Do I need to file an Oregon State Tax Return?

[Melymel12]

Hello, I am from Oregon but am working/living in Canada right now. All of my income comes from Canada. I don’t make any money in Oregon, but I do still have connections there such as driver’s license, registration, etc. Even thought I don’t make any money in Oregon, do I need to file state taxes or just federal? 

[rjs]

Are you an Oregon resident? See "Residency" on pages 5 - 6 of the Form OR-40 Instructions. If you are not an Oregon resident, and you have no income from any Oregon source, you do not have to file an Oregon tax return.

Note that the definition of an Oregon resident does not mention your driver's license or registration.

[Melymel12]

Yes I am still a full time resident of Oregon, but I do not work or make any money in Oregon. I work and live in Canada and my income is in CAD currency. 

[rjs]

If you meet the definition of an Oregon resident, then you must file an Oregon resident tax return. You have to pay Oregon tax on all of your income, no matter where the income is from.

It doesn't matter what currency you are paid in. But on your U.S. federal and state tax returns, you must convert all the foreign currency amounts to U.S. dollars. See the following page on the IRS web site for more information.

Foreign Currency and Currency Exchange Rates

[Melymel12]

I have to pay Oregon tax on the foreign income even though I am claiming the foreign Income exclusion on my federal taxes? Or would the exclusion apply to the Oregon taxes as well? 

[rjs]

You said you are an Oregon resident, but you also said you live in Canada. The definition of Residency that I referred you to earlier says the following (on page 6).

"Oregon residents living abroad. You're considered a nonresident if you're a qualified individual for purposes of the federal foreign earned income or housing exclusion for U.S. residents living abroad."

If you are not clear about your Oregon residency status for income tax purposes, you may need to discuss the details of your situation with a tax professional who is familiar with Oregon tax laws.