Remote Work from FL for CT company & Convenience Rule

[bouncy_belle]

I moved from CT to FL in mid-2022. My company, claiming the "CT Convenience Rule", has continued to deduct CT income tax from my paycheck while I work 100% remotely from my house in FL. Upon doing some research, few other states in USA (CT, DE, NE, NY, PA) impose this "Convenience Rule". 

In general, the nonresident's state of residence will allow a credit for the income taxes paid to Connecticut for income earned in Connecticut.  The nonresident who works in Connecticut will be required to file a nonresident return (Form CT-1040NR/PY) in Connecticut as well as a resident income tax return in his state of residence.

My question: if Florida has no state income tax, and hence state income tax return is not filed, how can I claim a credit for the taxes paid in CT? Or, do I just let my company continue to deduct CT income tax from my paycheck? This is quite opposite what was discussed in another forum discussion:

https://ttlc.intuit.com/community/taxes/discussion/move-form-connecticut-to-florida/00/2337140

[Critter-3]

Since FL doesn't have an income tax you cannot possibly get a credit on a non exhistant return for taxes paid to CT  so you will ONLY file a CT return and pay CT taxes. 

[TomD8]

Your employer should have ceased withholding CT taxes as soon as you became a Florida resident.  See this from the CT tax website:

"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."

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

The CT "convenience rule" applies only if the taxpayer's resident state applies a similar rule for work performed for a CT employer.  Since FL has no income tax, it obviously has no "convenience rule."

https://www.cga.ct.gov/2021/rpt/pdf/2021-R-0008.pdf

What you should do is file a part-year resident CT income tax return.  On that return report your CT withholdings as shown on your year-end W-2, but allocate to CT only the income you earned while you were a resident of CT.  This should result in CT refunding the excess withholding to you.

[bouncy_belle]

Hi Tom, thanks for such detailed response!

Someone else told me this: 

"Generally, in a state that applies the Convenience of the Employer test, wages earned by a nonresident are allocated to the employer’s location unless the nonresident works from an out-of-state location due to the necessity of the employer rather than the convenience of the employee.
So in your case, because you are not being double-taxed by both Connecticut and Florida, and are working in Florida due to convenience rather than necessity, you are subject to the "Convenience Rule."
If you haven't already, you can view the Nonresident Working in Connecticut guidelines here: https://portal.ct.gov/DRS/Individuals/Individual-Tax-Page/Nonresident-Working-in-Connecticut#:~:text..."

I am getting two conflicting messages and interpretations of the Convenience Rule... not sure which direction to go!

[TomD8]

@bouncy_belle --

Quoting from the reference you cited:

"For taxable years beginning on or after January 1, 2019, Connecticut will apply the Convenience of the Employer test in determining Connecticut source income of residents of states that apply the same rule." 

Since FL does not "apply the same rule", the CT convenience of the employer rule does not apply to FL residents.