Non Resident Income State Allocation from Oil Lease
for the Oklahoma state income I am on the screen that pulls in the Federal amount I was paid for a oil and gas mineral lease. I am being asked to "Enter the portion of the Oklahoma Federal Income items." I do not own the property. The 'learn more' section says this for what to enter in this section but I am NOT a resident - so do I put $0 here for Oklahoma?
"Dividing (Allocating) Income
When doing a part-year resident state return, it's necessary to divide (allocate) the income and/or deductions reported on your federal return. That's because we need to know how much of your total income is taxable to the state, or if we can help you get an additional state deduction.
Here's how it works:
- First, we bring over your federal totals for any items that need to be allocated on your state return
- Next, we need to know how much of those totals can be identified with the state
- If we already know those specific dollar amounts, we'll include them for you; otherwise, enter them in the space provided
Once we have that information, we'll go ahead and make the necessary changes to your state return.
How do I know how much to allocate?
There are three different ways to allocate, depending on the item:
1. Go by the income you earned while you lived in the state
Example:
Say you're self-employed and earned an annual total income of $40,000, which we bring over from your federal return.
Of that amount, $30,000 was made while you lived in state A, and $10,000 was made while you lived in state B.
In your part-year return for state A, you'd allocate $30,000 to state A by entering that amount. The $30,000 is what's taxable to state A (what you made during the time you lived there).
In your part-year return for state B, you'd allocate $10,000 to state B by entering that amount. The $10,000 is what's taxable to state B (again, what you made during the time you lived there).
2. If method #1 isn't practical, go by the time you spent in the state
Example:
Throughout the year, say you received $1,200 in interest income, which we bring over from your federal return. You lived in state A from January through April 30, and then moved to state B on May 1.
Since it may be hard to tell how much of this interest income was earned while you lived in each state, it's OK to allocate according to the time you spent in each state.
In your part-year return for state A, you'd allocate $400 to state A by entering that amount. The $400 is taxable to state A (for the four months you lived in the state).
In your part-year return for state B, you'd allocate $800 to state B by entering that amount. The $800 is what's taxable to state B (for the eight months you lived in the state).
If you received interest income while living in just one state, then all of that interest is taxable only in that state.
3. Go by an association with the state (usually applies to deductions)
Example:
Say you are a member of the Armed Forces and you moved from state A to state B during the year. The move cost you $2,000.
When doing your federal tax return, you take a $2,000 deduction for moving expenses.
In your part-year return for state A, you wouldn't allocate any of the deduction amount.
But in your part-year return for state B, you'd allocate the full $2,000 deduction amount to state B because that's the state you moved to (the one that's associated with the deduction)."
