Received signing bonus from Wisconsin employer while Oregon resident

[LookOverThere]

My husband and I were Oregon residents until September 1, at which point we moved to Wisconsin. While we were residing in Oregon, he received a sign-on bonus from his future Wisconsin employer. Wisconsin taxes were withheld; Oregon taxes were not. I know that Oregon taxes all income received while residents of the state. I have two questions:

1) Do we allocate all of the income from the signing bonus to Oregon?

2) Is this an instance of double taxation where we can claim a credit from Oregon for the taxes paid to Wisconsin? My understanding is that Oregon is one of five states that allows a credit to be claimed by a nonresident for tax paid to the nonresident's home state on income that is taxed by Oregon and the home state.

[MaryK4]

1) The signing bonus would be Wisconsin-source income because it was in consideration for employment in Wisconsin.  Because you moved to Wisconsin after you received the bonus, when you allocate it on your Part Year Wisconsin return, it will be Wisconsin-source income earned while a nonresident.  You also have to report it to your resident state of Oregon.  (In general, you report and pay nonresident tax on state-sourced income and report all income to your resident state, regardless of source.  The credit for taxes paid to another state applies to your resident state so you are not double-taxed on the same income at the state level.) 

2) The credit for the taxes paid to another state does apply as explained above because you paid Wisconsin tax on it as a nonresident so you can claim the credit on your Part Year Oregon return.  The reverse credit for Oregon does not apply in this instance because you were an Oregon resident when you received the Wisconsin income.  

NOTE:  You will want to prepare your Wisconsin tax return first, so that the credit can be applied correctly.  

[LookOverThere]

Thank you! So just to make sure I understand, I keep the amount of the bonus allocated to Wisconsin but then add the amount of the bonus to our Oregon income and then claim the credit for the taxes paid to Wisconsin?

[MaryK4]

Correct! You will see the Wisconsin Salary Allocation where you can indicate the total Wisconsin income.  On the Oregon Source Income and Adjustments, you will include any income you earned while a resident, including the bonus from Wisconsin.  Then look for the Credit for Tax Paid to Another State on the Take a look at Oregon credits and taxes.  If you need help, ask again!  @LookOverThere 

See How do I allocate (split) income for a part-year state return?