Worked in Texas, company in Oklahoma deducted Oklahoma Taxes

[DonnaH]

We live in Texas, my son attended Oklahoma State and worked for the university, so for the past years we have submitted a non-resident Oklahoma return. 

In 2020:

• He worked for Oklahoma State from Jan 1 - March 13, 2020
• Covid shutdown went into effect and he lost his job, he moved back to Texas to finish out school year
• In May, he graduated and started a job with a company based in Oklahoma
• He worked remotely from Texas for the remainder of the year for the Oklahoma company

The Oklahoma company withdrew state taxes.  I have tried to figure out how to notate this in Turbo Tax so he can get his full refund on his state taxes for his job he started in May.  I've selected both Non-Resident and Part-time resident but there isn't an option to input that he worked in Texas.

Any guidance would be greatly appreciated!

[JotikaT2]

You will need to report his wages as being from Oklahoma state even though he worked remotely from Texas.

He will prepare a nonresident tax return for Oklahoma and will be taxed only on his income sourced to Oklahoma as a nonresident.

[DonnaH]

Even though he didn't work in Oklahoma, he still has to pay Oklahoma taxes?  I thought it was based on the state you actually did the work in.

[ErnieS0]

Oklahoma does not follow the so-called “convenience of the employer” rule that allows states to tax nonresidents who work remotely so your son should not pay OK tax for teleworking from Texas.

As the previous answer said, OK nonresidents are only taxed on salaries, wages and commissions for work performed in Oklahoma.

More to point, a private letter ruling from the Oklahoma Tax Commission dated June 20, 2014 says: As a nonresident whose salaries, wages and commissions are for work performed outside of Oklahoma, and who derives no income from sources within the state of Oklahoma, it is the opinion of the Tax Policy Division that your employer is not required to deduct and withhold Oklahoma withholding tax from your wages.

Private letter rulings are not tax policy as they are in response to a specific case. However, they have been used in defense of tax positions.

You can file a nonresident OK return and only report the wages from Oklahoma State University. You cannot notate anything with an e-filed return. You can file by mail and include an explanation. Or you can e-file and wait for a possible notice from the Oklahoma Tax Commission in which case you can file a response.

Your son should also file a OK W-4 to stop withholding.

[DonnaH]

Thank you so much for the information.  I appreciate it.