Fillable Form Ct-1040crc - Claim Of Right Credit

Nonresidents or Part-Year Residents

Line 5: Compute the amount of your Connecticut income tax liability

for the year(s) of receipt after you exclude from your Connecticut

If you are a nonresident or part-year resident in the year of receipt

adjusted gross income for the year(s) of receipt the income you

and repaid income during your 2012 taxable year, you determine

repaid during your 2012 taxable year.

the decrease in your Connecticut income tax liability for the year

of receipt by excluding the repaid income from your Connecticut

Repayments of Social Security beneﬁ ts may require the recalculation

adjusted gross income. To the extent the repayment is derived from

of your taxable beneﬁ ts to determine the amount to exclude from

or connected with sources within this state, you also exclude this

Connecticut adjusted gross income.

repayment from your Connecticut-sourced income.

Line 6: Subtract Line 5 from Line 4. Include this amount on your 2012

Documentation Needed to Prove Eligibility for the

Form CT-1040, Line 13; Form CT-1040NR/PY, Line 15; or Form CT-

1040X, Line 17. This amount is considered a tax payment and will be

Connecticut Claim of Right Credit

credited against your Connecticut income tax liability for your 2012

You must submit all of the following documentation with your 2012

taxable year on the due date for payment of your 2012 Connecticut

Connecticut income tax return:

income tax liability. Check the box for Form CT-1040CRC on the

• A completed Form CT-1040CRC (attached to the back of your

front of your Connecticut return.

completed Connecticut income tax return);

• A copy of your completed 2012 federal income tax return,

Example 1: In December 2011, James, a Connecticut

including all schedules and attachments, that you signed and

resident, was advanced commissions by his employer. These

ﬁ led for your 2012 taxable year;

commissions were included in his 2011 Connecticut adjusted

• Proof you were required to repay income you included in

gross income of $45,000. In May 2012, James’s employer

Connecticut adjusted gross income for the year(s) of receipt,

advised him that some of his customers had decided to cancel

such as a letter from your employer requiring you to repay sales

their purchases and he must repay $4,000 of the commissions

commissions;

he received during 2011. If James was required to determine

his federal income tax liability for the 2012 taxable year using

• A copy of your completed federal income tax return, including

the deduction method (IRC §1341(a)(4)), he would deduct

all schedules and attachments, that you signed and ﬁ led for the

year(s) of receipt; and

the $4,000 as an itemized deduction on federal Form 1040,

Schedule A. Assuming James’s ﬁ ling status on his 2011 and

• Proof you repaid the income during your 2012 taxable year, such

2012 Connecticut income tax returns is ﬁ ling separately and

as a copy of your cancelled check.

his 2012 Connecticut adjusted gross income is $50,000, he

How to Compute the Connecticut Claim of Right Credit

computes his 2012 Connecticut income tax liability as follows:

Your Connecticut income tax liability for the year of repayment is

2012 Connecticut income tax liability on $50,000

$2,162

an amount equal to:

Minus difference between:

2011 tax payable on $45,000

= $1,845

• The tax for the year of repayment computed as if there was no

and

Connecticut claim of right credit; minus

2011 tax payable on $41,000 ($45,000 - $4,000) = $1,665

• The decrease in tax for the year(s) of receipt that would result

Claim of right credit

– $ 180

solely from the exclusion of the amount of income you were

2012 Connecticut income tax liability

$1,982

subsequently required to repay from your Connecticut adjusted

If James was required to determine his federal income tax

gross income for the year(s) of receipt.

liability for the 2012 taxable year using the credit method (I.R.C.

Line Instructions

§1341(a)(5)), he would also compute his Connecticut income

tax liability as shown above.

Line 1: If you repaid income during your 2012 taxable year that you

included in your Connecticut adjusted gross income for an earlier

Example 2: In February 2011, Donna, a nonresident individual

taxable year(s), enter:

who works in Connecticut, realized a capital gain of $5,000 from

•

The year(s) of receipt;

the sale of a capital asset. The gain was not derived from or

•

A description of the type of income repaid;

connected with Connecticut sources. Donna included the gain

•

The reason for the repayment; and

in her 2011 Connecticut adjusted gross income of $35,000. In

September 2012, Donna was required to repay the purchaser

•

The amount of income repaid. This income must have been

of the assets $5,000 as a result of failure to fulﬁ ll conditions of

included in your Connecticut adjusted gross income for the

the purchase agreement.

year(s) of receipt.

If Donna was required to determine her federal income tax

Line 2: Check the box to indicate if you used the deduction method

liability for the 2012 taxable year using the deduction method

or the credit method to determine your 2012 federal income tax

(IRC §1341(a)(4)), she would deduct the repayment as a capital

liability. See Exceptions on the front for more information. If you

loss on her federal Form 1040, Schedule D. For Connecticut

checked the credit method, skip Line 3 and go to Line 4.

income tax purposes, Donna is not eligible for the claim of right

credit because she deducted the repayment under IRC §1341(a)

Line 3: Check the box to indicate if you reported the repayment as

(4) in determining her federal adjusted gross income.

a deduction on Schedule A of your 2012 federal Form 1040.

If Donna was required to determine her federal income tax

Line 4: Enter the amount of your Connecticut income tax liability

liability using the credit method (IRC §1341(a)(5)), she is

reported on your Connecticut income tax return for the year(s) of

eligible for the Connecticut claim of right credit to the extent that

receipt. Enter the amount as originally ﬁ led, as adjusted by the

her 2011 tax liability would be decreased as a result of excluding

Department of Revenue Services (DRS), or as you later amended it.

the $5,000 she subsequently repaid.

Form CT-1040CRC Back (Rev. 12/12)

Form Ct-1040crc - Claim Of Right Credit - 2012 Page 2

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