Okay, so I downloaded the 2018 2-D 511NR Oklahoma form from their website (it does the calculations for you as you input). For the sake of argument, I entered numbers as would appear from my federal 1040 appropriately and I will pretend that my losses equal my winnings.
When I input the numbers into the 511NR-1 worksheet, I put my Texas income and Oklahoma gambling winnings combined in Line 1 on the federal amount, and only the Oklahoma gambling winnings on the OK Amount.
On Line 16 (Total Federal Adjustments to Income) I put my total federal adjustments (deductions) on the federal amount, but on the Oklahoma amount I put only the federal adjustments that apply to the Oklahoma sourced income (i.e. the gambling losses only; no mortgage interest, taxes, etc).
I then went to the 511NR-D and input my federal deductions. Once those numbers are in, the form automatically limits your deduction to the Oklahoma limit of $17,000. At this point, when I go back to the tax owed for the year on Line 44 on the main form, it says 0 (yes ZERO).
To test my theory as to why I am upset, I removed the Federal adjustments to income from the 511NR-1 worksheet out and let the form recalculate (I am not even sure I am allowed to use that line for anything related to deductions anyway; but it does not really specify in the instructions).
When the form recalculates the new amount, it is obviously very high. I checked my theoretical number on the Oklahoma tax table to see which income level it corresponds to. I will not disclose my exact numbers, but I will tell you the income level it indicated is within 10% of the actual gambling winnings.
The issue I have with that, is there is basically no deduction of any losses whatsoever, and the ratio it is using between Oklahoma source income (gambling winnings) and my own income from my home state, means that I am unfairly getting taxed on part of my own income in a nonresident state! Complete crap! If this wasn't the case, the Oklahoma deduction (capped at $17,000) would take more of tax burden away than what it calculates.
I think I may need to talk to an actual lawyer in this case because it is one thing to tax fairly on the income minus deductions, but completely another to either:
1.) Not explain forms enough for someone (including tax professionals to enter correctly) and tax more on the average person's lack of understanding
2.) Use shady formula's on someone who does input the information correctly, but still calculates more of a tax bill than seems fair or legal.
