Connecticut Claim of Right Credit

Claim of Right Credit
Form CT-1040CRC
DRAFT 11-30-2023
2023
Form CT-1040 CRC

Department of Revenue Services
State of Connecticut
	(Rev. 12/23)

Claim of Right Credit

Please note that each form is year specific. To prevent any delay in processing your return, the correct year’s form
must be submitted to the Department of Revenue Services (DRS).
Your first name and middle initial	

Last name	

If joint return, spouse’s first name and middle initial	

Last name	

Purpose: If you have claim of right income for federal tax purposes
and are claiming the federal claim of right credit on your 2023
federal return, you may also be entitled to a claim of right credit for
Connecticut income tax purposes.
If during your 2023 taxable year you had to repay income you
included in your Connecticut adjusted gross income for an earlier
taxable year, and the amount you repaid is more than $3,000, you
may be able to claim a credit against your Connecticut income tax
for your 2023 taxable year. If you are eligible for the Connecticut
claim of right credit, complete this schedule to claim a credit equal
to the Connecticut income tax you would not have had to pay if the
repaid amount had not been included in your Connecticut adjusted
gross income in the earlier taxable year.
Electronic filers: If you file your return electronically, select the
indicator for Form CT-1040 CRC on your Connecticut income tax
return. Complete Form CT-1040 CRC and upload as an attachment.
Paper filers: Check the box for Form CT-1040 on the front of
your Connecticut income tax return. Place this form on top of your
completed Connecticut income tax return. Complete in blue or
black only.

Eligibility for the Connecticut Claim of Right Credit

You are eligible for the Connecticut claim of right credit if you meet
all of the following conditions:
•	 You were a resident, nonresident, or part-year resident individual
who included income in Connecticut adjusted gross income for
an earlier taxable year(s) (year(s) of receipt). A trust or estate is
not eligible to claim relief for Connecticut income tax purposes;
•	 You were required to repay the income during your 2023 taxable
year (year of repayment);
•	 The amount of the repayment exceeds $3,000; and

Your Social Security Number
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••
••
••
Spouse’s Social Security Number	
••
••
••
••

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__ __

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•	 You determined your federal income tax liability for the year
of repayment under IRC § 1341(a)(4) (see Exceptions) or IRC
§ 1341(a)(5).
Exceptions: IRC § 1341(a) requires you to determine your federal
income tax liability by whichever of the following two methods results
in the lesser federal income tax liability.
1.	 If you are required to determine your federal income tax liability
using the deduction method (IRC § 1341(a)(4)), you may be
eligible for the Connecticut claim of right credit. For the deduction
method, you deduct the repayment on your federal income tax
return for the year of repayment. Depending on the type of income
you repaid, you either deduct the repayment in determining your
federal adjusted gross income or in determining your federal
taxable income. If the repayment is deducted in determining
your federal adjusted gross income, you are not eligible for the
Connecticut claim of right credit. See Example 2 on the back of
this form. If the repayment is deducted in determining your federal
taxable income and reported on federal Form 1040, Schedule A,
or federal Form 1040‑SR, Schedule A, you are eligible for the
Connecticut claim of right credit. See Example 1 on the back of
this form.
	 If the deduction results in a net operating loss for federal income
tax purposes carried back to a taxable year or years preceding
the year of repayment, no claim for refund is allowable for
Connecticut income tax purposes for the preceding year or years
on account of the loss carryback.
2.	 If you are required to determine your federal income tax liability
using the credit method (IRC § 1341(a)(5)), you are eligible for
the Connecticut claim of right credit. See Example 1 on the back
of this form.

1.	 Provide the following information for the item of income repaid during the 2023 taxable year.
Taxable Year(s)
in Which You
Received the
Income
(Year(s) of receipt)

Type of
Income Repaid

Reason(s) for Repayment

Amount of Income
Repaid During the
2023 Taxable Year

If the total amount repaid is $3,000 or less, stop here and do not file this form. You are not entitled to this credit.
2.	 Which method did you use to determine your 2023 federal income tax liability? See Exceptions above.

	
Deduction Method
	
Credit Method: If you check the credit method, skip Line 3 and go to Line 4.

3.	 Was the repayment reported as a deduction on Schedule A of the 2023 federal Form 1040, or federal Form 1040‑SR?

	
Yes	
	
No If No, stop here and do not file this form. You are not entitled to this credit.
4.	 Enter the Connecticut income tax liability reported on your Connecticut income tax return for
the year(s) of receipt.......................................................................................................................... 	 4.
5.	 Enter your Connecticut income tax liability for the year(s) of receipt after excluding the income
you were required to repay during the 2023 taxable year. ................................................................ 	5.
6.	 Subtract Line 5 from Line 4. This is your 2023 claim of right credit. Include this amount on your
2023 Form CT‑1040, Line 20b; Form CT‑1040NR/PY, Line 22a; or Form CT‑1040X, Line 22b. .... 	6.	

Visit us at portal.ct.gov/DRS for more information.

DRAFT 11-30-2023

Nonresidents or Part-Year Residents

If you are a nonresident or part-year resident in the year of receipt
and repaid income during your 2023 taxable year, you determine
the decrease in your Connecticut income tax liability for the year
of receipt by excluding the repaid income from your Connecticut
adjusted gross income. To the extent the repayment is derived from
or connected with sources within this state, you also exclude this
repayment from your Connecticut-sourced income.

Documentation Needed to Prove Eligibility for the
Connecticut Claim of Right Credit

You must submit all of the following documentation with your 2023
Connecticut income tax return:
•	 A completed Form CT‑1040 CRC (place this form on top of your
completed Connecticut income tax return);
•	 A copy of your completed 2023 federal income tax return,
including all schedules and attachments, that you signed and
filed for your 2023 taxable year;
•	 Proof you were required to repay income you included in
Connecticut adjusted gross income for the year(s) of receipt,
such as a letter from your employer requiring you to repay sales
commissions;
•	 A copy of your completed federal income tax return, including
all schedules and attachments, that you signed and filed for the
year(s) of receipt; and
•	 Proof you repaid the income during your 2023 taxable year, such
as a copy of your cancelled check.

How to Compute the Connecticut Claim of Right Credit

Your Connecticut income tax liability for the year of repayment is
an amount equal to:
•	 The tax for the year of repayment computed as if there was no
Connecticut claim of right credit; minus
•	 The decrease in tax for the year(s) of receipt that would result
solely from the exclusion of the amount of income you were
subsequently required to repay from your Connecticut adjusted
gross income for the year(s) of receipt.

Line Instructions

Line 1: If you repaid income during your 2023 taxable year that you
included in your Connecticut adjusted gross income for an earlier
taxable year(s), enter:

•	
•	
•	
•	

The year(s) of receipt;
A description of the type of income repaid;
The reason for the repayment; and
The amount of income repaid. This income must have been
included in your Connecticut adjusted gross income for the
year(s) of receipt.

Line 2: Check the box to indicate if you used the deduction method or
the credit method to determine your 2023 federal income tax liability.
See Exceptions on the front for more information. If you checked
the credit method, skip Line 3 and go to Line 4.
Line 3: Check the box to indicate if you reported the repayment
as a deduction on Schedule A of your 2023 federal Form 1040, or
federal Form 1040‑SR.
Line 4: Enter the amount of your Connecticut income tax liability
reported on your Connecticut income tax return for the year(s) of
receipt. Enter the amount as originally filed, as adjusted by DRS,
or as you later amended it.

Form CT-1040 CRC Back (Rev. 12/23)

Line 5: Compute the amount of your Connecticut income tax liability
for the year(s) of receipt after you exclude from your Connecticut
adjusted gross income for the year(s) of receipt the income you
repaid during your 2023 taxable year.
Repayments of Social Security benefits may require the recalculation
of your taxable benefits to determine the amount to exclude from
Connecticut adjusted gross income.
Line 6: Subtract Line 5 from Line 4. Include this amount on your
2023 Form CT‑1040, Line 20b; Form CT‑1040NR/PY, Line 22a; or
Form CT‑1040X, Line 22b. This amount is considered a tax payment
and will be credited against your Connecticut income tax liability for
your 2023 taxable year on the due date for payment of your 2023
Connecticut income tax liability. Check the box for Form CT‑1040 CRC
on the front of your Connecticut return.
Example 1: In December 2022, James, a Connecticut resident,
received advanced commissions from his employer. James
included these commissions in his 2022 Connecticut adjusted
gross income of $45,000. In May 2023, James’s employer told
him that some of his customers had decided to cancel their
purchases and James must repay $4,000 of the commissions
he received during 2022. If James is required to determine his
federal income tax liability for the 2023 taxable year using the
deduction method (IRC § 1341(a)(4)), he will deduct the $4,000
as an itemized deduction on federal Form 1040, Schedule A,
or federal Form 1040‑SR, Schedule A. Assuming James’s filing
status on his 2022 and 2023 Connecticut income tax returns
is filing separately and his 2023 Connecticut adjusted gross
income is $50,000, he computes his 2023 Connecticut income
tax liability as follows:
2023 Connecticut income tax liability on $50,000	
$2,186
Minus difference between:
	 2022 tax payable on $45,000	
= $1,846
		
and
	 2022 tax payable on $41,000 ($45,000 - $4,000)	 = $1,666
Claim of right credit	
–	
	$ 180
2023 Connecticut income tax liability			$2,006

If James is required to determine his federal income tax
liability for the 2023 taxable year using the credit method
(IRC § 1341(a)(5)), he will also compute his Connecticut income
tax liability as shown above.
Example 2: In February 2022, Donna, a nonresident individual
who works in Connecticut, realized a capital gain of $5,000 from
the sale of a capital asset. The gain was not derived from or
connected with Connecticut sources. Donna included the gain
in her 2022 Connecticut adjusted gross income of $35,000. In
September 2023, Donna was required to repay the purchaser
of the assets $5,000 as a result of failure to fulfill conditions of
the purchase agreement.
If Donna was required to determine her federal income tax liability
for the 2023 taxable year using the deduction method (IRC
§ 1341(a)(4)), she will deduct the repayment as a capital loss on
her federal Form 1040, Schedule D, or federal Form 1040‑SR,
Schedule  D. For Connecticut income tax purposes, Donna is
not eligible for the claim of right credit because she deducted
the repayment under IRC § 1341(a)(4) as a net operating loss in
determining her federal adjusted gross income.
If Donna was required to determine her federal income tax
liability using the credit method (IRC §  1341(a)(5)), she is
eligible for the Connecticut claim of right credit to the extent that
her 2022 tax liability would be decreased as a result of excluding
the $5,000 she subsequently repaid.