LIve in Idaho, Work in Oregon, but working from home in 2020

[AK2ID74]

I live in Idaho and work in Oregon. My employer withholds income taxes for Oregon from my paycheck. In a normal year, I file a tax return in both states, but only pay tax in Oregon for my W2 income. In 2020, I've been working from home (in Idaho) since March. My employer has continued to withhold Oregon taxes. Oregon has a higher income tax rate than Idaho. Can I claim my income from March - December was earned in Idaho and pay Idaho's lower rate?

[TomD8]

<<Can I claim my income from March - December was earned in Idaho and pay Idaho's lower rate?>>

Yes, that is exactly what you should do.  The income you earned by working remotely in ID is taxable only by ID, not by OR.  OR does not tax non-resident remote workers who work outside the state.

Only the income you earned by physically working in OR is taxable by OR.  ALL your income is taxable by your home state of ID.  On your non-resident OR return, allocate only the income you earned when you were actually working in OR.

You'll be able to take a credit on your ID return for the taxes paid to OR on the portion of your income that is taxable by both states.  In TT, be sure to complete your non-resident state return first, before you do your home state return, so that the credit is applied properly.

[AK2ID74]

Thank you for your answer!  Does anyone know how to successfully split my income on my state returns in TurboTax Premier?

[LenaH]

If you need to allocate a portion of wages to Oregon, you will have to indicate that you made wages in another state in your Personal Information section and also add a nonresident return. 

Please follow these steps in TurboTax:

1. With your return open, select My Info in the left-hand menu.
2. Confirm you and your spouse have Idaho as your resident state. 
3. Scroll down on the Personal info summary screen to Other State Income, and select Edit.
4. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state of Oregon is selected from the drop-down.
5. Select Continue to return to your Personal info summary.
6. Click on State on the left-hand side.
7. Add Oregon. 
8. Follow the on-screen instructions.
9. On the screen Oregon Source Income and Adjustments enter your Oregon Wages in the corresponding box. 
10. Click continue

I have attached a picture for additional reference of the screen in which you allocate wages as stated in step #9.

@AK2ID74

[208Joshua]

For me it it just the opposite, I work remotely in Oregon for a company in Idaho. Does Idaho tax non-resident remote workers who work outside the state?

[BillM223]

No, Idaho does not tax people working remotely for Idaho companies.

You will pay your tax to Oregon.

[208Joshua]

Great, thank you. Do I need to file a return in both states...or just Oregon?

[ErnieS0]

You only have to file an Oregon return @208Joshua unless you had any Idaho tax withheld. If ID tax was withheld, then you would file a nonresident ID return to claim a refund. Otherwise, just file OR.

[208Joshua]

Great, thank you!

[rjwandkew]

Just saw this response and am thinking we made a mistake on my husband's W4. 

He works remote from our home in AZ for a company in Idaho.
He has had Idaho state income taxes pulled all year.

How do I get it back? On Turbotax it is not asking me the correct questions to remedy this. 

Please let me know if we were  or were not supposed to pay to Idaho while not living there (ever) and my husband working remote. 

[DoninGA]

@rjwandkew In the My Info/Personal Info section enter that you made money in other states and enter the state as Idaho.

In the TurboTax program you need to complete the non-resident Idaho state tax return before completing your resident state tax return.  On the Idaho return you enter 0 income so that you will get all the Idaho state taxes withheld as a tax refund.

[TomD8]

@rjwandkew —

if your husband still has the same work situation, he should ask his employer to begin withholding AZ taxes (and to cease withholding ID taxes).  If they are unable to withhold AZ taxes, you will need to make quarterly estimated tax payments to AZ.  
As long as he never physically works in ID, his income is not taxable by ID.  It is of course 100% taxable by your resident state of AZ.

https://azdor.gov/forms/individual/individual-estimated-tax-payment-form