Oregon Part-year Resident--Social Security Income Subtraction

[tjenns1]

For an Oregon return for a part-year resident, the screen for Oregon Source Income shows federally-reported Social Security Income and asks for the Oregon share.  Under Oregon Miscellaneous Adjustments, there is an entry for "Other Subtractions," but no link there to SS income and no other apparent way to subtract or exclude SS income from Oregon income.

The Oregon Dept of Rev webpage clearly states Oregon does NOT tax SS income.  Further, Oregon 2021 Form OR-40-P, Subtractions line 32F, asks for SS benefits under federally-reported income included on line 19F, and lines 34F and 34S ask for federal and Oregon income minus the SS subtraction.  The Oregon entry with SS excluded is used for computing Oregon taxes.  Same with 2020 Form.

How do I delete SS income from my Oregon income without pretending I received no SS income while an Oregon resident, or keying in an otherwise unidentified subtraction?

[AmyC · Accepted solution]

When you enter the Social Security amount for the time you lived in Oregon, that should trigger the subtraction. You can't leave that spot blank. You know when you lived in Oregon and how much your social security payments are. You can do the math. Or are you saying you did enter the OR portion and the program is not picking it up as it should?

[tjenns1]

Thank you.  I'm convinced you are right.  I should have looked at how Turbotax was filling out my forms.  When I look at the forms mode, they are following all of the steps, including subtracting the social security from the federal tax figure that is ultimately multiplied by the Oregon %.  So it's all imbedded in the Turbotax program.  I'm not sure I understand why Oregon calculates the Oregon % with some SS in the Oregon numerator but not in the federal denominator but I assume it makes sense.

[tjenns1]

BTW, I was originally able to enter "0" as the Oregon SS share and my taxes went down; I thought that was because my SS wasn't being taxed but it was really because my Oregon % went down.

[AmyC]

Glad you have it working!

[skydealer]

It does NOT subtract it.  When I enter my portion of what I earned in Oregon it taxes it, even though Oregon does not tax SS.

If I leave it blank it shows up as an error on form 40P.  This needs fixed on this edition of TurboTax.

[AmyC]

I have  created a part year return with Social Security. I entered a portion as received in OR.

Look at your part year OR as I go through what I made.

• Line 31 Federal income and OR income - yes, Social Security is in the totals for OR and the taxable portion is in the federal.
• Line 32 removes the taxable Social Security
• Line 33 other subtractions
• Line 34 federal income minus all social security minus other subtractions
• Line 35 The percentage is OR income  calculation divided by line 34. The OR amount includes the taxable portion of Social Security you earned while in OR since it is taxable income to the federal.
• Line 36 is line 34 again and so the return continues.
• Line 44 tax on income
• Line 45 is your OR % from line 35 times line 44.

Your Social Security is not included in the taxable income but could be included in the OR income for the percentage calculation.