TurboTax Unaware of New CT Tax Law: Connecticut Spares 110,000 Covid-19 Telecommuters From Double Taxation For 2020

[tbtxuser837]

According to https://www.forbes.com/sites/ashleaebeling/2021/03/04/connecticut-spares-110000-covid-19-telecommute... (published just last night), CT's governor signed a new COVID-19 tax relief bill into law yesterday. Now, CT residents who used to commute to work in offices in NY and MA but worked from home in 2020 because their offices were closed due to the Covid-19 pandemic will get a tax credit on their CT tax return for income taxes paid to the other state.

It looks like TurboTax is not currently taking this new law into account. Should customers that this applies to wait for a TurboTax update before filing, to avoid unnecessarily paying tax to CT and waiting for it to be refunded? If so, can TurboTax provide an estimate of how long before it is updated to take the new law into account?

Thank you.

[xmasbaby0]

They passed a law "yesterday" and you expect tax software to be changed for it that fast?   It just does not work that way.   When a tax law changes it means the forms have to be changed and the programmers have to change the software, undergo approval of the software by the tax authorities etc. etc. etc.  You will have to await word on how soon the software can be changed for a mid-tax-season tax law change.   If you want to wait to file your tax return you can do that by getting an extension until October 15 when the extension form becomes available.   

[tbtxuser837]

Nothing in my post indicated that I expect TurboTax to be updated quickly.

I asked two simple questions:

1. Should TurboTax customers that this affects bother waiting for TurboTax to be updated?

2. Is there an estimate for how long they should wait?

[xmasbaby0]

No one knows the answer to either of those questions this soon.   Politicians who change tax laws in the middle of the tax season wreak havoc on the systems----they have had months to do this.   

[tbtxuser837]

Again, nothing in my post indicated that I expect an immediate answer to those questions. Starting a thread about this in the meantime allows other members to discover this news and subscribe to this thread so they can be notified of the eventual answers.

The only immediate response to those questions that I hoped for from TurboTax is: "We don't know yet but will update this thread when we have more information."

[SundayInSalem · Accepted solution]

No change is necessary in TurboTax. The Connecticut software already allows state residents to claim a credit for taxes paid other states. You can prepare a return right now that complies with 2021 H.B. 6516.

The new law simply clarified that Connecticut's existing telecommuter policy applied to residents who are working remotely due to COVID-19. See Conn. Gen. Stat. § 12-711(b)(2)(C).

Connecticut previously allowed a tax credit when a resident worked from home out of convenience, e.g. an employee who worked in New York four days a week would qualify for a tax credit for the fifth day while working from home at their option.

However, being forced to work from home due to COVID-19 was not out of convenience so Connecticut could potentially deny a tax credit for any day a resident worked from home due to the pandemic.

The law closed that loophole: "Any resident who paid income tax to any other state that uses a convenience of the employer rule shall be allowed a credit against such resident's Connecticut income tax, for the tax paid to such other state on income earned by such resident while working remotely from this state for said taxable year, including while obligated by necessity to work remotely from this state."

TurboTax has experts who keep up with the latest changes in the law and software developers who incorporate those changes into TurboTax as quickly as possible.

[Carloc7c6cyfyxydyx6c6vuf6]

Turbo tax informed me they are waiting to file Ct state taxes until ct figures it out. Ct is set to have figured out by March. Taxes are due April. That's turbo tax now I can do my taxes twice.  Maybe avoid turbolax and try h&r block, liberty etc.

[ErnieS0]

Are you trying to file a 2020 return? As @SundayInSalem said, there was no update needed in TurboTax. Additionally, at this point, the 2020 program includes any changes for that year, as we are well past the 2020 filing deadline.

Connecticut made this change permanent for years after 2020.

Connecticut says:

A Connecticut resident who works in another state that imposes an income tax will be required to file a nonresident income tax return for the other state and a resident return for Connecticut. 

The Connecticut resident will receive credit from Connecticut for income tax paid to the other state on income earned for services performed in the other state.  The credit allowed will be the lesser of the tax paid to the other state or the tax which Connecticut imposes on the resident's out-of-state wages. 

The credit is claimed by completing Form CT-1040, Schedule 2, and attaching a copy of the return filed with the other state.

See: Resident Working in Another State

If you are a Connecticut resident working in another state, prepare your non-resident return first. TurboTax should automatically fill in your tax credit on the Other State Tax Credit Summary.

Tap Edit next to your work state and go through the screens to verify the income and tax paid to your nonresident state.

@Carloc7c6cyfyxydyx6c6vuf6