Moved to new state--after earning entire income in that state--and 0$ previous state refund/payment?

[swaminanda]

Just filed my 2021 return. I moved from Oklahoma to Texas midway through 2021 and indicated this during filing with TurboTax. The weird thing, I suppose, is that I worked remotely for a company in Texas before actually moving to Texas, so my entire year's income took place in Texas, even for the months I was still residing in Oklahoma.

Now, after reading posts from others who weren't able to e-file due to underpayment, I'm concerned something's gone wrong. The Oklahoma return listed my entire year's income (not just the portion when I actually lived in Oklahoma). I wasn't given the option to split the income anywhere in the return, despite inputting the date of my move and going back through the return three or four times.

There was no refund nor payment to Oklahoma listed in the return. Can this be accurate? I know I didn't earn anything from Oklahoma sources, but will they come after me for back taxes later? Will there be some crazy underpayment penalty?

[BillM223]

The Oklahoma Instructions for form 511-NR state:

"HOW NONRESIDENTS AND PART-YEAR RESIDENTS ARE TAXED

The Oklahoma taxable income of a part-year individual or nonresident individual shall be calculated as if all income were earned in Oklahoma, using Form 511-NR. The Federal Adjusted Gross Income (AGI) will be adjusted using the Oklahoma adjustments, allowed in 68 Oklahoma Statutes (OS) Section 2358, to arrive at AGI from all sources. The AGI from all sources is used to determine the taxable income. After the taxable income is calculated, it is prorated using a percentage of the AGI from Oklahoma sources divided by the AGI from all sources. This prorated tax is the Oklahoma tax."

It appears that TurboTax relies on the state income fields on your W-2 (boxes 15 through 17) to know how much income to assign to Oklahoma. In your case, I suspect that you had no tax withheld for Oklahoma, so the ratio of OK income to federal income was zero, so the amount of OK income on your return is zero.

However, the Oklahoma Instructions state (on page 5 of the above link):

"The Oklahoma source income of a part-year resident is the sum of the following: (1) All income reported on your federal return for the period you are a resident of Oklahoma, except income from real and tangible personal property located in another state, income from business activities in another state, or the gains/losses from the sales or exchange of real property in another state; and (2) The Oklahoma source income for the period you were a nonresident of Oklahoma."

You earned half of your income (or whatever amount) while still a resident in Oklahoma. Therefore, to do this right, you need enter the amount of your wages (were you an employee of that Texas company?) in box 16 on your W-2, and OK in box 15 (you may have to make up a number for the rest of box 15 - since no money was actually withheld in box 17, the number won't matter).

Now go through your Oklahoma return again, and see what happens. And if you were a contractor and not an employee come back and tell us.

[swaminanda]

Thank you!

I tried to go back in and amend my tax returns, but the problem became that TurboTax removed my entire Federal return and started asking how I wanted to pay the $800+ debt to Oklahoma. With the original federal return, I only ended up owing like ten dollars. I couldn't get the Federal return back to where it was, so I don't know how to proceed. Is there a way to simply cancel this filing and start over?

Oklahoma already accepted the original return (according to TurboTax), but will the Oklahoma processors reject it after reviewing it? What's the potential outcome here?

[MaryK4]

The first thing to do is sign into TurboTax and go directly to the Oklahoma state return.  You should have already indicated that you need to amend your state tax only.  Check your resident status and make sure you are filing a Part Year Resident Return.  You will then get Allocation screens (see below) where you can indicate zero Oklahoma income.  @swaminanda

[swaminanda]

Thank you! Unfortunately, this is not an option available in TurboTax. I'm using the no-cost online version. There is no way to select the state return; TurboTax forces you to go through the Federal return, the end product of which is stated above.

Will the state of Oklahoma simply reject the return (even though TurboTax says they've accepted it already)?

Is there a way to cancel this return filing and simply make another one?

[swaminanda]

I figured out how to keep my federal return while amending. Simply hit "Cancel Amend" after you have saved the screen(s) where you made the necessary amendments. TurboTax will spit you back to a screen that asks you to verify your cancellation of the amended return and will re-add your original federal refund (while keeping your amended state tax total).

Unfortunately, TurboTax tells me that I can't e-file the amended state of Oklahoma return and would have to mail it in. I *think* what this means is I'd have to print off the amended Oklahoma return forms, enclose a check for the $800+ amount, and send it to Oklahoma. Is this correct?

This is incredibly inconvenient, of course, since I won't get the federal return (which is also $800+), until long after I pay off Oklahoma. Isn't there usually a way to circumnavigate this? As in, TurboTax sends my federal refund to the state and I just pay the difference? Feels like this used to be how TurboTax worked.

[ErnieS0]

Yes. File your amended Oklahoma income tax return by mail. Not all states are set up to accept e-filed state returns.

The due date for Oklahoma taxes is April 18. You have a month. Your federal may come in before that.

You can also set up a payment plan on OKTAP. There will be a one–time delinquent penalty of 5% and interest accruing at 1.25% per month on any tax not paid by the original due date.

[swaminanda]

Thank you! Another little oddity just occurred to me and I'm interested if this is why I'm not supposed to pay any Oklahoma taxes. 

I received a 1098-E Student Loan Interest Statement, and in box 1 the amount listed is  ~$22k. The taxable income when I still had to claim Oklahoma residency was ~$21k. Does this mean that, for the state of Oklahoma, my overall income doesn't require a return? Strangely, on the Oklahoma form, my "Oklahoma Source Income" was listed as -2500 (negative 2500) by TurboTax.

My apologies--I did not realize my return was this complex this year! I've moved between states before and hadn't had these issues.

[DaveF1006]

Yes, since your taxable income is negative, there was no tax liability for the year. To be safe though, I would suggest you file an Oklahoma return to avoid questions that may come up later.

@swaminanda

[swaminanda]

Thank you! I already filed the return and called the Oklahoma tax commission, and they simply recommended waiting to see if a processor would reach out for more info.

Thanks for your help everyone!