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Personal CT Tax Credits for Remote Workers
Connecticut’s legislature recently passed An Act Mitigating Adverse Tax Consequences Resulting From Employees Working Remotely During Covid-19, and Concerning The Removal Of Liens On The Property Of Public Assistance Beneficiaries And Three-Tiered Grants In Lieu Of Taxes Program. A highlight of this law ensures that Connecticut residents, who normally work in other states, will not face double taxation on their 2020 income.
The COVID pandemic caused thousands of Connecticut residents to begin working remotely from home out of necessity. In certain circumstances, an employee who chooses to work from home, but normally works in a different state, could have their income subject to double state taxation – taxed both by Connecticut and the other state. However, these residents will now receive a tax credit against their Connecticut personal income tax for taxes paid in the other state(s) where that employee – due to COVID-19 – is now working remotely in Connecticut versus their typical work state outside Connecticut. This tax credit will reduce the Connecticut resident’s income tax so that the income is taxed by only one state.
This bill also protects employers in that they will not be subject to new taxes in 2020 solely due to an employee working from home because of the pandemic.