Is my military income taxable to Connecticut?

According to the Connecticut filing instructions, "Military personnel and their spouses who claim Connecticut as a residence but are stationed elsewhere are subject to Connecticut income tax. If you enlisted in the service as a Connecticut resident and have not established a new domicile (permanent legal residence) elsewhere, you are required to file a resident income tax return unless you meet all of the conditions in Group A or Group B for being treated as a nonresident.

 Group A

1. You did not maintain a permanent place of abode in Connecticut for the entire 2023 taxable year;
2. You maintained a permanent place of abode outside of Connecticut for the entire 2023 taxable year; and
3. You spent not more than 30 days in the aggregate in Connecticut during the 2023 taxable year

 Group B 

1. You were in a foreign country for at least 450 days during any period of 548 consecutive days;
2. During this period of 548 consecutive days, you did not spend more than 90 days in Connecticut and you did not maintain a permanent place of abode in Connecticut at which your spouse (unless legally separated) or minor children spent more than 90 days; and
3. During the nonresident portion of the taxable year in which the 548-day period begins, and during the nonresident portion of the taxable year in which the 548-day period ends, you were present in Connecticut for no more than the number of days that bears the same ratio to 90 as the number of days in the portion of the taxable year bears to 548. 

What if my permanent home was not Connecticut? 

If your permanent home (domicile) was outside Connecticut when you entered the military, you do not become a Connecticut resident because you are stationed and live in Connecticut. As a nonresident, your military pay is not subject to Connecticut income tax. However, income you receive from Connecticut sources while you are a nonresident may be subject to Connecticut income tax. See the instructions for a Connecticut nonresident contained in the instruction booklet for Form CT-1040NR/PY."

If you are a resident of Connecticut you are subject to Connecticut income tax withholding. You should complete Form CT-W4, Employer’s Withholding and Exemption Certificate, and provide it to your armed forces finance officer so the correct amount of Connecticut income tax is withheld from your pay.  If you meet the qualifications to be treated as a nonresident for income tax purposes  you may file as a nonresident.

If you are a nonresident of Connecticut or a resident able to file as nonresident, you are not subject to Connecticut income tax withholding.

If taxes were withheld from the Active Duty Military pay, you will need to file a nonresident return to remove the income from the return and claim a refund of the tax. To subtract your income in the  program, follow these steps:

1. Federal Section
2. Income
3. W-2
4. Edit
5. Remove the dollar amount in Box 16
6. If you have withholdings in Box 17, leave them

If both spouses are nonresidents and only one has Connecticut income, and a joint federal return was filed, only the spouse that is required to file a Connecticut return must file a return as married filing separate. However, you may also decide to file a joint nonresident return,  

To file a married filing separate return for only the spouse that had Connecticut source income, file the federal return and any other state returns that are being filed with the same status as the federal return. Wait for the returns to be accepted and then change the filing status to Married Filing Separate in the Basic Information section of the Federal return. File the separate Connecticut return. 

Military Pension

If you have military retirement pay included in your federal adjusted gross income amount, you can exclude it to from your Connecticut return. To enter the pension exclusion within the program, follow these steps:

1. 1. State Section
   2. Connecticut Return (any residency status)
   3. Deductions from Income
   4. Military Retirement Pay
   5. Enter Military Pay included in federal adjusted gross income
   6. Save until Exit Connecticut Return

What if my spouse is a resident and I am not?

If one spouse is a resident and the other is not, the spouses can file Married filing separate returns. The taxpayers can also decide to file a joint resident state return. If you elect to file a joint resident return, your joint Connecticut taxable income is taxed as if you were both residents. 

To file a Married Filing Separate Connecticut return within the program, you can file the federal return and wait for the return to be accepted. Then, change the filing status for the primary taxpayer in the Basic Information section of the Federal return and file a separate return for the first spouse. The second spouse will need to create a new account and file the separate Connecticut return in that account. 

For additional information, please see:  

• CT 1040 Individual Income Tax Instructions 
• CT 1040 Non Resident/Part Year Instructions
• Connecticut Military Spouse Residency Relief Act 
• Connecticut website for filing status information