New Job With a Change in State

[abartoloni]

Hello!

Firstly, thank you so much for doing this!

I am an Oregon resident, who typically pays income tax with her salary. I have switched to a job that is based out of Washington (no income tax), with a company who's headquarters is in Illinois (apologies for the complication). I am currently paying no income tax, due to being in Washington and not working in Illinois. Will I have to pay Oregon income tax, even though my job is in Washington? Will I have to pay to Washington or Illinois as well? Due to this complication would you recommend working with someone to help me with my taxes this year? To give you context, I do not make exorbitant amounts of money, and do not own property, so typically my taxes are fairly easy to complete on my own. 

Thank you!
Amelia 

[JaredS_CPA · Accepted solution]

Hello abartoloni,

Thank you for participating in our Ask the Expert event. You ask a very good question and are wise to look into it now so you won't be surprised come tax time. I understand your question, but what isn't clear is if you work from home or commute to Washington State for your job. It really doesn't matter for your specific situation, but having all the facts helps.

Regardless, let's approach this in steps:

1. We can disregard Illinois because it doesn't matter where the home office is, only where you physically work.
2. We can also disregard Washington because it does not tax personal income.
3. Then, you may be tempted think that because Washington doesn't tax personal income that you are okay, but...
4. Oregon taxes all income regardless of where you earned it, which is why whether you work from home or commute doesn't really matter in this situation.
5. So...I would ask your HR department if they can withhold and transmit Oregon state taxes. If not, I would recommend paying estimated taxes to Oregon throughout the year.

To help rectify in your mind this perceived injustice of having to pay Oregon taxes on Washington income 🙂 ... pretty much all the states that tax personal income do it, but may have different methods and calculations in how they do it. Either way, you would never be double-taxed on that income because your resident state would give you a tax credit for any taxes you are required to pay to another state. Because you are not required to pay any taxes to Washington, Oregon gets it all.

I hope that helps and if you use TurboTax to file your taxes, it will walk you through how to handle this situation and you can even get live help from us if you desire. Good luck.

[abartoloni]

Hi There!

Thank you so much for your reply. I do commute to Washington to work, and do not work from home (I work in the healthcare field). 

I think I have heard through the grape vine that regardless of where you work Oregon takes its taxes, so unfortunately this is not surprising. I will reach out to my HR department, thank you for that tip! 

Thank you so much for the advice!