Is my $1348 of unemployment income taxable in Oregon?

[ledjedd]

Line 19 in form 40N

[foxncmail]

According to Oregon's instructions, they do tax unemployment unless it's Railroad. Please confirm.

[jeremy3]

You are correct. The previous answer is wrong. Oregon even taxes non-residents that are receiving unemployment benefits from an Oregon job.

[SherekaB · Accepted solution]

Oregon does not tax unemployment wages. Of the 41 states that tax wage income, 5 states completely exempt unemployment benefits from tax (California, New Jersey, Oregon, Pennsylvania, and Virginia).

[Jasper345]

Oregon does tax unemployment benefits. These people are wrong to claim Oregon doesn't.

You must pay Oregon income tax if the benefits are from the Oregon Employment department no matter what state reside in, or if you are an Oregon resident with benefits from another state.

[taneisha_pugh]

Yes, OR does indeed tax unemployment. https://www.statesmanjournal.com/story/news/2021/01/13/oregon-unemployment-benefits-2020-tax-returns...Any unemployment benefits you receive are fully taxable if you are required to file a tax return. You may need to make estimated tax payments. For more tax information consult IRS publication 505, “Tax Withholding and Estimated Tax”, and the Oregon Department of Revenue.

[fbmcardl2]

Anyone know whether Oregon will follow the new federal law allowing $10,200 of unemployment benefits to be tax free?

[ReneeM7122]

As of today's date, Unemployment benefits are taxable in the state of Oregon.  You should file your 2020 taxes as such.

Any unemployment benefits you receive are fully taxable if you are required to file a tax return. You may need to make estimated tax payments. ... If you received benefits from a state other than Oregon, the other state also will send you a Form 1099-G.

Here is a copy of Oregon Bill 657

@fbmcardl2

[fbmcardl2]

Thanks, but I know that. The question is whether Oregon is going to change its existing rules because the federal law now makes up to $10,200 federally tax free in 2020. So please post any updates on that issue. Thanks again.

[ReneeM7122]

To find out the latest updates about Oregon changing the law regarding the taxability of unemployment benefits, you can sign up for updates on the Oregon Department of Revenue website.  Here is a link.

You can also give them a call at Phone: ​503-378-4988 or 800-356-4222.

@fbmcardl2

[fbmcardl2]

Here it is. Oregon is saying to "wait." Just got this from them:

Wait to act on unemployment tax relief

The American Rescue Plan Act of 2021 (ARPA), signed into law Thursday, exempts up to $10,200 of unemployment benefits received in 2020 per individual from taxes for households with less than $150,000 in adjusted gross income. The change will affect thousands of Oregon taxpayers by reducing their 2020 taxable income and lowering their tax bill.

The Oregon Department of Revenue recommends that affected taxpayers wait for further information from the IRS and the department before taking action. This includes those who have already filed their 2020 federal and state taxes and may need to file an amended return, as well as those who have yet to file.

Once the IRS determines the best way to address this unique change in law made in the middle of tax filing season, the department will offer more information to Oregon taxpayers via its website.

Taxpayers who received unemployment benefits in 2020 and have not yet received a Form 1099-G should contact the Oregon Employment Department by calling [phone number removed].

Federal and state income taxes are due April 15. Information about filing for an extension can be found on the Department of Revenue website.

[ReneeM7122]

This is very useful information.  It sounds like the best thing to do is file your federal tax return separately from your Oregon return.  Here is a TurboTax article about how to skip your state return for now.

@fbmcardl2

[fbmcardl2]

Actually, if one received unemployment benefits in 2020, and hasn't filed yet, it may be wise to delay filing Federal for a while as well in the hope that IRS will clarify how the unemployment tax exemption of $10,200 will apply to 2020 federal returns and the tax preparation software IRS has already approved for 2020 prior to the retroactive law change in unemployment benefits.