Calif to Connecticut

[S T]

I have a client that is California resident working for a California Employer - I also prepare payroll for the Calif Employer.

Going on a different employment agreement with the California Employer, but will still be employed as part-time, as the client is going to enroll at Yale for his MBA in August, 2016.

Question - will the client be a Connecticut resident due to enrollment at Yale for MBA, and the wages earned will be reported to both Calif as non-resident and Connecticut as resident. Or?

If wages are from Calif based, should they be taxed to Connecticut if client establishes residency there.

I am thinking of too many items, so a little confused for the moment

Thanks for any thoughts and guidance

Sandy

[Snaggletooth]

College Students

Sandy, most states allow college students to retain their residency from the most recent prior state. As I understand from the CT website, unless the taxpayer maintains a PERMANENT domicile in CT for at least 183 days, the taxpayer can file as a non-resident.

This doesn't mean he gets exempted from having CT taxes withheld from a CT job. And he still would have to file a CT non-resident return if his CT income is at least $12,000. And even without making that much, he would have to file a return if he wishes to get his CT taxes refunded.

Lion practices in Connecticut. Maybe she will chime in...

[S T]

Thanks Snags,

I was hoping that Lion would chime in - We have some time as the full time employment ends 7/29/2016, just trying to let client (employee) and employer know what needs to happen - and then of course we have Group Insurance issues Calif based, and going part time the Client Employee is going to lose the Group Insurance Coverage.

That is why I said - too many thoughts going on here and fact information gathering

Sandy

[S T]

Update on Employee moving to Connecticut - will only be working a few hours per month, obviously by remote.

Wondering if Employer can change Employee Status to Independent Contractor Status on Form 1099 Misc for Connecticut.

Thoughts

Sandy

[Lion]

I was in Kentucky with Appalachia Service Project making homes warmer, safer, and drier.

CT has fairly specific regulations re residency. Most states require both a "leaving" and a "sticking the landing" to have a new residence in a new state. So, if your client retains his domicile in CA and intends to return to it and is in CT for education with a definable end date, he might be a CT non-resident.

CT will tax CT-sourced income and generally considers WHERE the work is performed, so working remotely from CT for a CA employer could be CT-sourced income.

The instructions for the tax return has some pretty good definitions.

You're getting more into the CT Department of Labor area than the CT Department of Revenue Services. For instance, will the employer have to withhold for the state in which the work is performed?

I have 282 emails to return and a dozen voice mails! Why do my clients need me so much during the 12 days I'm in the hollers of KY with limited cell service?!

[S T]

Lion,
Thanks for taking the time to post. I do understand, as I have countless emails from clients that arrive from nowhere and expect an answer and did not go out of town!

I believe the employee will be a CT resident for PY 2016 and then resident for 2017- It is the employer I am concerned about - Ca based, but she has stated she would offer some part time hours to this employee that has been with her since 2013.

Employer based on what she knows thinks it will only be a few hours per month - less than 5 hours if that, and will be remote computer

I am wondering if we can make this employee an Independent Contractor to simplify the CT payroll taxes?

Thanks for your time if you are available

Sandy

[ATSMAN]

I would not recommend filing as a 1099-misc taxpayer if the nature of this job is that of an employer -employee, control etc. It is too easy to say without all the facts to make an employee 1099-misc just to get around withholding issues.

Given the facts in the original post, it is my opinion that this student has not established domicile in CT for resident tax purpose. CA employer is not required to do mandatory withholding of CT taxes. Will the income even exceed the filing threshold in CT?

[Lion]

CT's DOL is going after employee vs. IC situations aggressively.

If your client keeps ties to CA, does not establish a permanent residence in CT, does not move family out here, change doctors and churches and DL and car reg and voting and can demonstrate intent to return to CA, then he remains a CA resident and files a CT nonresident return for any CT-sourced income. Read the instructions. Things like 183 days while not a student can establish CT residency. It is possible to be a resident for tax purposes of two different states at the same time, as each state has their own regulations. Then, no credit for taxes paid in another jurisdiction! Planning is important. Acting like a student in CT helps keep him a nonresident. Acting like an IC in CT would lean towards resident. Line up the regulations for both states to see where he falls. Then help him adjust to him meet his desired outcome.

Check with CT DOL to see if employer must register in CT to have a CT-based employee.