MA and CT tax question

[waltz2u]

Hi Tax Experts,

We live in MA for the whole year 2022. I work from home. My wife works from home for the State of CT most of the week. She travels to work in CT once a week. Would you please help advise how we should file state tax?

Thank you!!

[ErnieS0]

File a resident Massachusetts return and a non-resident Connecticut return. You can claim a credit on your MA return for tax paid to CT.

All your income is taxable to MA because you are residents. Any income earned while working in CT is taxed by Connecticut. If your wife works in CT once a week, then approximately 20% of that income is CT income (1 of 5 days).

CT allows you to file either jointly or separately. If you file together, your tax rate will be based on your total income, but you’ll only pay tax on the CT percentage.

For example, if you earned $100,000 everywhere, then your CT base income would be $100,000. If the CT tax on $100,000 is $x and you earned $50,000 in CT then your part-year/non-resident tax would be 50% ($50k/$100k) of $x.

It may be more beneficial to file married filing separately in CT.

See How do I prepare a joint federal return and separate state returns?

[waltz2u]

Thank you so much

[waltz2u]

I forgot one thing. I also work remotely from home in MA (part-time) for CT. Do I need to file non resident tax return with CT?

Thank you so much.

[TeresaM]

Work is taxed where it is physically performed and by your resident state. So if you live and work in Massachusetts, your income will be taxed there, even if the company is in Connecticut. 

You will want to check My Info in the Federal return and be sure the box is checked for Made money in another state.

Complete your income in the federal return and then complete the Non-Resident state, Connecticut. 
It will ask you and your wife to allocate your federal income between the states. Your part will be 0

Then complete the Resident state, Massachusetts, and allocate the income there.
Then Massachusetts will ask if you paid any other state taxes, and you can enter what your wife owes Connecticut. 

If you need extra time and file an extension, it will waive failure-to-file penalties until October 18th. However, if you would have owed tax on April the 18th, the IRS will assess monthly late payment penalties and interest until you pay.

I recommend to extend your return with a TurboTax Extension and also pay your best guess of anything you may owe. If you overpay, it will be refunded. If you underpay, it will only calculate penalties on the part that was not paid.

The states vary according to their due dates and if you have to file an extension or if it is automatic. You can look it up on this TurboTax Help article and if a state extension needs to be filed, it should be an option at the bottom of the federal extension screen. 

TurboTax has a tool called TaxCaster to give you an idea of your tax liability and/or refund. You can vary different items and see how that could impact your return. Click for TaxCaster