Oklahoma non-resident

[boisedan]

I worked in Oklahoma for 3 days in 2019 as a non-resident.  I am retired and drawing a pension earned in Illinois.  It looks like I have to pay taxes on part of my pension along with the actual pay I received while in Oklahoma and traveling to and from Oklahoma.  Can anyone verify if that is correct?

[DawnC · Accepted solution]

No, that is not correct.  If you owe and pay any tax based on the money you earned in OK, you will receive a credit for that on your IL tax return.  Also, when you prepare the OK nonresident return, you will be given an opportunity to allocate your income - all of your pension income should be allocated to your resident state and subtracted from income on your OK return, see details below.  

For Oklahoma Nonresidents - Individuals are required to file if they received $1,000 or more Oklahoma-source gross income, which includes:

• Salaries, wages, and commissions for work performed in Oklahoma. 

• Income from an unincorporated business, profession, enterprise, or other activity as the result of work done, services rendered, or other business activities conducted in Oklahoma. 

• Net rents and royalties from real and tangible personal property located in Oklahoma.

• Gains from the sales or exchanges of real and tangible personal property located in Oklahoma.

• Income received from all sources of wagering, games of chance, or any other winnings from sources within this state. 

Nonresidents do not include any entry for the following:

• Taxable IRA distributions (line 4).

• Taxable pensions and annuities (line 5).

• Taxable Social Security benefits (line 6).

• Taxable refunds (line 8).

• Alimony received (line 9).

• Unemployment compensation (line 14)

[boisedan]

Thank you for your response (although I didn't get a notice that you responded until 4am this morning and I mailed the forms off yesterday).  On Form 511NR-B, under Line 6 Federal Amount, "Other retirement income", I was only allowed to input a maximum of $20000 of the $40000 made via my pension.  So, according to their instructions, I was taxed on the $20,000 I couldn't claim.  I called the Oklahoma Tax Commission twice about this and, both times, they told me they couldn't answer my question - that I should seek a tax professional.  The tax professional would cost me more than the refund difference.  That is why I posted on here.  

I do thank you for your response and if you have anything to add.  I may end up working in OK again this fall for a couple of days and you have shed some light on how to proceed.

[DawnC]

On the form you are referencing, 511NR-B, there should not be any pension income to exclude.  The amounts from your pensions should not be included on 511NR-1 (Line 5) -  see the instructions on page 9 of the non-resident packet attached.   On your OK nonresident return, your pension income should be 0, so there is no pension income to exclude on Form 511NR-B.   The only income that should be on your OK return is the wages you earned while you worked in OK.   There should not be any additions or subtractions, so no need for 511NR-B. 

Look at a printed copy of your 511NR, the Federal column should list all of your income and the OK Amount column should have only your OK income on Line #1 and Line #6.    I hope that this helps and doesn't further confuse!  😉   @boisedan

[Crafty53]

I am SO confused with this Oklahoma Non Resident state tax return.  It says and I quote "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 511NR. 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. The tax is then calculated. At this point, the tax 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.

So if I understand this, this mean that even though I live in Texas and have all my life, earn a TMRS income along with social security but work in oklahoma - H & R Block is telling me I have to pay taxes on my retirement income not JUST the money I make in Oklahoma.  I have called that Okla Tax Commission and they are confused and keep telling me they will have to talk with the auditors to get an explanation on this.  Seems to me it is straight forward - pay taxes only on the money you earned but they Form 511NR is a nighmare to complete.  I would welcome any help with this.

[MarilynG1]

@Crafty53  Since you are a Non-Resident of Oklahoma, you are correct that you are only taxed on your Oklahoma income.

Most state returns start with your Federal AGI, then make Adjustments In/Out using a myriad of different calculations to arrive at your taxable Oklahoma income. If the state interview ask for your 'Non-Oklahoma Income', that would be everything except your earned income there. 

Don't worry, TurboTax will be able to figure your taxable Oklahoma income.  If this income is reported on a W-2 showing Oklahoma Tax Withheld, you are correct, it is cut and dried. 

Often Part-Year Residents are asked to 'allocate' their pension income between states they lived in that year, but that does not apply to you. If you are asked this, your Oklahoma portion is $0. 

Click this link for more info on How to File a Non-Resident State Return. 

[Crafty53]

When I did it with tubotax it comes up with me owing and when I do it I get a small refund so I don't know what to do.  I have had H & R Block do it as well and they keep telling me I owe too.  SO, I just can't get my head around Oklahoma.  I don't think I should have to pay any state any money if it didn't come out of or certainly if I don't live there and never had.  What happened to simple and easy!

[JotikaT2]

Make sure you are only including the state sourced income to Oklahoma when you prepare your nonresident Oklahoma return.  Sometimes you need to make adjustments to the income source when prompted to in the state interview section of the program.  For example, if you had $10,000 in wages everywhere but only $5,000 was from Oklahoma sources, you may get a screen asking you how much was from Oklahoma sources.  Review your entries to ensure only the $5,000 is reflected.

Please see below for income that is taxable to nonresidents of Oklahoma to ensure your income is being treated correctly.  Essentially if it is from Oklahoma sources, even though you are a nonresident, it could still be taxable.

@Crafty53

[LukeRow]

I'm pretty confused as well.

PLEASE HELP!

I'm a Texas resident who worked in Oklahoma for five months in 2020 with a company that has a Kansas address on my W2 form.

For some reason, HR didn't deduct any Oklahoma state income tax from my pay for any month in 2020 (but is deducting it for the months I've worked in 2021).  I haven't yet received a response from HR as to why this happened.

I made more than $1000, so am trying to file my state taxes, but BOTH Turbo and H&R Block are telling me that I don't owe any taxes to OK for 2020.  I've tried to run it as both a non-resident and part-time resident....and still it says that I don't owe anything,  H&R allows me to manually go into the form and change my pay in OK to what I made and the taxes owed does change to $1300....but then it tells me that because I'm manually over-riding their program that I'm no longer allowed to e-file.

It also states that if I turn it in this way, I would be guilty of underpaying taxes to the state (??) and face multiple penalties. 

I'm just not sure what to do and feel like I'm missing something that's pretty obvious to everyone else.

I'm leaning toward just turning in TurboTax's version of the return. Everything I put in is 100% accurate, so I just don't understand why I'm not having to pay taxes on this money. 

I don't have the funds to see a "tax professional," so I pretty frustrated right now.

What am I missing??

[DMarkM1]

The reason for the zero tax is that OK uses the amount of state income in box 16 of your W2.  Since there is no income reported there for OK, the tax is zero. 

To pay what you owe OK for 2020 you will need to revisit the "Job (W2)" topic in the federal interview.  Edit the W2 and go to the state boxes (15-17).  In box 15 select OK and put in the federal ID number from your W2 in the state ID box.  In box 16 you need to put the prorated amount of wages for OK.  Use your W2 box 1 amount and multiply it by 5 and divide by 12 to get 5 months of your wages for OK.

If using a desktop version switch to the step-by-step view and follow the same procedure.

For your 2021 taxes it sounds like you employer has adjusted and your W2 should reflect the correct amounts next year.