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Connecticut Sourced Income of a Nonresident - Nexus


Connecticut sourced income of a nonresident is income derived from or connected with sources within Connecticut when the income is:

  • Attributable to ownership or disposition of real or tangible personal property within Connecticut including, but not limited to, the income from the rental or sale of such property;

  • Attributable to compensation for services performed in Connecticut or income from a business, trade, profession, or occupation carried on in Connecticut. This includes income derived directly or indirectly by athletes, entertainers, or performing artists from closed-circuit and cable television transmissions of irregularly scheduled events if such transmissions are received or exhibited within Connecticut;

  • Unemployment compensation received from the Connecticut Department of Labor;

  • From a partnership doing business in Connecticut;

  • From an S corporation doing business in Connecticut;

  • From a trust or estate with income derived from or connected with sources within Connecticut;

  • From a nonqualified deferred compensation plan for services performed wholly or partly within Connecticut;

  • From reportable Connecticut Lottery winnings. Winnings from the Connecticut Lottery, including Powerball, are reportable if the winner was issued a federal Form W-2G by the Connecticut Lottery Corporation. In general, the Connecticut Lottery Corporation is required to issue a federal Form W-2G to a winner if the Connecticut Lottery winnings, including Powerball, are $600 or more and at least 300 times the amount of the wager.  See Informational Publication 2015(23), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut.

  • Certain gains and losses from the sale or disposition of an interest in an entity that owns, directly or indirectly, real property in Connecticut.  The term entity mean a partnership, limited liability company, or S corporation.  See Special Notice 2014(5), 2014 Legislative Changes Affecting the Income Tax on Sale or Disposition of an Interest in an Entity that Owns Property in Connecticut.

  • Nonresident business income of a business, trade, profession, or occupation carried on in Connecticut and outside Connecticut.  The items of income, gain, loss, or deduction derived from or connected with Connecticut sources are determined by using an apportionment formula.  See Special Notice 2017(1), Legislative Changes Regarding Single-Sales Factor Apportionment and Market-Based Sourcing.

In general, Connecticut sourced income of a nonresident does not include the following income even if it was included in your federal adjusted gross income:

  • Distributions from pension or retirement plans (such as 401K plans);

  • Interest, dividends, or gains from the sale or exchange of intangible personal property, unless that property is employed in a business, trade, profession, or occupation carried on in Connecticut;

  • Compensation received for active service in the U.S. military;

  • Dividends from a corporation doing business in Connecticut;

  • Compensation you received from an interstate rail carrier, interstate motor carrier, or an interstate motor private carrier; 

  • Gambling winnings (other than reportable Connecticut Lottery Winnings shown on federal Form W-2G). See Informational Publication 2011(27), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings.

  • Interest you earned from a Connecticut bank (unless earned by a Connecticut business); or

  • Income you received from business or employment activities in Connecticut that are considered casual, isolated, or inconsequential.

Activities Considered to be Casual, Isolated, or Inconsequential 

  1. $6,000 test - The gross income from the presence of a nonresident in Connecticut does not exceed $6,000 in the taxable year.  Important: An employee’s wages for services performed in Connecticut are taxable, regardless of amount, unless the employee’s services meet the Ancillary Activity Test. Also, reportable Connecticut Lottery winnings are taxable regardless of amount.

  2. Ancillary Activity Test - The nonresident’s presence in Connecticut is ancillary to his or her primary business or employment duties that are performed at a base of operations outside of Connecticut. Ancillary activities are those activities that are secondary to the individual’s primary out-of-state duties, and include such things as presence in this state for planning, training or attendance at conferences or symposia, etc.

E-mail Questions and Referrals regarding Nexus