I understand the state of oregon that we will be taxed at 8.5% income tax on our stimulus payments - where do I input this?

[guyhavingtaxfun]

I believe I understand how the federal and oregon state forms should handle the stimulus payments.  On my federal form things seem to be handled correctly and in fact i'm happy to see a credit i didn't realize i would get from the federal calculations.  However on my Oregon form 40 line 10 I am still getting the $6950 deduction.   My understanding is that the $6950 should be reduced by $3600.     Any reason why?  Anyone else seeing this behavior.

[guyhavingtaxfun]

More information and better understanding:   In the Oregon tax form the stimulus deduction is entered in the Fed Tax Liab Worksheet.   If your federal tax liability is large enough (e.g. in my case greater than $6950+$3600 = $10550). Then you will still receive the maximum $6950 tax liability deduction on Oregon 40 line 10.   I believe some of the local press implied otherwise but the forms don't lie. 

[Aldona123]

Guyhavingtaxfun,

The federal tax liability worksheet makes you SUBTRACT credits from you tax liability, not add them.  In your example you are ADDING the credits.  If your federal tax liability is $6950, and you received stimulus in the amount of $3600, then your OR40 line 10 would be $3350.  Maybe you didn't answer the questions on the Federal side regarding RECEIVING the stimulus.  If you answered NO you didn't receive a stimulus, then the $3600 would not have been SUBSTRACTED from your tax liability subtraction on OR40 line 10.

[guyhavingtaxfun]

Sorry for the confusion.   You misunderstood my text.   My point was that if your fed tax liab is something over $10550 then you Subtract the $3600 and you are still over $6950 and then receive the whole $6950 deduction.