never lived in CT, you would report income earned from Connecticut sources as a Non-Resident.  Although CT may tax this income, New York will give you a credit for tax you pay (or paid) to CT. 

In your case, you could prepare your CT Non-Resident Return first, then MA Part-Year, then NY Part-Year.  Here's more info on Allocating Income as a Part-Year Resident.

Take your time going through the State interviews.  Although it may appear that two states are taxing your income, the end result should be that they are not.  You may have to look at the final state tax forms to really see this, though.

@zhiyuanh 

[zhiyuanh]

Thank you so much @MarilynG1 ! Just one last question: as a non-resident of CT, do you know if there is a way for me to avoid CT taxing my MA-earned income? It seems from the state tax form that CT wants to tax both my MA income (before I changed my job and moved to NY) and my NY income (when working in CT).

Or should I just let CT tax my full-year income, and get tax credit from MA for the tax paid to CT?

[ErnieS0 · Accepted solution]

Connecticut will not tax your Massachusetts income. It does use your total income set your base tax rate.

For example, if you earned $50,000 total and $25,000 in CT, your tax rate would be based on $50,000. Say the CT tax on $50,000 is $5,000. Then your tax would be 50% ($25,000/$50,000) of $5,000 or $2,500.

Look at your CT-1040NR/PY return. The allocation is shown on lines 8-10.

[zhiyuanh]

Thank you so much @ErnieS0 ! This is super helpful and really solves my puzzle.