Connecticut: Bill Passed to Protect Telecommuting Employees

House Bill 6516, which was signed into law on March 4, 2021, seeks to alleviate the burden of double taxation for residents who were remotely working from their homes in Connecticut due to COVID-19. In addition to other COVID-19 relief measures, House Bill 6516 allows a credit against Connecticut personal income tax for any resident who paid income tax in 2020 to a state that applies a convenience of employer rule similar to Connecticut’s.  Generally, in a state that adopts this rule, wages earned by a nonresident are allocated to the employer’s location unless the nonresident works from an out-of-state location due to the necessity of the employer rather than the convenience of the employee. The credit, which is effective for the taxable year commencing January 1, 2020, applies to the tax paid another state on income earned while the taxpayer worked remotely in Connecticut. Additionally, the bill allows a resident a credit against Connecticut income tax if a taxpayer was required by another state’s law or rule to pay a nonresident income tax based on work performed remotely in Connecticut. However, the resident must have worked in the other state immediately prior to March 11, 2020. House Bill 6516 also states that, in determining whether an employer has Connecticut nexus, the Department of Revenue Services may not consider the activities of employees who worked remotely in the state due to COVID-19. For more information on House Bill 6516, please contact Andrew Koutroumanis at (860) 297-5033.