I live in WA and work in OR. I spent 80% of my time last year working from home. WA has no income tax. Can I get a credit on my OR state taxes?

Forum|Forum|4 years ago
January 30, 2022
4 replies
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TurboTax Deluxe Online

Best answer by DMarkM1

Yes. According to OR law, you will exclude OR income based on the number of days you actually worked in OR. Take your total income from the OR company W2 box 1 and divide by 250 (working days in the year). Multiply the result by the number of days you physically worked in OR. The result will go in the OR box for wages in your non-resident OR state return.

DMarkM1Answer

Level 15

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Opus 17

Level 15

You don’t get a credit. But you should only pay Oregon tax on income that you earn while you are living or working in Oregon. You don’t pay Oregon tax on income earned while you are living in Washington, even if the company is based in Oregon.

You should be filing a non-resident Oregon return. TurboTax should detect from your address that you live in Washington and ask if you had income in other states. When you say yes, TurboTax should ask if you lived in the state or if you were a visitor or non-resident. If you are a non-resident, then when you get to the Oregon State tax module (after entering all your federal information) TurboTax will ask you to manually allocate each type of income you received based on where you received it. Bank interest or investment income is all Washington income because your permanent home is Washington. For your job, you will have to manually tell TurboTax what percentage of your salary was earned while you were living in Oregon. You will have to perform this calculation yourself. Count the number of days that you lived or worked in Oregon and divided by the total number of days you worked in 2021 to get the correct percentage.

If you are paying Oregon tax on all your income and were not asked to allocate your income, then you have mistakenly prepared a return as if you were a full year Oregon resident. Delete your Oregon tax return and start over.

Chiltonw

Level 2

So if we live full time in wa and she works fulltime in oregon we should be able to get back much of the taxes she paid while working there? Or is it only for days worked from home in Wa that she would be able to deduct?

Opus 17

Level 15

@Chiltonw

if your wife is a non-resident of Oregon, she must file an Oregon non-resident tax return, and she will pay income tax on all of her Oregon-source income. For a W-2 worker, Oregon source income is income that is paid to her while she is living or working in Oregon. It would not include bank interest, investment income, gambling prizes, or other income because that is allocated to her home state. But that means that if she works full-time in the state of Oregon and does not work from home, then all of her job income will be considered Oregon income.

I believe that you may file a federal joint tax return, indicate that you live in the state of Washington. TurboTax will ask if either you or your spouse earned income in another state, and you will indicate Oregon. Then, you will be required to manually tell TurboTax how much income is allocated to Oregon, and how much is allocated to Washington. You would allocate 100% of your spouses working come to Oregon, but your income, and other family income, that is not considered Oregon source of income would be allocated to Washington.