Oregon state part-year resident tax on IRA distribution taken before residing in Oregon

[Fay56]

January 2024, while living in WA state, I took a distribution from my trad IRA and converted all of it into my Roth. Now that I have moved to Oregon, May 1, it appears OR is taxing 100% of that distribution.  Can this be right? Seems like a money grab since none of it was earned in OR and the transaction was completed prior to moving to OR.  

[SabrinaD2]

Oregon taxes residents on all income, regardless of where it was earned. If your Roth conversion was completed before moving to Oregon, it generally shouldn't be taxed by Oregon. However, if it was processed after you became a resident, Oregon may tax it.

For more details, you can refer to the Oregon Department of Revenue and the Oregon Administrative Rules.

[Fay56]

Thanks for the quick reply. I agree with you. However, despite me telling TurboTax that I moved to OR May 1 and it completed a part-year OR return for me, the return appears to use an amount including the distribution for calculations rather than the amount of my pension received while living in OR. The OR instruction booklet doesn’t clarify anything for me. Do I just trust TurboTax and move on?

[JustSomeone]

The part-year resident instructions from Oregon (https://www.oregon.gov/dor/forms/FormsPubs/form-or-40-n_or-40-p-inst_101-048-1_2024.pdf) are pretty clear that you should not be being taxed. Double-check the columns part of the return to make sure your conversion isn't being shown as happening during your Oregon time. 

[Fay56]

Thank you. I agree. In completing the OR part-year return on Turbo, my taxable income is pulled from my fed return 34F.  In the Oregon column 34S, I did not include the conversion$, only pension money received while living in OR. Yet line 36 of the OR return pulls the Fed number from 34F not the OR number from 34S to calculate OR taxable income. Maybe I should be using some alternate way to calculate OR tax as optioned in line 44 of OR return?  Any help is appreciated.