Live in NJ, Work in CT, work from home due to COVID

[wreilly]

Hi,

I live in NJ and ordinarily work for a CT employer in CT.  But, I worked from home for 75% of 2020 due to COVID.  Do I allocate my income on my resident and non-resident state returns between NJ and CT based on my work location? 

Thanks in advance.

[TomD8]

Not exactly.  Your resident state of NJ can tax all your income, regardless of where you earned it.  CT can tax the portion of your income earned from work you physically performed in CT.

[DanielV01]

@wreilly As @TomD8 mentions, New Jersey does tax all of your income.  Working remotely in Connecticut is now a bit complex because Connecticut might tax the income.  The factor that determines this is whether or not New Jersey would tax a Connecticut resident if the Connecticut resident was working remotely for the New Jersey company.  New Jersey used to do this, but I believe they suspended this during the pandemic.  

[wreilly]

Thanks.  So, what does Turbotax assume?  I went through my state taxes and the script had me allocate 2020 workdays to one state or the other.  Does that mean it will allocate the income proportionately to each state and, if NJ and CT both decide to tax the same income, CT will be contacting me to request the taxes due on the income that was allocated to NJ?

[TomD8 · Accepted solution]

This reference explains CT's policy regarding taxation of non-residents who work in CT:

https://portal.ct.gov/DRS/Withholding-Taxes/Nonresidents-who-work-in-Connecticut

100% of your income is taxable by NJ, regardless of where you earned it.

You'll be able to claim a credit on your NJ return for the taxes paid to CT on the portion of your income that is taxed by both states, so you won't be double-taxed.

In the Personal Info section of TT, enter NJ as your State of Residence, and indicate that you had Other State Income from CT.  Do not indicate that you lived in both states.

[wreilly]

Thanks.