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smartodmart
New Member

I live in Oregon but earned income in California only last year. Do I need to file taxes in Oregon and California?

If I file a federal tax return do I have to file a state return?

1 Best answer

Accepted Solutions
MiriamF
New Member

I live in Oregon but earned income in California only last year. Do I need to file taxes in Oregon and California?

Yes, if you are an Oregon resident but only earned income in California, then you must file returns in both states if you were in California when you earned the income.

Were you physically present in California? You must have been physically present when you were earning the income in order for it to be taxable in California. If you earned all the income while you were sitting at your desk in Oregon, then you will not need to file a California tax return.

If you traveled to California and your work required you to stay overnight, then your travel expenses are deductible to the extent they were not reimbursed. The IRS allows you to deduct travel expenses, lodging, and half of the cost of meals and incidental expenses. If you didn't save receipts, you can use a per diem.

You can find more information about rules and where to enter the information in TurboTax in the link below. 

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3 Replies
MiriamF
New Member

I live in Oregon but earned income in California only last year. Do I need to file taxes in Oregon and California?

Yes, if you are an Oregon resident but only earned income in California, then you must file returns in both states if you were in California when you earned the income.

Were you physically present in California? You must have been physically present when you were earning the income in order for it to be taxable in California. If you earned all the income while you were sitting at your desk in Oregon, then you will not need to file a California tax return.

If you traveled to California and your work required you to stay overnight, then your travel expenses are deductible to the extent they were not reimbursed. The IRS allows you to deduct travel expenses, lodging, and half of the cost of meals and incidental expenses. If you didn't save receipts, you can use a per diem.

You can find more information about rules and where to enter the information in TurboTax in the link below. 

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mrandmrsotter
New Member

I live in Oregon but earned income in California only last year. Do I need to file taxes in Oregon and California?

@MiriamF I'm not sure if the advice about remote work is still accurate.

 

See: https://money.stackexchange.com/questions/95243/is-self-employed-work-performed-out-of-state-for-a-c...

 

You have to file and pay taxes in California for your income received from California based clients, even though no services were performed inside of California. See California's OTA ruling on Bindley [i]. Bindley is important because it comes one year after a similar case, appeal of Larsen, where the OTA reached the opposite conclusion. Bindley took precedential status, Larsen did not. Therefore, Bindley is the rule going forward.

[...]

Sources
[i] In the Matter of the Appeal of Blair S. Bindley, OTA Case No. 18032402 (May 30, 2019).
[ii] See 18 Cal. Code Regs. § 17951-4.
[iii] 18 Cal. Code Regs. § 17951-4(b).
[iv] 18 Cal. Code Regs. § 17951-4(b).
[v] Appeal of Bindley, OTA No. 18032402, at 6 (May 30, 2019).
[vi] Cal. Rev. & Tax. Code § 25136.
[vii] See 18 Cal. Code Regs. § 25136-2(c).

TomD8
Level 15

I live in Oregon but earned income in California only last year. Do I need to file taxes in Oregon and California?

@mrandmrsotter --  Note that the Bindley ruling applies only to non-resident sole proprietors (who receive a 1099-MISC), not to non-resident employees (who receive a W-2).

 

@smartodmart  --

You must file in both states.

Your home state of Oregon can tax ALL your income, regardless of where you earn it.  Therefore you must file an Oregon tax return.

California can tax you as a non-resident on any California-source income.  Income you earn by working in CA is CA-source income.  Therefore you must ALSO file a non-resident CA tax return.

In TurboTax, be sure to complete the OR return first, before you do the CA return.  CA will then give you a credit for taxes paid to OR on the CA-source income, so that you're not double-taxed.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

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