Connecticut adjusted gross income.

[jbshah40]

I moved to a different state and therefore I have to split my federal AGI between CT and my new state. Line 1 and line 3 on the CT tax return are the same as the federal AGI. Line 4 as an adjustment is adjusted for SSA and therefore, calculated CT adjusted gross on line 5  is slightly lower than federal.

My income from CT is about 40% of total federal AGI, yet CT charges income tax based on income on line 5 which is close to my federal AGI. Then CT state tax is calculated pro-rata bases on the ratio of income from CT sources (line 6) and Line 5 - CT AGI. If I were to use my CT income (per line 6), the tax would be very different and lower than the pro-rata allocated tax calculation.   

How do I correct this situation? 

[ErnieS0 · Accepted solution]

Your Connecticut income tax return is correct. States are allowed to tax part-year and nonresidents any fashion they want.

Many states, including Connecticut, New York and California, start with a tax rate based upon total income earned everywhere (with some state specific adjustments). The actual tax is the base tax x (actual state income ÷ total income). That is the ratio you see on line 9 of your CT-1040NR/PY.

This usually results in higher tax than if the tax rate were based only on income earned within the state.