DRS: IP 2000(22), Connecticut Income Tax Information for Armed Forces Personnel and Veterans

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been
modified and superseded by
IP 2001(24)

IP 2000(22)

Connecticut Income Tax Information
for Armed Forces Personnel and Veterans


Purpose: This publication explains how Connecticut income tax laws apply to members of the Armed Forces of the United States on active duty. It defines the requirements for Connecticut residency status for members of the Armed Forces and their families and the taxability of the types of income they receive. It also explains how to file a Connecticut income tax return and special conditions that apply to certain types of service.


Effective Date: This publication is effective for taxable years beginning on or after January 1, 2000.


Domicile and Permanent Place of Abode: To determine your resident status for Connecticut income tax purposes, you must consider where your domicile was before you entered the Armed Forces and where you maintained a permanent place of abode during the taxable year.

Your domicile (permanent legal residence) is the place you intend to have as your permanent home. It is the place you intend to return to whenever you are away. You can have only one domicile, although you may have more than one place to live. This also applies if you are working in a foreign country.

You can have only one domicile. Your domicile does not change until you move to a new location and definitely intend to make your permanent home there. If you move to a new location but intend to stay there only for a limited period of time (no matter how long), your domicile does not change. Armed Forces assignments do not generally affect your domicile.

A permanent place of abode is a residence (a building or structure where a person can live) that you permanently maintain, whether or not you own it, and generally includes a residence owned by or leased to your spouse. A place of abode is not considered permanent if you maintain it only during a temporary stay for the accomplishment of a particular purpose.

A temporary duty assignment does not change your permanent place of abode.

Barracks, quarters on a ship, or any structure that contains only dormitory-type quarters and not facilities ordinarily found in a dwelling, such as facilities for cooking and bathing, generally do not qualify as a permanent place of abode.


Resident and Nonresident Defined: You are a resident and you should complete Form CT-1040EZ or Form CT-1040, or Telefile your Connecticut income tax return if:

  • Connecticut was your domicile for the entire taxable year; or
  • You were domiciled elsewhere during the taxable year but maintained a permanent place of abode in Connecticut, spent a total of more than 183 days in Connecticut during the taxable year, and you are not a part-year resident.

If you are in the Armed Forces and stationed in Connecticut, but your domicile is elsewhere, you do not become a resident of Connecticut even though you spend more than 183 days in Connecticut during the taxable year. Armed Forces personnel who are domiciled in Connecticut 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.

Exceptions: Certain individuals are not treated as resident individuals even though they are domiciled in Connecticut.

Group A Exception:

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

Group B Exception:

  1. Within any period of 548 consecutive days (the "548-day period"), you are present in a foreign country (or countries) for at least 450 days;
  2. During the 548-day period, you are not present in Connecticut for more than 90 days and you do not maintain a permanent place of abode in Connecticut at which your spouse (unless the spouse is legally separated) or minor children are present for more than 90 days; and
  3. During the nonresident portion of the taxable year with which or within which the 548-day period begins and during the nonresident portion of the taxable year with which or within which the 548-day period ends, you are present in Connecticut for a number of days which does not exceed an amount which bears the same ratio to 90 (see "d" below) as the number of days contained in the nonresident portion of the taxable year bears to 548. See the calculation below:

Number of days in
the nonresident portion
of the taxable year  
548

=

d
90

=

Maximum
days allowed in
Connecticut

For more information about the Group B Exception see Special Notice 2000(17), 2000 Legislation Affecting the Connecticut Income Tax.

If you meet all three conditions in either Group A or Group B, you are a nonresident of Connecticut for the taxable year. You do not have to file a resident income tax return. However, if you have any income derived from Connecticut sources, you may have to file a nonresident income tax return. Review the following examples to determine if you must file Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return.

Group B Example 1: Cindy is domiciled in Connecticut. During the period November 2, 2000, through May 3, 2002 (a period of 548 consecutive days), Cindy was present in a foreign country 480 days.

During the above period, Cindy was present in Connecticut a total of 65 days, 9 days during the period November 2, 2000, through December 31, 2000; 41 days during 2001; and 15 days during the period January 1, 2002, through May 3, 2002.

Because Cindy was present in a foreign country 480 days, she meets the first requirement. Cindy also meets the second requirement because she was present in Connecticut a total of 65 days during the 548-day period (which is less than the maximum of 90 days allowed).

For Cindy to decide if she meets the third requirement, she must determine if the number of days present in Connecticut during the period November 2, 2000, through December 31, 2000 (60 days), exceeds the maximum number of days allowed for the nonresident portion of the taxable year within which the 548-day period began.

The maximum number of days Cindy may be present in Connecticut during the period November 2, 2000, through December 31, 2000, is 10, as determined by the following computation:

60 = d
548 90

90 x 60 = d
548
d = 10 [9.85]

Because Cindy was present in Connecticut 9 days during the period November 1, 2000, through December 31, 2000, she did not exceed the maximum of 10 days allowed for this period.

Cindy must also determine if the number of days she was present in Connecticut during the period January 1, 2002, through May 3, 2002, exceeds the maximum allowed for the nonresident portion of the taxable year within which the 548-day period ended. The maximum number of days she may be present in Connecticut during the period January 1, 2002, through May 3, 2002, is 20, as determined by the following computation:

123 = d
548 90
90 x 123 = d
548
d = 20 [20.20]

Because Cindy was present in Connecticut 15 days during the period January 1, 2002, through May 3, 2002, she did not exceed the maximum of 20 days allowed for this period.

Cindy meets all the requirements of the Group B Exception. Therefore, she must file as a part-year resident individual for the 2000 taxable year, as a nonresident individual for the 2001 taxable year, and as a part-year resident individual for the 2002 taxable year.

Nonresident Members of the Armed Forces: If your permanent home (domicile) was outside Connecticut when you entered the Armed Forces, 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, other income that you receive from Connecticut sources while you are a nonresident (including your spouseís nonmilitary income) may be subject to tax. For example, if you have a civilian job in Connecticut during your off-duty hours, the civilian income you earn is subject to Connecticut income tax. Income or gain received by a nonresident from property located in Connecticut or from a business, trade or profession carried on in this state is also subject to tax.

Spouses of Armed Forces personnel who are stationed in Connecticut may be considered residents of this state even if their domicile is elsewhere. If your spouse has a permanent place of abode in Connecticut and spends more than 183 days in the state in the taxable year, he or she is a resident for Connecticut income tax purposes and must file Form CT-1040EZ or Form CT-1040, or Telefile his or her Connecticut income tax return.

Group A Example 4: Bob and Sue are domiciled in Florida. Bob enlisted in the Navy in Florida and was stationed in Groton, Connecticut, with his wife. They lived in Connecticut for 8 months during the taxable year. Bob earned $38,000 in Armed Forces pay.

  1. They had no other income. Armed Forces personnel are residents of the state in which they resided when they enlisted. Because Bob resided and enlisted in Florida, he is not considered a resident of Connecticut and does not have to file a Connecticut return.
  2. Bob had a part-time civilian job in Connecticut from which he earned $10,000. Bobís civilian income is Connecticut source income and is subject to Connecticut income tax. He must file Form CT-1040NR/PY.
  3. Sue had $29,000 in wage income and $1,000 in interest income for the taxable year. Because Sue lived in Connecticut for more than 183 days during the taxable year, she is a resident and must file Form CT-1040EZ or Form CT-1040, or Telefile her Connecticut income tax return, and report all her income whether or not it is from a Connecticut source.
Group A Example 5: John is domiciled in Connecticut but stationed in Texas. John meets all three conditions in Group A to be a nonresident. He sold property in Connecticut during the taxable year on which he recognized a capital gain. He must file Form CT-1040NR/PY, because income from the sale of property in the state is Connecticut source income and is subject to Connecticut tax.

Part-Year Residents: If you change your domicile by moving into or out of Connecticut during the taxable year, you are a part-year resident. A part-year resident is subject to tax on all income earned during the residency period of the year and on income from Connecticut sources during the nonresidency period.

Resident Members of the Armed Forces: If you are a Connecticut resident in the Armed Forces and you meet either of the following conditions for the taxable year, you must file a resident return:

  • You had Connecticut income tax withheld or made estimated Connecticut income tax payments; or
  • Your federal gross income (plus any income that is federally exempt, but subject to Connecticut income tax) exceeds:

$12,250 for a Single Person
$12,000 for a Married Person Filing Separately
$19,000 for a Head of Household
$24,000 for Married Persons Filing Jointly.


Special Rules for Married Individuals: When one spouse is a Connecticut resident or a nonresident and the other spouse is a part-year resident, each spouse who is required to file a Connecticut income tax return must file as married filing separately.

When one spouse is a Connecticut resident and the other is a nonresident, each spouse who is required to file a Connecticut income tax return must file as married filing separately unless they:

  • File jointly for federal income tax purposes; and

  • Elect to be treated as if both were Connecticut residents for the entire taxable year.

Where both spouses are part-year residents, and move into or out of Connecticut at different times during the taxable year, both spouses must file as married filing separately.

IMPORTANT: If both spouses are part-year residents and moved into or out of Connecticut on the same day and filed jointly for federal income tax purposes, a joint Connecticut income tax return must be filed.

Where both spouses are nonresidents and only one spouse has Connecticut source income, the spouse who is required to file a Connecticut income tax return must file as married filing separately unless they:

  • File jointly for federal income tax purposes; and

  • Elect to be treated as if both had Connecticut source income.


Taxability of Armed Forces Pay for Residents: If you are a Connecticut resident, your Armed Forces pay or your Armed Forces pension is subject to Connecticut income tax to the same extent that it is taxable for federal income tax purposes.

Disability pensions and any other benefits granted for the relief of injuries or disabled veterans, as well as tuition payments, subsistence allowances, and any other benefits paid to, or on account of, a veteran or beneficiary under the laws relating to veterans, are treated the same for Connecticut income tax purposes as for federal income tax purposes. If these amounts are excludable from gross income for federal income tax purposes, they are not subject to Connecticut income tax.


Withholding and Payment of Estimated Income Tax: If you are a Connecticut resident, your Armed Forces pay is 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 that the correct amount of Connecticut income tax is withheld from your pay. However, if you are a nonresident during the taxable year, you may request that no Connecticut income tax be withheld from your pay by checking the exemption box on Form CT-W4 and filing it with your Armed Forces finance officer. Do not send Form CT-W4 to DRS. If you expect to owe more than $500 in Connecticut income tax after subtracting Connecticut income tax withheld during the taxable year, you should make estimated Connecticut income tax payments or increase your Connecticut income tax withholding. See Informational Publication 2001(1), Is My Withholding Correct? or Informational Publication 99(35), Estimated Connecticut Income Taxes. Use Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon, to make estimated Connecticut income tax payments.


Filing Returns:

Group A: If you are domiciled in Connecticut but meet all three conditions in Group A, you must file Form CT-1040NR/PY (to claim a refund of any Connecticut income tax that was withheld in error) and attach an explanation that contains the following:

  1. A statement that you did not maintain a permanent place of abode inside Connecticut during the taxable year; and
  2. The location and a description of the permanent place of abode you maintained outside Connecticut and the beginning and ending dates of your stay there; and
  3. The exact number of days you were inside Connecticut during the taxable year.

Group B: If you are domiciled in Connecticut but meet all three conditions in Group B, you must file Form CT-1040NR/PY (for each taxable year within the 548-day period) and attach an explanation that contains the following:

  1. A statement that within any period of 548 consecutive days, you were present in a foreign country (or countries) for at least 450 days; and
  2. During the 548-consecutive-day period, you were not present in Connecticut for more than 90 days and you did not maintain a permanent place of abode in Connecticut at which your spouse (unless you and your spouse are legally separated) or minor children are present for more than 90 days; and
  3. During the nonresident portion of the taxable year with which or within which the period of 548 consecutive days begins and during the nonresident portion of the taxable year with which or within which the period of 548 consecutive days ends, you were present in Connecticut for a number of days which does not exceed an amount which bears the same ratio to 90 as the number of days contained in the nonresident portion of the taxable year bears to 548.

For more information on filing returns for Group B, see Special Notice 2000(17).

If you are a resident you must file Form CT-1040EZ or Form CT-1040, or Telefile your Connecticut income tax return. Nonresidents and part-year residents must file Form CT-1040NR/PY.


When to File Your Return: Your Connecticut income tax return is due on or before April 15 of the following year. If you are not a calendar year filer, your return is due on or before the fifteenth day of the fourth month following the close of the taxable year. If the due date falls on a Saturday, Sunday or legal holiday, the next business day is the due date.


Extension of Time to File Returns: If you cannot meet the April 15 deadline and need to extend the time for filing your return, you must file Form CT-1040 EXT, Application for Extension of Time to File. The time to file your return will be extended six months. File Form CT-1040 EXT on or before the due date for filing your return. Form CT-1040 EXT must be accompanied by full payment of tax due, because filing Form CT-1040 EXT does not extend the time for payment of tax.

United States Citizens Living Abroad: If you are a United States citizen or resident living outside the United States and Puerto Rico, or in the Armed Forces of the United States serving outside the United States and Puerto Rico, and are unable to file a timely Connecticut income tax return, you must file Form CT-1040 EXT. You must also pay the amount of tax due on or before the original due date of the return. Include with Form CT-1040 EXT a statement that you are a United States citizen or resident living outside the United States and Puerto Rico, or in the Armed Forces of the United States serving outside the United States and Puerto Rico, and that you qualify for a federal automatic two-month extension. If your application is approved, the due date will be extended for six months. If you are still unable to file your return, and you were granted an additional extension of time to file for federal purposes, you may file your Connecticut return using the federal extension due date. A copy of the federal Form 2350 approval notice must be attached to the front of your Connecticut return.

Group B Exception: If you believe that you will ultimately meet all three requirements of the Group B Exception and you need additional time to file your return, you may apply for a further extension of time to file by attaching a letter to a subsequently filed Form CT-1040 EXT explaining why additional time to file is being requested. This request must be made before the expiration of the original extension.

Interest and Penalties: In general, interest and penalty apply to any portion of the tax that is not paid on or before the original due date of the return.

If you do not pay the tax when due, you will owe interest at the rate of 1% per month or fraction of a month until the tax is paid in full.

If you did not pay enough tax through withholding or estimated payments, or both, by any installment due date, you may be charged interest. This is true even if you are due a refund when you file your tax return.

Interest on underpayments or late payments of tax cannot be waived.

The penalty for late payment or underpayment of income or use tax is 10% of the tax due. If a request for an extension of time has been granted, you can avoid a penalty for failure to pay the full amount due by the original due date if you:

  • Pay at least 90% of the income tax shown to be due on the return on or before the original due date of the return; and

  • Pay the balance due with the return on or before the extended due date.

If no tax is due, DRS may impose a $50 penalty for the late filing of any return or report that is required by law to be filed.

If you do not file your return and DRS files a return for you, the penalty for failure to file is 10% of the balance due or $50, whichever is greater. If you were required to file Form CT-1040X and failed to do so, you will be subject to a penalty.


Combat Zone: The Connecticut income tax return of any individual in the U.S. Armed Forces serving in a combat zone or injured and hospitalized while serving in a combat zone is due 180 days after returning. There will be no penalty or interest charged.

Combat Zone is an area designated by the President of the United States as a combat zone by executive order. A combat zone also includes an area designated by the federal government as a qualified hazardous duty area.

Members of the U.S. Armed Forces serving in the military operations in the Kosovo region are eligible for the 180 day extension allowed to individuals serving in a combat zone. Spouses of military personnel and civilians supporting the military in the Kosovo region who are away from their permanent duty stations but are not within the designated combat zone are also eligible for the extension. Individuals requesting an extension under the Kosovo provision should print the words "Operation Allied Force" at the top of the tax return.


Death of Armed Forces Personnel: For any individual who dies while on active duty in a combat zone or as a result of injuries received in a combat zone, no income tax or return is due for the year of death. A refund of tax paid will be provided to the legal representative of the estate or to the surviving spouse. If any tax was assessed but not paid, the assessment will be canceled.


Related Forms and Publications: See the current edition of the following forms and publications for further information:

IP 1999(35), Estimated Connecticut Income Taxes
IP 2001(1), Is My Connecticut Withholding Correct?
Form CT-1040ES, Estimated Connecticut Income Tax Payment Coupon for Individuals
Connecticut Telefile Tax Return
Form CT-1040EZ, Connecticut Resident EZ Income Tax Return and Instructions
Form CT-1040, Connecticut Resident Income Tax Return and Instructions
Form CT-1040NR/PY, Connecticut Nonresident or Part-Year Resident Income Tax Return and Instructions


Effect on Other Documents: Informational Publication 2000(22) supersedes Informational Publication 99(32), which may no longer be relied upon on or after this date.


Effect of This Document: An Informational Publication is a document that addresses frequently asked questions about a current DRS position, policy or practice, usually in a less technical question and answer format.


For Further Information: Please call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (toll-free within Connecticut), or
  • 860-297-5962 (from anywhere)

TTY, TDD, and Text Telephone users only may transmit inquiries 24 hours a day by calling 860-297-4911.


Forms and Publications: Forms and publications are available all day, seven days a week:

  • Internet: Preview and download forms and publications from the DRS Web site: http://www.ct.gov/drs
  • Telephone: Call 860-297-4753 (from anywhere), or 1-800-382-9463 (toll-free within Connecticut) and select Option 2 from a touch-tone phone.

IP 2000(22)
Income Tax
Military Personnel
Issued: 02/07/01