SN 92(2)
Credit For Taxes Paid to Other Jurisdictions
This Special Notice has been issued to clarify the instructions for how the credit for income taxes paid to other jurisdictions is calculated when tax is paid to another state and political subdivision of that state (e.g. New York State and New York City). In determining the credit allowed by a resident taxpayer for tax paid to another state and city of that state the following rules will apply:
A. If the same amount of income is taxed by both the city and state:
1. Enter that amount in only one column on form CT-1040 Schedule 2;
2. Include the income only once. See example 1.
B. If the amounts of income taxed by both the city and state are not equal:
1. Use two columns on form CT-1040 Schedule 2;
2. Include only the same income taxed by both in the first column;
3. Include the excess income in the next column. See example 2.
Example #1: Taxpayer A is a resident of Connecticut
| (1) | A's Connecticut AGI |
$160,000
|
| (2) | New York State Income |
80,000
|
| (3) | New York City Income |
80,000
|
| (4) | Identical income subject to tax in both jurisdictions |
80,000
|
| (5) | New York State Tax: |
4,800*
|
| (6) | New York City Tax: |
360*
|
| (7) | Connecticut Tax: |
2,400*
|
CT-1040 SCHEDULE 2-CREDIT FOR INCOME TAXES PAID TO OTHER JURISDICTIONS
COLUMN A: (N.Y. State and N.Y. City)
| Line 40 | Modified Connecticut AGI | $160,000 |
| Line 41 | Non-Connecticut income included on Line 40 and reported on another jurisdictions income tax return (NY State & NY City) |
80,000
|
| Line 42 | Divide Line 41 by Line 40 |
.50
|
| Line 43 | Connecticut income tax liability |
2,400
|
| Line 44 | Multiply Line 42 by Line 43 |
1,200
|
| Line 45 | Income tax paid to another jurisdiction (NY State & NY City) |
5,160
|
| Line 46 | Enter smaller of Line 44 or Line 45 |
1,200
|
| Line 47 | Total Credit |
$1,200
|
Example #2: Taxpayer B is a resident of Connecticut
| (1) | B's Connecticut AGI |
$100,000
|
| (2) | New York State Income |
40,000
|
| (3) | New York City Income |
50,000
|
| (4) | Identical income subject to tax in both jurisdictions |
40,000
|
| (5) | New York State Tax: |
2,400*
|
| (6) | New York City Tax: |
225*
|
| (7) | Connecticut Tax: |
1,500*
|
CT-1040 SCHEDULE 2-CREDIT FOR INCOME TAXES PAID TO OTHER JURISDICTIONS
Step 1: COLUMN A: (N.Y. State and N.Y. City)
| Line 40 | Modified Connecticut AGI | $100,000 |
| Line 41 | Non-Connecticut income included on Line 40 and reported on another jurisdiction's income tax return |
40,000
|
| Line 42 | Divide Line 41 by Line 40 |
.40
|
| Line 43 | Connecticut income tax liability |
1,500
|
| Line 44 | Multiply Line 42 by Line 43 |
600
|
| Line 45 | Income tax paid to another jurisdiction New York State (based on $40,000) 2,400 New York City (based on $40,000) 4/5 x 225 180** |
2,580
|
| Line 46 | Enter smaller of Line 44 or Line 45 |
600
|
| Line 47 | Total Credit |
600
|
Step 2: COLUMN B (N.Y. City Excess)
| Line 40 | Modified Connecticut AGI | $100,000 |
| Line 41 | Non-Connecticut income included on Line 40 and reported on another jurisdictions income tax return |
10,000
|
| Line 42 | Divide Line 41 by Line 40 |
.10
|
| Line 43 | Connecticut income tax liability |
1,500
|
| Line 44 | Multiply Line 42 by Line 43 |
150
|
| Line 45 | Income tax paid to another jurisdiction New York City (based on $10,000) 1/5 x 225 |
45**
|
| Line 46 | Enter smaller of Line 44 or Line 45 |
45
|
| Line 47 | Total Credit |
$45
|
Step 3:
Total Credit:
| Step No. 1 | $600 |
| Step No. 2 | 45 |
| $645 |
*The amount of New York State, New York City and Connecticut Tax indicated are solely for purposes of illustration.
| ** | NY City income | Prorated | |
| included in this column | X NY City Tax = | NY City | |
| Total NY City income | Tax |
SN 92(2)