i have a question, i live in massachusetts, and work for a company based in connecticut. i never physically work in CT as i am 100% remote. My wife does however work in MA.
my question is should i stop my CT employer from witholding taxes? what is the best approach? i am afraid that i am being taxed incorrectly because of the two states
Yes, you should have your employer withhold Massachusetts tax on your remote work compensation.
You can file a non-resident Connecticut state tax return to get the tax withheld refunded.
According to the state of Connecticut:
“Example: Working solely outside Connecticut: A resident of New York works in New York for an employer whose main office, including the payroll department, is located in Connecticut. The employer is not required to withhold Connecticut income tax even though payment is made from a point in Connecticut, because the employee is a nonresident and performs all services outside Connecticut.”
State of Connecticut Department of Revenue
Yes, you should have your employer withhold Massachusetts tax on your remote work compensation.
You can file a non-resident Connecticut state tax return to get the tax withheld refunded.
According to the state of Connecticut:
“Example: Working solely outside Connecticut: A resident of New York works in New York for an employer whose main office, including the payroll department, is located in Connecticut. The employer is not required to withhold Connecticut income tax even though payment is made from a point in Connecticut, because the employee is a nonresident and performs all services outside Connecticut.”
State of Connecticut Department of Revenue
So once CT was witholding MA income taxes then i wouldnt need to file a CT nonresident return any longer ?
Correct, once they stop withholding CT tax, there would be no reason for you to file a Connecticut return.
if my CT employer is refusing to withhold MA taxes, then should i exempt myself from taxes in CT and just pay them quarterly to MA instead ? any other/better options ?
Q: "if my CT employer is refusing to withhold MA taxes, then should i exempt myself from taxes in CT and just pay them quarterly to MA instead?"
A: Assuming you will be doing no work in 2023 from a location within CT, then yes, that is exactly what you should do.
Thank you tom, from the best of my understanding, i would need to claim witholding code of "E" in CT which printed on the W4 says i expect to make less then 24,000 or i am claiming MSRRA ... neither one of which is correct, but there are no other options to claim exempt.
i assume its just a case of the form not being up to date to current situations ?
I found this in the instructions for Form CT-W4:
Any nonresident who expects to have no Connecticut income tax liability should choose Withholding Code “E.”
https://portal.ct.gov/-/media/DRS/Forms/2022/WTH/CT-W4_1221.pdf
I would just enter "E" on Line 1 of the form.
One more question to Tom and Kris,
i ran across this article: https://www.wipfli.com/insights/articles/tax-understanding-the-convenience-of-the-employer-rule
Where since MA and CT both have "Convenience of the employer" rules even tho i physically performed the work outside of CT it appears that i am still obligated to pay CT income tax... which seems to go against your advice above what are your thoughts ?
MA does not have a "convenience of the employer" rule. See the citation from CT's regs that @KrisD15 cited in her original answer.