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:
- We can disregard Illinois because it doesn't matter where the home office is, only where you physically work.
- We can also disregard Washington because it does not tax personal income.
- Then, you may be tempted think that because Washington doesn't tax personal income that you are okay, but...
- 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.
- 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.
