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dscottpierson
New Member

My son is an Oregon resident. He is a full time student in California and made $3480 in income at the school. Will he have to pay Oregon State income tax?

 
3 Replies
GeoffreyG
New Member

My son is an Oregon resident. He is a full time student in California and made $3480 in income at the school. Will he have to pay Oregon State income tax?

The answer to your question will depend upon whether or not your son is listed as a dependent on your tax return, or the tax return of anyone else -- or is instead not a dependent, and thus still retains his own personal exemption.

If the former is true, then the answer is yes, he will have to file tax returns in both California and Oregon, given the dollar amount ($3,480) you indicate as his earned income.  If the latter is true, then the answer is no, he will not have to file a tax return in either California or Oregon.

You (or he) can verify this conclusion for yourself by visiting the following California Franchise Tax Board website:

https://www.ftb.ca.gov/individuals/fileRtn/


as well as the following Oregon Department of Revenue website:

https://www.oregon.gov/DOR/programs/individuals/Pages/file-requirements.aspx


Please read those pages in conjunction with the accompanying income charts.

If your son does need to file these state tax returns (because his income is above the filing threshold), then you should also know the following information.

As an Oregon resident, he is otherwise taxed on all of his income, worldwide, no matter what the source, by the state of Oregon.  It is also a fact that income earned in California is considered "California-source" income; and so that requires paying taxes to California.

Normally, where a taxpayer has to pay taxes to two states on the same item of income (which often happens when a taxpayer lives in one state and has a wage-earning job in another state, for example), they are then allowed to take a tax credit on their home state return for taxes paid to the other state.  Similarly, the same principles typically apply to non-wage taxation by more than one state.

However, Oregon and California have a "special" relationship agreement when it comes to interstate taxation.  Instead of the usual method of claiming a state tax credit on the taxpayer's home state return, instead the tax credit here is claimed on the nonresident California return.

While TurboTax can certainly compute this tax situation correctly, it can be tricky.  The "ordering" sequence of state tax preparation is crucial.  In order to apply the state tax credit correctly, for the double-taxed income, he would want to complete his federal return first, his Oregon resident return second, and then his California nonresident return third.

(Normally, the nonresident state tax return is completed first, before the resident state tax return . . . but not in the case of the two-state pairing of California and Oregon.)

Thank you for your attention, and for asking this important question.

hansonrdh
Returning Member

My son is an Oregon resident. He is a full time student in California and made $3480 in income at the school. Will he have to pay Oregon State income tax?

Re: My son is an Oregon resident. He is a full time student in California and made $3480 in income at the school. Will he have to pay Oregon State income tax? And, also California income tax?

Hal_Al
Level 15

My son is an Oregon resident. He is a full time student in California and made $3480 in income at the school. Will he have to pay Oregon State income tax?

Yes.

The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state. You will have to file a non resident CA state return and pay CA tax on the income earned there.. You will also file a OR full year resident return and calculate tax on ALL your income. OR will give you a credit, or partial credit, for the tax you pay CA. So, there will be little or no double taxation, but you have the cost and hassle of filing two state returns. Do the nonresident state return first.

 

Filing Requirements: https://ttlc.intuit.com/questions/2903200-do-i-need-to-file-a-state-return

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