Oregon Individual Income Tax Guide 2023 PDF

2023 Publication OR-17 OREGON Individual Income Tax Guide 150-101-431 (Rev. 06-17-24) Important updates June 17, 2024 The instructions for the PTE-E tax refund included on entity-level federal return subtraction have been revised to clarify the amoun...

2023 Publication OR-17 OREGON Individual Income Tax Guide 150-101-431 (Rev. 06-17-24) Important updates June 17, 2024 The instructions for the PTE-E tax refund included on entity-level federal return subtraction have been revised to clarify the amount of the subtraction. February 6, 2024 The instructions for the Paid Leave Oregon benefits subtraction have been revised to remove specific references to federal treatment of this type of income. January 12, 2024 In the instructions for calculating the credit for taxes paid to another state on mutually-taxed income, the defi- nition of “Oregon tax after all other credits” has been updated to include the Oregon surplus (“kicker”) credit and the credit for pass-through entity elective (PTE-E) taxes paid as exceptions. See “Standard credits” for more information about this credit.  This publication supplements the Oregon income tax instruction booklet and the Internal Revenue Service (IRS) Tax Guide: Publication 17, Your Federal Income Tax (For Individuals). This is a guide, not a complete statement of Oregon laws and rules. Law or rules may have changed after printing. Refer to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR), available at www.oregon.gov/dor. Forms and publications For tax forms and publications go to www.oregon.gov/dor/forms or write: Forms Oregon Department of Revenue PO Box 14999 Salem OR 97309-0990 Do you have questions or need help? www.oregon.gov/dor 503-378-4988 or 800-356-4222 [email protected] Contact us for ADA accommodations or assistance in other languages. Tax professionals Questions. If you're a tax professional, you can email us for assistance. Research your question. We can assist you with Oregon income tax law and policy questions, but we can't provide or discuss specific taxpayer information, prepare returns, or make calculations for you. You can include.txt files in your email, but we are unable to open any other type of attachment. In the email, include your question with your name, business name, and phone (with area code). We'll get back to you within three business days. Personal and partnership income tax: [email protected]. Pass-through entity elective tax: [email protected]. Corporate income or excise tax: [email protected]. Corporate minimum tax: [email protected]. Corporate nexus and voluntary disclosure: [email protected]. Corporate activity tax: [email protected]. Payroll and business tax: [email protected]. Fiduciary/estate/inheritance tax: [email protected]. Transit self-employment taxes: [email protected]. Agricultural overtime: [email protected]. Revenews. To receive emailed information from us, subscribe to Revenews using the link on our Tax professionals webpage. Contents Federal tax law.....................................................................7 Gain, loss, and distributions............................................48 New information..................................................................7 Global intangible low-taxed income (GILTI).................48 Important reminders...........................................................7 Hydroelectric dam workers..............................................48 Individual Retirement Account (IRA) distributions....49 General information...................................................9 Interest and dividend income..........................................49 Do I have to file an Oregon income tax return?..............9 Interstate transportation wages (Amtrak Act)...............49 Electronic filing for Oregon.............................................11 Like-kind exchange or involuntary conversion............51 2-D barcode filing for Oregon..........................................11 Market-based sourcing.....................................................52 Why Oregon needs a federal return...............................11 Retirement income.............................................................52 Record-keeping requirements..........................................11 Social Security and Railroad Retirement Board benefits....52 State and local income tax refunds.................................52 Filing an Oregon return..........................................13 Unemployment insurance (UI) benefits and other Residency............................................................................13 taxable income...............................................................53 Extensions of time to file..................................................15 Wages, salaries, and other pay for work.........................53 Which form do I file?.........................................................15 Waterway workers.............................................................53 Filing status........................................................................16 Registered domestic partners (RDPs).............................19 Adjustments..................................................................54 Individual Taxpayer Identification Number..................19 Alimony paid......................................................................54 Military personnel filing information............................20 Certain business expenses of reservists, performing artists, and fee-basis government officials................54 Oregon tax.....................................................................25 Educator expenses.............................................................55 Personal income tax rates.................................................25 Health savings account (HSA) deduction......................55 Qualified business income reduced tax rate.................26 IRA or self-employed SEP and SIMPLE contributions....55 Farm liquidation long-term capital gain tax rate..........28 Moving expenses...............................................................56 Farm income averaging....................................................29 Penalty on early withdrawal of savings.........................56 Pass-through entity elective tax.......................................29 Self-employed health insurance.....................................56 CPAR tax.............................................................................30 Self-employment tax.........................................................57 Interest on certain installment sales...............................30 Student loan interest.........................................................57 ABLE account or Oregon 529 College Savings Other adjustments on federal Form 1040, Network account tax recapture..................................30 Schedule 1, lines 23 and 25.........................................57 Other individual taxes......................................................31 Additions.........................................................................59 Payments and refunds............................................32 ABLE account subtraction nonqualified withdrawal.....59 Payment options.................................................................32 Accumulation distribution from certain domestic trusts....59 Refunds................................................................................32 Capital loss carryover difference.....................................59 Direct deposit of refund....................................................33 Claim of right income repayments..................................59 Application of refund........................................................33 College Opportunity Grant Fund contributions...........60 Refund processing.............................................................34 Depletion in excess of property basis.............................60 Injured spouse refund claims..........................................35 Disposition of inherited Oregon farmland or forestland....60 Oregon statute of limitations on refunds......................35 Disqualified charitable donations...................................61 Federal business income deduction................................61 Amended returns......................................................36 Federal election on interest and dividends of a minor child....61 How do I amend my Oregon return?.............................36 Federal estate tax................................................................61 Federal income tax refunds..............................................62 Interest and penalties.............................................38 Federal subsidies for employer prescription drug plans.....63 Interest.................................................................................38 First-time home buyer savings account Penalties...............................................................................39 nonqualified withdrawal.............................................63 Gambling losses claimed as an itemized deduction....63 Audits and appeals....................................................41 Income taxes paid to another state by a What to do if your return is audited...............................41 pass-through entity......................................................64 Appeals................................................................................42 Individual development account (IDA)..........................64 Interest and dividends on government bonds Failure to file an Oregon income tax return....45 of other states.................................................................65 Filing a return after tax is assessed.................................45 Lump-sum distribution from a qualified retirement plan..................................................................................65 Income.............................................................................47 Nonresident capital losses and loss carryovers.............66 What income is taxable to Oregon?.................................47 Oregon College and MFS 529 Savings Plan Air carrier employees........................................................47 subtraction nonqualified withdrawal........................66 Alimony received...............................................................47 Oregon Production Investment Fund contributions....66 Business income or loss.....................................................48 Passive foreign investment company income................66 Discharge of indebtedness...............................................48 PTE-E tax deducted on entity-level federal return.......67 Federal Schedule E and F income....................................48 150-101-431 (Rev. 06-17-24) 4 Refund of Oregon-only itemized deductions from Gain on the sale of an Oregon residence........................94 a prior year.....................................................................67 Fiduciary adjustment from Oregon estates University Venture Development Fund contributions....67 and trusts.......................................................................94 Unused business credits...................................................67 Passive activity losses (PALs)...........................................95 WFHDC medical expenses..............................................68 Suspended losses...............................................................96 Oregon percentage.............................................................96 Subtractions..................................................................69 Deductions and modifications.........................................96 ABLE account deposit carryforward..............................69 Oregon deferral of reinvested capital gain....................98 American Indian................................................................69 Federal law disconnect......................................................98 AmeriCorps educational award......................................70 Artist’s charitable contribution........................................70 Credits.............................................................................99 Capital Construction Fund (CCF) contributions...........70 Types of credits...................................................................99 Casualty loss from state-declared emergency...............71 Construction worker and logger commuting expenses....71 Standard credits.......................................................100 Domestic international sales corporation (DISC) Exemption credit..............................................................100 dividend payments.......................................................72 Income taxes paid to another state on Federal gain previously taxed by Oregon......................72 mutually-taxed income..............................................102 Federal income tax liability..............................................72 Exception for Oregon resident partners and S Federal tax worksheet.......................................................73 corporation shareholders...........................................106 Federal mortgage interest credit...................................... 74 Mutually-taxed gain on the sale of residential Federal pension income­.................................................... 74 property........................................................................106 Federal tax credits.................................................................76 Oregon Cultural Trust contributions............................107 Film production labor rebate............................................76 Oregon Veterans’ Home physicians.............................107 First-time home buyer savings account (FTHBSA) Political contributions.....................................................108 contributions and earnings.........................................77 Reservation enterprise zone...........................................108 Foreign income tax............................................................77 Retirement income...........................................................109 IDA contributions..............................................................78 Rural emergency medical service providers............... 110 Income on a composite return.........................................78 Rural health practitioners............................................... 110 Interest and dividends on U.S. bonds and notes...........78 Legislative Assembly expenses.......................................79 Carryforward credits.............................................. 112 Manufactured dwelling park capital gain exclusion....79 Agriculture workforce housing..................................... 112 Manufactured dwelling park closure payments...........80 Alternative qualified research activities carryforward.... 113 Marijuana business expenses..........................................80 Bovine manure production/collection carryforward.... 114 Oregon College and MFS 529 Savings Plan Business energy carryforward....................................... 114 deposits carryforward..................................................80 Child Care Fund contributions carryforward............. 114 Oregon income tax refund...............................................81 College Opportunity Grant Fund contributions Oregon Investment Advantage........................................81 (auction)........................................................................ 114 Oregon Lottery winnings.................................................81 Crop donation................................................................... 114 Paid Leave Oregon benefits deducted on federal Electronic commerce zone investment carryforward.... 115 Schedule A.....................................................................82 Employer scholarship...................................................... 115 Previously taxed employee retirement plan contributions....83 Energy conservation project carryforward.................. 115 Previously taxed IRA conversions..................................83 Fish screening devices..................................................... 116 Psilocybin business expenses..........................................84 Forest conservation.......................................................... 116 PTE-E tax refund included on entity-level federal Lender’s credit: affordable housing............................... 117 return..............................................................................84 Lender’s credit: energy conservation carryforward..... 117 Public Safety Memorial Fund award..............................84 Long-term enterprise zone facilities............................. 117 Railroad Retirement Board benefits................................84 Oregon IDA Initiative Fund donation.......................... 117 Scholarship awards used for housing expenses...........85 Oregon Low-Income Community Jobs Social Security benefits.....................................................85 Initiative/New Markets............................................. 118 Special Oregon medical....................................................85 Oregon Production Investment Fund State and local government bond interest......................88 contributions (auction)............................................... 118 Taxable benefits for former RDPs....................................88 Qualified research activities carryforward................. 118 U.S. government interest in IRA or Keogh Renewable energy resource equipment distributions..................................................................88 manufacturing facility carryforward...................... 119 Residential energy carryforward.................................. 119 Other items....................................................................90 Rural technology workforce development Net operating losses (NOLs)............................................90 carryforward............................................................... 119 Depreciation difference for Oregon................................92 Short line railroad rehabilitation................................... 119 Federal depreciation disconnect......................................92 Transportation projects carryforward..........................120 Partnership and S corporation modifications for University Venture Development Fund contributions....120 Oregon............................................................................93 CPAR adjustments.............................................................93 Refundable credits..................................................121 Basis of business assets transferred into Oregon..........93 ABLE account contributions...........................................121 Gain or loss on sale of depreciable property with Agricultural employer overtime tax credit (AEOTC)....121 different basis for Oregon............................................94 Claim of right income repayment.................................122 150-101-431 (Rev. 06-17-24) 5 Earned income credit (EIC)............................................122 Figure your required annual payment.........................126 Manufactured dwelling park closure...........................122 Exceptions to paying interest on an Oregon 529 College Savings Network account underpayment of estimated tax................................126 contributions................................................................123 Oregon EIC for ITIN filers..............................................123 Estimated tax..............................................................128 Oregon Kids Credit..........................................................124 Should I pay estimated tax?...........................................128 Oregon surplus credit.....................................................124 Exceptions.........................................................................128 Pass-through entity elective taxes paid........................124 Special situations.............................................................128 Working family household and dependent care (WFHDC).....................................................................124 Appendix.......................................................................129 Contents.............................................................................129 Interest on underpayment of estimated tax....126 Do I owe underpayment interest?.................................126  return to take advantage of the subtraction. See “Mili- Federal tax law tary personnel filing information” for details. No extension to pay. Oregon doesn’t allow an extension Casualty loss from state-declared emergency. If you of time to pay your tax, even if the IRS is allowing an experienced a loss in Oregon due to a state-declared extension. Your 2023 Oregon tax is due April 15, 2024. emergency and weren’t able to deduct it on your fed- Federal law connection. Oregon has a rolling tie to eral return, you may be able to take a subtraction on changes made to the definition of federal taxable your Oregon return. This subtraction applies to tax income, with the exceptions noted below. For all years 2020, 2021, and 2022, as well as future years. other purposes, Oregon is tied to federal income tax If you meet the requirements for the subtraction for laws as amended and in effect on December 31, 2022. those years, you’ll need to amend your return to take Oregon exceptions to federal tax law: advantage of the subtraction. See “Subtractions” for Internal Revenue Code (IRC) Section 139A tax exemp- more information. tion for federal subsidies for employer prescription Agricultural employer overtime tax credit (AEOTC). drug plans. If you have this type of business income, A new tax credit is available for agricultural employ- you’ll have an addition on your Oregon return. ers who pay overtime wages to their employees. To IRC Section 529 tax exemption for earnings on col- claim the credit, an employer must file an application lege savings plan funds used for K-12 tuition. Ore- with us during January following the year in which gon College & MFS 529 Savings Plans may be used the wages were paid. See “Refundable credits” for for higher education expenses only. more information. IRC Section 199A deduction for noncorporate quali- fied business income (QBID). Oregon is discon- Elective tax for partnerships and S corporations nected from the QBID. This deduction doesn’t flow changes. The pass-through entity elective tax has through to the Oregon personal income tax return, been extended to apply through tax years beginning so there is no addition to report; however, the deduc- before January 1, 2026. Additionally, there is now a tion must be added back on fiduciary returns. subtraction available on the personal income tax References to federal return forms. In this publica- return that may be claimed for refunds of the elec- tion, references to the federal return or to Form 1040 tive tax that were included as income on your fed- also include a reference to Forms 1040-SR, 1040-NR, eral return. See “Pass-through entity elective tax” in and 1040-X, unless otherwise indicated. “Oregon tax” for more information. Forest conservation credit. A new tax credit is avail- New information able to small forestland owners that choose to create a forest conservation area. The forest conservation Kicker refund. Oregon’s surplus credit, known as the area requires restrictions on harvest to be followed “kicker,” will be claimed as a credit on your 2023 tax for 50 years. See “Carryforward credits” for more return. The credit is a percentage of your 2022 tax liabil- information about this credit. ity. You may donate your kicker credit to the Oregon State School Fund. Our form instructions contain more Federal tax liability subtraction. The federal tax information and instructions for calculating your credit. subtraction limit is $7,800 ($3,900 if married filing separately) for 2023. It may be limited further based Oregon Kids Credit. A new refundable tax credit is on your adjusted gross income (AGI). See “Federal available to certain taxpayers with a qualifying child income tax liability” in “Subtractions.” age five or younger. See “Refundable credits” for more information. Important reminders Paid Leave Oregon benefits. Oregon’s new program providing medical, family, and safe leave began Revenue Online. Revenue Online provides conve- paying benefits September 3, 2023. Changes to your nient, secure access to tools for managing your Ore- return may be necessary if you received benefits gon tax account. With Revenue Online, you can: under the program. See “Subtractions” for more Check the status of this year’s refund. information. View and print letters from us. National Guard subtraction. Pay for active service in Make or schedule payments. the National Guard can now generally be subtracted Securely communicate with us. from taxable income if the service is authorized by the Check balances and view your tax account history. governor. This change also applies retroactively to tax Submit your requests (such as penalty waivers or years 2021 and 2022. If you received National Guard appeals) or information we’ve requested from you. pay during those years, you will need to amend your View your Form 1099-G, if applicable. 150-101-431 (Rev. 06-17-24) 7 Federal tax law Tax professionals with third party access have addi- deposited directly into an Oregon College or MFS tional benefits, such as viewing clients’ accounts. 529 Savings Plan account. You may choose up to four For more information and instructions on setting up accounts. See our full-year and part-year/nonresident your personal Revenue Online account, go to www. booklets for more information. oregon.gov/dor and click on Revenue Online. Minimum refund. Under Oregon law, the minimum Data security breaches. Tax professionals suffering a refund that can be issued is $1. data security breach associated with tax return prep- Minor child’s return and signature. If your child must aration must report the breach to us promptly. See file a tax return, you may sign the child’s name as our Tax professionals webpage for details. their legal agent. Sign the child’s name and then write Military pay. Oregon doesn’t tax your military pay if “By (your signature), parent (or legal guardian) for you aren’t an Oregon resident. For more information minor child.” about residency and the Oregon military pay subtrac- Deceased person’s return. A final return for a person tions, see “Military personnel filing information.” who died during the calendar year must be filed if a Federal centralized partnership audit regime (CPAR). return would normally be required. If a return must Oregon recognizes CPAR, the federal regime for be filed, check the “Deceased” box after the person’s name on the return. auditing partnerships. See “Oregon tax” and “Audits and appeals.” If you filed a final return with a refund and are unable to cash the refund check, you will need to return the Special Oregon medical subtraction. You or your check to us along with Form OR-243, Claim to Refund spouse must be age 66 or older at the end of the tax Due a Deceased Person. Go to our website to download year to qualify for the subtraction. See “Special Ore- the form or contact us to order it. gon medical subtraction.” If you are a court appointed personal representative Fiduciary returns. This publication includes infor- or have filed a small estate affidavit and you need mation for Oregon fiduciary return filers, where the more information about trusts or estates, contact our treatment of an item may differ from the treatment Estate Unit at [email protected]. on personal income tax returns. Also, see the instruc- Additional exemption credits. Additional exemption tions for Form OR-41, Oregon Fiduciary Income Tax credits for severely disabled taxpayers and for dis- Return. abled children aren’t available for taxpayers whose Statewide transit tax (STT). This income tax funds AGI is more than $100,000, regardless of filing sta- public transportation services and improvements tus. For more information, see “Exemption credit” in within Oregon. See “Oregon tax” for filing require- “Standard credits.“ ments and other details. Registered domestic partners (RDPs). For Oregon Market-based sourcing. Nonresident taxpayers must tax purposes, same-sex RDPs are treated the same as apportion their business income from sales of services married couples. References to “spouse” within this and intangible property according to market-based publication include RDPs. sourcing principles rather than cost of performance. Nonresident disaster relief workers. You don’t need See ORS 314.665, ORS 314.666, and OAR 150-314-0435. to file a return if you worked in Oregon solely to pro- Payment options. We accept tax payments by check, vide relief during a declared disaster or emergency. money order, debit card, and credit card. See “Pay- See “General information” for more details. ments and refunds.” Mailing address. Always include your current mail- Direct deposit. Instead of receiving your refund ing address when filing a return so that we can reach check in the mail, you may have your refund depos- you if needed. If you’re filing a return for a previous ited directly into your account that accepts electronic tax year, don’t use the address that you had during deposits. See “Direct deposit of refund” in “Pay- that tax year unless it is still your current mailing ments and refunds.” You can also have your refund address. 150-101-431 (Rev. 06-17-24) 8 Important reminders General information 0 $9,165 Do I have to file an Oregon income Head of household 1 $10,365 tax return? 2 $11,565 Use the following charts and examples to determine 0 $10,180 whether you are required to file an Oregon personal Qualifying surviving income tax return. See the explanations in this publi- spouse 1 $11,180 cation if you are unsure about: 2 $12,180 Residency status—see “Residency.“ In addition, file a return if: Filing status—see “Filing status.“ You’re required to file a federal return. Taxable income—see “What income is taxable to Oregon?” You had $1 or more of Oregon income tax withheld from your wages. Deductions—see “Deductions and modifications.” You must file a return to claim a refund if you had Dependents. If you can be claimed as a dependent Oregon income tax withheld, even if you aren’t oth- on another person’s return, you must file your own erwise required to file a return. return if your income is more than the lesser of: Note: You don’t have to file an Oregon return if you The standard deduction allowed on your federal are an out-of-state employee or the operator of an return, or out-of-state business and you were in Oregon solely The Oregon standard deduction for a single filer. for purposes of performing disaster or emergency- related work (ORS 401.690). You can use this worksheet, which has the federal amounts, to help you figure out if you need to file Full-year residents your own return. You need to file if your gross income is more than the 1. Enter gross income from all 1. $_________ amount shown for your filing status in Table 1. taxable sources. Note: The amounts in Table 1 apply to gross income 2. Earned income $_____ plus $400. 2. $_________ from all taxable sources. Enter total. Table 1. Filing thresholds for full-year residents 3. Set federal amount. 3. $ 1,250 Number of And your gross 4. Enter the larger of line 2 or 3. 4. $_________ boxes checked Your filing status is: income is more below line 17 of 5. Enter the Oregon standard 5. $_________ than: Form OR‑40: deduction for a single person: Single, can be claimed See Any Basic standard deduction: $2,605. on another’s return “Dependents” Age 65 or older, or blind: $3,805. 0 $7,305 Age 65 or older and blind: $5,005. Single 1 $8,505 6. Enter the smaller of line 4 or 5. 6. $_________ 2 $9,705 If line 1 is more than line 6, you must file an Ore- gon return. If line 6 is more than line 1, you aren’t 0 $14,605 required to file an Oregon return. 1 $15,605 Example 1: Emily is single, age 20, and a full-time Married filing jointly 2 $16,605 college student. Her parents claim her as a depen- dent. Emily has earned income of $800 from her job. 3 $17,605 She also has $29 of interest income from her savings 4 $18,605 account. 0 $7,305 1. Enter gross income from all 1. $ 829 Married filing taxable sources. 1 $8,305 separately 2. Earned income $800 plus $400. 2. $ 1,200 2 $9,305 Enter total. 150-101-431 (Rev. 06-17-24) 9 General information 3. Set federal amount. 3. $ 1,250 6. Enter the smaller of line 4 or 5. 6. $ 1,250 4. Enter the larger of line 2 or 3. 4. $ 1,250 Because line 1 ($1,300) is more than line 6 ($1,250), Katrina is required to file an Oregon return. 5. Enter the Oregon standard 5. $ 2,605 deduction for a single person: Part-year residents and nonresidents Basic standard deduction: $2,605. You need to file an Oregon return if your gross Age 65 or older, or blind: $3,805. income is more than the amount shown for your fil- Age 65 or older and blind: $5,005. ing status in Table 2. 6. Enter the smaller of line 4 or 5. 6. $ 1,250 Note: The amounts in Table 2 apply to gross income from Oregon taxable sources while a nonresident Because line 6 ($1,250) is more than line 1 ($829), and gross income from all taxable sources while an Emily isn’t required to file an Oregon return. Oregon resident. Note: If Emily had any Oregon income tax withheld Table 2. Filing thresholds for part-year residents and from her income, she must file an Oregon return to nonresidents claim a refund. Example 2: Norman, age 77, is claimed as a depen- And your Oregon gross income is dent by his son. Norman has income of $3,015 from a Your filing status is: more than: pension and interest. He doesn’t have any other tax- able income. Single, can be claimed on another’s $1,250* return 1. Enter gross income from all 1. $ 3,015 Single $2,605 taxable sources. Married filing jointly $5,210 Married filing separately 2. Earned income $0 plus $400. 2. $ 400 Enter total. If spouse claims standard deduction $2,605 If spouse itemizes deductions 0 3. Set federal amount. 3. $ 1,250 Head of household $4,195 4. Enter the larger of line 2 or 3. 4. $ 1,250 Qualifying surviving spouse $5,210 5. Enter the Oregon standard 5. $ 3,805 * The larger of $1,250 or your earned income plus $400, up to your standard deduction amount. deduction for a single person: If your Oregon income is less than the amount in Basic standard deduction: $2,605. Table 2, you aren’t required to file a return unless you Age 65 or older, or blind: $3,805. had $1 or more of Oregon tax withheld from your Age 65 or older and blind: $5,005. wages. 6. Enter the smaller of line 4 or 5. 6. $ 1,250 Nonresidents with rental property in Because line 1 ($3,015) is more than line 6 ($1,250), Oregon Norman is required to file an Oregon return. You don’t have to file an Oregon return if: Example 3: Katrina is single, age 19, a full-time stu- Your only Oregon-source income is from rental dent, and claimed as a dependent by her mother. property, and Katrina didn’t work but had $1,300 of unearned inter- You have a loss from the rental activity for the est income. year. However, you must file Oregon returns for all 1. Enter gross income from all 1. $ 1,300 applicable loss years if: taxable sources. — You later sell the rental property in a fully-tax- 2. Earned income $0 plus $400. 2. $ 400 able transaction; Enter total. — The sale results in gain that would otherwise be taxed by Oregon; 3. Set federal amount. 3. $ 1,250 — You have suspended passive activity losses from 4. Enter the larger of line 2 or 3. 4. $ 1,250 the rental activity; and — You are deducting your suspended losses from 5. Enter the Oregon standard 5. $ 2,605 that gain on your federal return. deduction for a single person: Basic standard deduction: $2,605. Age 65 or older, or blind: $3,805. Age 65 or older and blind: $5,005. 150-101-431 (Rev. 06-17-24) 10 General information  filing it and include it with your Oregon return. Don’t Electronic filing for Oregon include extension requests or federal schedules other than those listed above, but keep a copy of those with Electronic filing is a fast, efficient, and accurate way your tax records. We may ask for copies later. to file an Oregon income tax return. Returns filed electronically require fewer manual steps to process compared to paper returns. Record-keeping requirements Practitioners are automatically approved for Oregon Why is record-keeping important? electronic filing after the IRS accepts your online application to become an authorized e-file provider. Keeping records of your income and deductions There is no separate registration required for Oregon. will help you prepare an accurate tax return and pay the correct tax. Paid preparers who meet the requirements of the fed- You must be able to prove all items on your return eral e-file mandate must also e-file Oregon personal with adequate records and sufficient evidence. income tax returns. For information on waivers of Keep records that verify the income, deductions, this requirement, see the information for tax profes- credits, and other items reported on your tax sionals on our website. return. Estimates or approximations don’t qualify The copy of a tax return provided to a client must be as proof. an exact copy of the tax return submitted to us. Accurate records will help you if we select your tax When filing electronically, don’t send us a paper copy return for audit. Usually, an audit will occur one to of your tax return. three years after a return is filed (or later if you have had a federal audit). If you’ve kept good records, you can clear up any questionable items and easily arrive 2-D barcode filing for Oregon at the correct tax. If you haven’t, you may have to spend time getting statements and receipts from 2-D barcode filing is an alternative way to file a paper various sources. You may also have to pay more tax Oregon return. Oregon-approved tax software pack- if you can’t prove the figures you used. ages are required to print a 2-D barcode on Forms OR-40, OR-40-N, and OR-40-P. The 2-D barcode on How should I keep my records? the tax return is a “picture” of the information on the You must keep accurate records, but no particular return, which is printed on the top right-hand cor- system is required for keeping them. Your records ner of the return’s front page. A machine reads the should contain all the information you used to fig- barcode information so it doesn’t have to be entered ure your income, deductions, credits, and other items manually into our computer system. shown on your income tax return. If changes are made to the return after it has been What records should I keep? printed, the entire return must be re-printed so that the barcode will reflect the correct information. If you report an item on your tax return, you must have adequate records to verify it. Here’s a partial list The copy of a 2-D barcode return provided to a tax- of records you should keep: payer must be an exact copy of the tax return you submit to us. Receipts and sales documents for deductible busi- ness expenses, self-employment, farm, rentals, sale of assets, etc. Why Oregon needs a federal return Dated and signed receipts for any cash payments that might be deductible. Most information to support the amounts on your Income statements, including Form W‑2 for your Oregon return comes from your federal return. Even wages and Form 1099 for interest, dividends, rents, when Oregon law differs from federal law (such as and nonemployee compensation. additions, subtractions, and credits), we still need All payroll records, including copies of W‑2 and information from your federal return (ORS 314.380). 1099 forms you’ve issued. If you file an electronic return, we will receive your Pay statements if you have deductible expenses federal return with your Oregon return. If you are withheld from your paycheck. filing a paper return, you must include a copy of the Receipts and certificates to verify Oregon tax cred- front and back of your federal return with Schedules its claimed. 1 through 3 (if applicable). Also include any “as if” Copies of your tax returns, including complete fed- federal returns. If you’re not required to file a federal eral returns with all required schedules, or an “as if” return, prepare a federal return as if you were actually return if you don't have a federal filing requirement. 150-101-431 (Rev. 06-17-24) 11 General information  Copies of your “as if” returns if you were required The amount of each separate expense for a vehicle, to prepare them to claim a special filing status. such as the cost of purchase, capital improvements, Worksheets, summary statements, calendars, log lease payments, maintenance, and repairs. books, journals, etc. The mileage for each business or investment use of Canceled checks, substitute checks or carbon cop- the vehicle and the total miles for the tax year. ies of checks, bank deposit slips, and receipts. The date of the expense or use. Keep a trip log at Checking and savings account statements for both the time of use, showing the date and mileage for personal and business accounts. each business use, including odometer readings. If you deduct alimony payments, keep copies of The business or investment reason for the expense canceled checks and the divorce, separate main- or use of the vehicle. tenance, or support decree or a written separation agreement. Keep the proof you need for these items in an account For property you own, keep proof of the purchase book, diary, log, statement of expense, trip sheet, etc. price, any purchase expenses, the cost of any Include all documents needed to verify the item. improvements, and any other basis adjustments, How long should I save my records? such as depreciation and deductible casualty losses. If you received property as a gift, you must Keep records that support an item of income or a have records that show the donor’s adjusted basis deduction on your return at least until the statute of just before the property was given to you, its fair limitations expires for that return. A statute of limita- market value on the date of the gift, and any gift tions is the period of time after which no legal action tax paid on it. can be brought. Usually this is three years from the The sale of a capital asset (and certain other assets). date the return was filed, or two years from the date This type of sale is reported as a capital gain or loss. the tax was paid, whichever is later. Returns filed Your records must show when and how the asset before the due date are treated as if they were filed was acquired, how it was used, and when and how on the due date. you disposed of it. Records must also show your cost or other basis, the gross selling price, and the Exceptions: There are times you should keep records expenses of the sale. longer, including the following: Year-end statements showing total interest paid on Keep records that support your basis in property loans, mortgages, or notes. for at least four years after you sell or dispose of Statements and canceled checks, mortgage state- the property (including all capital improvements). ments, and other documents for your real estate If you’re depreciating property, keep records and personal property taxes paid. related to each item’s depreciation expenses for its Proof of payment to your care provider if you are entire recovery period plus three years. claiming the Oregon WFHDC credit. If your return was audited by the federal govern- How do I document deductible expenses? ment, Oregon has two years from the date we receive the federal audit report to review your Ore- A receipt is the best evidence to prove the amount gon return for adjustments. of an expense. A canceled check, together with a bill If you have employees, we recommend you keep or invoice from the payee, ordinarily establishes the all of your employment tax records for at least five cost. A canceled check might not prove a business years after the date the tax becomes due or is paid, expense without other evidence to show that it was for a business purpose. All records should show: whichever is later. This includes copies of Form W‑2 for each employee, and all payroll records. The date, If you didn’t report some income and it’s more than The amount, and 25 percent of the income shown on your return, the The purpose of the expense. return may be audited within five years after it was To be deductible, a business expense must be both filed. If a return is false or fraudulent or if no return ordinary and necessary. is filed, there is no time limit. How do I document car or truck expenses? What if I don’t have all of my records? You must have written records to verify your vehicle If records have been destroyed and your return is expenses. To deduct car or truck expenses, you must selected for audit, the auditor will advise you about be able to prove: reconstructing your records. 150-101-431 (Rev. 06-17-24) 12 General information Filing an Oregon return In order to correctly file an Oregon personal income The important points are physical presence at a new tax return, you must know: dwelling and the intent to make the new dwelling a home. Your residency status. Which form to file. Non-domiciled residents. An Oregon resident may Your filing status. also be someone who isn’t domiciled in Oregon, but: Maintains a residence in Oregon, and Residency (ORS 316.027) Spends a total of more than 200 days in Oregon during the taxable year. General rule. Oregon taxes residents on all sources of A fraction of a day is considered to be a whole day income. Oregon taxes nonresidents on income from when figuring the 200 days. We won’t consider you Oregon sources. to be a resident if you are in Oregon for a temporary Residents purpose. The burden of proof is on you to show your stay here is only temporary. An Oregon resident is someone who is domiciled in this state. Consider both your domicile and the place where you live to determine how you are taxed. Domicile. Domicile is a tax-law concept. It’s the place you consider to be your home and where you plan Special-case Oregon residents (Oregon residents liv- to return after an absence. Domicile isn’t the same ing in another US state). Even if you are domiciled as home, abode, or residence. Intent is the deciding in Oregon, you will be taxed as a nonresident if you factor when you determine your domicile. The law meet all of the following requirements: assumes you have a domicile somewhere. It also You don’t maintain a permanent residence in Ore- assumes you have only one domicile. gon for yourself or your family during any part of Home. If you have one home, your domicile is gen- the year, and erally where that home is located. If you have two You maintain a permanent residence outside Ore- homes, your domicile follows your center of activity. gon during the entire year, and You spend less than 31 days of the year in Oregon. To determine your center of activity and your domi- cile, consider: Oregon residents living in a foreign country. Certain Oregon residents living in a foreign country may be Physical characteristics of the place. taxed as foreign nonresidents. Time you spend there. Things you do there. In general, you’re considered to be a foreign non- People and property there. resident if you meet the residency requirements for Your attitude toward the place. foreign earned income or housing exclusion under Your intent to return to the place when you are federal law. To qualify as a foreign nonresident, you away. must meet one of these two federal tests: Family relations. Generally, spouses living together The “physical presence” test; or have the same domicile. The domicile of minor chil- The “bona fide residence” test. dren is determined by the domicile of the person Note: You may be treated as an Oregon nonresident who has legal custody of them. for tax purposes if you are in the civil service or mili- When living apart, spouses each may establish their tary serving in a foreign country, even if you can’t claim the federal exclusions. See “Military personnel own domicile if they meet the requirements for a filing information” for more details. change of domicile. Physical presence test. To meet the requirements of Change of domicile. Intent is the most important the physical presence test: factor in determining a change of domicile. If intent relies on uncertain events, you haven’t changed your Your tax home must be in a foreign country, and domicile. Once domicile is established, it’s never lost You must be present in a foreign country or coun- until all of the following happen: tries for 330 full days out of any consecutive 12-month period. You intend to abandon the old domicile, and You intend to acquire a specific new domicile, and “Tax home” is generally your regular place of busi- You are physically present in the new domicile. ness or the location where you work, regardless of 150-101-431 (Rev. 06-17-24) 13 Filing an Oregon return where you live. For more information on tax home, She also doesn’t qualify for the physical presence test refer to IRS Publication 17, Your Federal Income Tax for because she isn’t physically present in a foreign coun- Individuals. try for 330 full days out of a consecutive 12-month period. A “full day” means a period of 24 consecutive hours beginning at midnight. The 12-month period may Example 4: Use example 3, but instead of going to begin on any date in the calendar year. The period South Korea, Sandra continues to work in Russia ends the day before that same date, one year later. For until February 2024. She would now qualify under example, a 12-month period beginning October 10 the bona fide residence test. Her residence was estab- would end October 9 of the following year. lished for a full tax year. Sandra should file a nonresi- The 330 full days must fall within that 12-month dent return for 2023. Sandra also qualifies for non- period. resident treatment for the months in 2022 and 2024 that she maintained the bona fide foreign residence. Example 1: Juan arrives in England on April 24, 2022, She should file Oregon part-year returns for 2022 and at noon. He establishes his tax home in England and 2024. remains there until 2 p.m. on March 21, 2024, when he leaves England to return to the United States. Juan For more information about physical presence or is physically present in a foreign country for 330 full bona fide residence, see IRS Publication 54, A Tax days during at least one 12-month period: Guide for U.S. Citizens and Resident Aliens Abroad. One 12-month period starts on his first full day in Tax treaties. If a U.S. tax treaty changes the meaning England, April 25, 2022, and ends April 24, 2023. of terms used in determining federal taxable income, Another 12-month period starts on March 21, Oregon accepts the changed meaning as it applies 2023, and ends March 20, 2024, his last full day in to affected taxpayers. We may ask you to provide England. records showing how a particular treaty affects your Juan may use any 12-month period that begins after taxable income. his arrival in England and ends before he returned to Nonresidents the United States to meet the physical presence test. If you were domiciled outside Oregon and lived out- Juan qualifies for nonresident treatment for the side Oregon for the entire year, you were a nonresi- months he was out of the country during 2022, 2023, dent of Oregon. If you are a nonresident, Oregon taxes and 2024. He should file Oregon part-year returns for only income you earned in Oregon and received from 2022 and 2024, and a nonresident return for 2023. Oregon sources. In some cases, however, a taxpayer Example 2: Use the facts in Example 1, but change domiciled in Oregon can be treated as a nonresident. Juan’s arrival date to June 23, 2023. In this case, Juan See “Special-case Oregon residents.“ won’t qualify for nonresident treatment because he Example 1: Misha was a permanent California resi- wasn't physically present in a foreign country for 330 dent in 2023. She temporarily worked in Medford as a days. He must file a full-year resident return for 2023 computer consultant for two months in 2023. Misha is and 2024 as well as 2022. a nonresident of Oregon. She will pay Oregon tax on Bona fide residence test. To meet the requirements of the income she earned in Oregon. California will also the bona fide residence test, you must: tax Misha’s income because she is a resident of that state. Because both Oregon and California will tax Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign her income, Misha may claim a credit for taxes paid country, and to another state. For information about this credit, see Maintain a bona fide residence for an uninter- “Income taxes paid to another state.” rupted period that includes a full tax year. Example 2: Nash is a permanent Nevada resident. He Example 3: Sandra is a calendar-year taxpayer. has rental property in Oregon. Nash is a nonresident She establishes a bona fide residence in Russia on of Oregon. He will pay Oregon tax on the income August 12, 2022. On June 10, 2023, she moves out from his Oregon rental property. of her residence and spends six weeks at a hotel in Part-year residents Alaska. On July 22, 2023, she establishes a bona fide residence in South Korea. She is transferred back to If you were domiciled in Oregon for part of the year the United States on May 8, 2024. She doesn’t meet the and in another state for part of the year, you were a requirements of the bona fide residence test because part-year Oregon resident. Oregon taxes all of your she doesn’t maintain a bona fide residence for an income for the part of the year you were an Oregon uninterrupted period that includes a full tax year. resident. Oregon also taxes any income earned in 150-101-431 (Rev. 06-17-24) 14 Filing an Oregon return Oregon or received from Oregon sources for the part extension payment must be received by April 15, 2024, of the year you were a nonresident. to avoid penalties and interest. Download Publication OR-40-EXT from our website or contact us to order it. Example 1: Gustav was a resident of Minnesota through July 21. On July 22, he moved to Oregon and Whether you owe tax or are expecting a refund, mark established a new domicile here. Gustav is considered the “Extension filed” box on your Oregon return and to be a part-year Oregon resident for the tax year. file your return by October 15, 2024. Example 2: Tiffany is a resident of Oregon, but works in Alaska six months of the year. She returns to her Which form do I file? home in Oregon when the job is complete. Tiffany isn’t considered a part-year Oregon resident because Oregon has three types of personal income tax forms. she doesn’t abandon her Oregon domicile when she The form you use depends on your residency status. works in Alaska. Resident—Form OR-40 Use Form OR-40 if you are a full-year Oregon resident. Extensions of time to file Part-year resident—Form OR-40-P If you can’t file your Oregon return by the due date, you may be able to get an extension of time to file. For Use Form OR-40-P if any one of the following is true: 2023 returns, this means you have until October 15, You are a part-year resident; or 2024 to file. You are filing jointly and one spouse is a full-year An extension of time to file your return Oregon resident and one is a part-year resident; or doesn’t mean you have more time to pay You qualified as an Oregon resident living abroad for part of the year. your taxes. You must pay any tax you expect to owe by April Nonresident—Form OR-40-N 15, 2024. If you don’t, you will owe interest on the Use Form OR-40-N if any one of the following is true: unpaid balance from April 15, 2024 until the date it’s paid, and will be subject to a minimum penalty You are a nonresident; or of 5 percent of the unpaid tax. To avoid penalty and You are a special-case Oregon resident (see “Resi- interest charges, include enough payment with your dency”); or extension to cover your tax liability. Once you file You and your spouse are filing jointly and one (or your return, if you have overpaid, we'll refund the both) of you is a nonresident; or overpayment. See “Interest and penalties” for more You meet the military personnel nonresident information. requirements (see “Military personnel filing infor- mation”); or Were you stationed in a designated combat You qualified as an Oregon resident living in a for- zone? eign country for the entire year (see “Residency”). If you were in the military and stationed in a desig- You may need to file supplemental schedules or forms, nated combat zone, you may qualify for an automatic depending on your circumstances. extension of time to file your return. See “Military Nonresident trusts. If you file a federal Form 1040- personnel filing information.” NR and you’re filing an Oregon return for a nonresi- Was your home or business located in a dent trust, you must file using Form OR-41. Don’t file presidentially-declared disaster area? using Oregon Form OR-40-N. Did you receive additional time to file your federal Sales of Oregon real property by tax return and pay your federal tax? If so, you may nonresidents qualify for additional time to file your Oregon return Withholding on real property sales. Authorized and pay your Oregon tax. Check the “Federal disas- escrow agents may be required to withhold taxes ter relief” box on your return. due when a nonresident sells real property located Extension for filing returns in Oregon. Unless an exception applies, once escrow closes, the agent must withhold and remit the least of: Oregon accepts your federal extension. If you didn’t request a federal extension, but you need more time to Four percent of the consideration; file your Oregon return and you owe tax, see Publica- The net proceeds from the sale; or tion OR-40-EXT, Instructions for Automatic Extension of Eight percent of the gain includible in Oregon tax- Time to File Oregon Individual Income Tax Return. Your able income. 150-101-431 (Rev. 06-17-24) 15 Filing an Oregon return For more information about this requirement and its Nonresident withholding. A PTE must withhold tax exceptions, see the instructions for Form OR-18-WC, on a nonresident owner’s share of Oregon-source Report of Tax Payment or Written Affirmation for Oregon income if the nonresident owner elects not to be Real Property Conveyance, available on our website. If included on Form OR-OC, unless the nonresident required, the nonresident transferor uses Form OR- owner’s share of Oregon-source income is less than 18-WC to calculate their gain or claim an exemption $1,000 or other exceptions listed in ORS 314.784 apply. from withholding, then gives the form to the escrow For more information, see the instructions for Form agent. The escrow agent completes the rest of the OR-19, Annual Report of Pass-through Entity Owner Tax form and submits it and any required payment to the Payments. department. Keep a copy of this form for your own records. Filing status Pass-through entities (PTEs) Partnerships. Except for publicly-traded partner- General rule ships taxed as corporations, every partnership with The filing status on your Oregon return must be the one or more Oregon resident partners, and every same as your filing status on your federal return, partnership having income or loss derived from unless you’re married and have a different residency or connected with Oregon sources, must file Form status than your spouse or you’re an RDP who isn’t OR-65, Oregon Partnership Income Return. Partnership married. income is generally taxable to the partners rather Example 1: Minerva filed her federal return using the than the partnership. See the Form OR-65 instruc- tions for further details. Note: Oregon follows fed- filing status of single. She must use the single filing eral filing guidelines including the due date for fil- status on her Oregon return. ing a partnership return. If you aren’t required to Example 2: Peter and Della are married and both are file a federal partnership return, you don't need to full-year Oregon residents. They filed a joint federal file one for Oregon. return. Peter and Della must use the married filing S corporations. S corporations doing business in jointly filing status on their Oregon return. Oregon or receiving income from Oregon sources are Example 3: Tia and Colin are married and choose the required to file Form OR-20-S, Oregon S Corporation married filing separately filing status on their federal Tax Return. S corporation income is generally tax- returns. They must use the married filing separately able to the shareholders rather than the corporation. filing status on each of their separate Oregon returns. However, S corporations do pay Oregon tax on cer- tain kinds of income. For more information, see the Exception: Filing status for married instructions for Form OR-20-S on our website. taxpayers with different residency status LLCs. Oregon LLCs and foreign LLCs doing business If you and your spouse file a joint federal return but in Oregon are taxed and classified the same as for only one of you was an Oregon resident (either full- federal income tax purposes. year or part-year), you have a choice of two different filing statuses to use for Oregon: An LLC that chooses to be taxed as a corporation files Form OR-20, Oregon Corporation Excise Tax You and your spouse may file one Oregon return Return, or Form OR-20-INC, Oregon Corporation using the married filing jointly status; or Income Tax Return. You and your spouse may each file a separate A multiple-member LLC that chooses to be taxed Oregon return using the married filing separately as a partnership files Form OR-65. status. A single-member LLC that chooses to be taxed as You may not file as head of household (ORS 316.122). a sole proprietorship and files Schedule C, Sched- ule E, or Schedule F with their federal individual Note: This exception doesn’t apply to unmarried income tax return files the same way for Oregon. RDPs or married non-U.S. citizens without perma- nent resident status because these taxpayers may not PTEs with nonresident owners file joint federal returns. For information on RDP fil- (ORS 314.778, 314.784) ing, see “Registered domestic partners.” Composite tax return. A PTE must file Form OR-OC, Which forms do we file? Oregon Composite Return, on behalf of nonresident owners who elect to be included on the return. For Use Table 3 to determine which return form to use if forms and instructions, see our website. you file a joint return or separate returns for Oregon. 150-101-431 (Rev. 06-17-24) 16 Filing an Oregon return Table 3. Spouses with different residency status to determine your federal tax subtraction, with the applicable AGI limitation. Spouses’ If you file a If you file residency joint return, separate Itemized deductions. Multiply each itemized deduc- status: use: returns, use: tion by your percentage to compute the amount to include on your separate Schedule OR-A, Oregon Part-year and OR-40-N Itemized Deductions, if you can't clearly determine nonresident Each spouse each spouse’s deductions. For more information Nonresident about itemized deductions, see the instructions for uses the form and full-year OR-40-N Schedule OR-A. that matches resident their individual Standard deduction. The Oregon standard deduc- Part-year and residency status full-year OR-40-P tion is $2,605 for each spouse. resident Age 65 or older, or blind. Each taxpayer is entitled to an additional deduction if they turned 65 on or Note: If you file separate federal returns, you must before January 1, 2024, or if they’re blind. The addi- file separate Oregon returns. If you are a married tional deduction is $1,000 for married taxpayers nonresident without Oregon income, and you and filing separately. A taxpayer who is both age 65 or your spouse are filing separate returns, you aren’t older and blind may claim two additional deduc- required to file an Oregon return. tions plus the basic standard deduction. Exception: If one spouse claims itemized deduc- What information goes on each return? tions, the other spouse can’t claim the standard On each spouse’s separate Oregon return, enter the deduction. The other spouse may only claim item- filer’s name and Social Security number first, then ized deductions. the spouse’s name and Social Security number. Mark Exemption credits. You can’t prorate exemptions. the “Married filing separately” box. You may claim exemptions for yourself and any “As if” federal returns. You must include an “as if” dependents allowed on your federal return. You can’t federal return showing how the return would have claim an exemption for the same dependent claimed appeared if you had filed a separate federal return, on your spouse’s return. along with a copy of the joint federal return that you Example: Jim worked and lived in Oregon all year. actually filed. Label the “as if” federal returns and Mary moved from Idaho to Oregon in July and mar- mark the “Calculated using ‘as if’ federal return” ried Jim. They filed a joint federal return and are fil- box on each Oregon return. If you are filing paper ing separate returns for Oregon. Mary earned $30,000 returns, mail both Oregon returns, the “as if” federal in Oregon and $22,000 in Idaho. Jim earned $41,000 in returns, and the actual federal return in the same Oregon. Their total federal AGI was $93,000. Jim and envelope, but don’t staple them together. Mary claimed the standard deduction on their joint Income and deductions. You and your spouse each federal return. They had $12,200 in Oregon itemized report your own share of income and deductions. deductions, including $4,000 in property tax and Also, report your share of any Oregon additions, sub- $6,400 in mortgage interest on their Oregon home, tractions, modifications, or adjustments, including and $1,800 in charitable contributions. Their joint fed- the federal tax subtraction. eral income tax liability was $14,400. Jim, a full-year Oregon resident, files Form OR-40 and reports his Use the following guidelines when preparing your income of $41,000. On the return, he enters his own return: name and Social Security number (SSN) first, then Your percentage. Use this formula to compute your enters Mary’s information, and marks the “Married share of certain deductions: filing separately” box. He creates an “as if” federal return, marks the “Calculated using ‘as if’ federal Your share of federal AGI Your percentage = (not to exceed 100%) return” box on the Oregon return, and claims the fol- Joint federal AGI lowing federal tax liability and deductions: If your share is less than $0, your percentage is 0. His share: $41,000 ÷ $93,000 = 0.44 (44%) Federal tax subtraction. Each spouse may subtract Federal tax: 0.44 × $14,400 = $6,336 their portion of the federal tax liability on their joint federal return. Multiply the joint federal tax liability (His subtraction is limited to $3,900; see “Federal (after all credits except the EIC) by your percentage income tax liability” in “Subtractions.”) 150-101-431 (Rev. 06-17-24) 17 Filing an Oregon return Oregon itemized deductions: a resident of California, a community property state. Property tax: 0.44 × $4,000 = $1,760 They maintain separate households, don’t combine funds, and have no plans to get back together. They Mortgage file a joint return with the IRS. When Paul files his interest: 0.44 × $6,400 = $2,816 separate return for Oregon on Form OR-40, he doesn’t Charitable have to include any community property income contributions: 0.44 × $1,800 = $792 because California’s community property laws don’t Total Oregon itemized deductions: $5,368 apply to him and Marie. Jim will have Oregon itemized deductions of $5,368. Example 2: Renton is an Idaho resident. His wife, He follows the line instructions for Oregon Form Julie, lives in Oregon. Julie plans to move to Idaho OR-40 and Schedule OR-A to complete his return. next year, but for now they will live separately. Julie’s income for the year is $40,000 in wages, $3,000 in cap- Mary, a part-year resident, files Form OR-40-P and ital gain, and $100 in interest. reports $52,000 federal AGI ($30,000 from Oregon sources). On her return, she enters her own name and Because Renton is domiciled in Idaho, he and Julie SSN first, then enters Jim’s information, and marks are subject to Idaho’s community property laws. His the “Married filing separately” box. She creates an “as income for the year is $60,000 in wages and $500 in if” federal return, marks the ”Calculated using 'as if' interest. They plan to file a joint return with the IRS, federal return” box on the Oregon return, and claims but aren’t sure whether they want to file jointly for the following federal tax liability and deductions: Oregon. Her share: $52,000 ÷ $93,000 = 0.56 (56%) If they file a joint return for Oregon, they will file on Form OR-40-N. The Oregon column will contain Federal tax: 0.56 × $14,400 = $8,064 all of Julie’s income, because Oregon taxes all of her (Her subtraction is also limited to $3,900.) income from all sources. In addition to Julie’s sepa- rate income, she has $30,250 of community property Oregon itemized deductions: income for the year—half of Renton’s wages and Property tax: 0.56 × $4,000 = $2,240 bank interest. Line 34F (federal column) of their joint Mortgage Form OR-40-N is $103,600, which is equal to their interest: 0.56 × $6,400 = $3,584 federal AGI. Line 34S (Oregon column) is $73,350— Julie’s wages, capital gain, interest, and community Charitable property income ($40,000 + $3,000 + $100 + $30,250). contributions: 0.56 × $1,800 = $1,008 They are also eligible for a credit for taxes paid to Total Oregon itemized deductions: $6,832 Idaho on Julie’s mutually-taxed income of $30,250. (See “Income taxes paid to another state on mutually- Mary will have Oregon itemized deductions of taxed income“ for more information on this credit.) $6,832. She follows the line instructions for Form OR- 40-P and Schedule OR-A to complete her return. If they file separate returns for Oregon, Julie will file using Form OR-40. Julie will fill out an “as if” federal Married filing separately with community return as if she had filed separately. She will include property income $73,350 in separate income and community property An Oregon resident whose spouse lives in a commu- income. This amount flows through to Line 7 of her nity property state may have community property Oregon Form OR-40. She is eligible for a credit for income that is taxable by Oregon. There are nine com- taxes paid to Idaho, because she must also file a non- munity property states: Arizona, California, Idaho, resident Idaho return to report her community prop- Louisiana, Nevada, New Mexico, Texas, Washington, erty income of $30,250. and Wisconsin. Example 3: Kevin lives and works in California and Some residents of community property states aren’t is subject to California’s community property laws. subject to community property laws for various rea- Lori, his wife, moved to Oregon with their kids two sons. You will need to check with your community years ago. Kevin supports them and will be ready to property state for details. IRS Publication 555, Com- transfer to Oregon within the next two years. Kevin munity Property, also contains information that may has $110,000 in wages. Kevin and Lori have joint be helpful to you. income of $2,000 in interest and $4,000 in capital gain. Lori has separate income of $5,000 from her business. Here are examples of how to file for Oregon: They decide to file separate federal returns. Lori’s Example 1: Paul and Marie are married, but they are federal AGI is $63,000: half of Kevin’s wages, half of legally separated. Paul is an Oregon resident. Marie is their joint income, and all of her business income. 150-101-431 (Rev. 06-17-24) 18 Filing an Oregon return Kevin’s federal AGI is $58,000; half of his wages and 2. Use