Why is my Oregon pension distribution being taxed by Oregon?

To my knowledge Oregon does not tax OR pension income.  Feds do.  I am a full time resident of NY.  Retired from OR in 2008.
I received about 19 K  from my PERS pension on 1099-R.  Box 1 reads 19K Box 2a Reads 19K  Boxes 2b not checked. No OR state tax was withheld.  It appears my Fed information was just carried forward to OR in Turbo Tax but I don't believe that the OR pension income should  be counted on the Oregon NR tax form.  Am I correct?  How can I fix this without undoing the Fed return?  

I only considered filing because I have a w-2 from OR with minor income ($2700) from an early retirement bonus but to my knowledge this is not enough income to even file in OR for married filing jointly.

Please advise.
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    Dear talkstotrees:

    Were you a full-year New York state resident for all of 2011?  If so, then you do not need to file an Oregon part-year (Form 40P) or nonresident (Form 40N) tax return, if your only Oregon taxable income is $2,700 from a W-2, no Oregon state income tax was withheld from your paycheck, and you are married filing jointly.  Otherwise, if this is not the case, then you do need to file an Oregon tax return, even if you currently physically reside in New York (i.e., somewhere other than in Oregon).

    Now then, we need to clear up one issue about Oregon pension income.  While it is true that Oregon PERS pensions are Oregon-source income, this income is not taxable to Oregon nonresidents.  However, if someone is an Oregon full-year resident, or a part-year resident, then that income is taxable (in the former case, it is fully taxable, in the latter case it is taxable to the extent that you received pension payments during the part of the year that you were an Oregon resident).

    Assuming for a moment that you do have to file an Oregon Form 40N or Form 40P, you should be made aware of the special nature of these Oregon tax forms. The dual-column format sometimes confuses taxpayers who are not familiar with it.

    Specifically, ALL of your federally taxable income gets reported on Form 40N and Form 40P, Column F (federal column), whereas ONLY your Oregon taxable income is reported in Column S (state column). Thus, for example, your total pension and IRA payments received throughout the year will appear as an amount on Lines 16F and 17F, while only those amounts taxable by Oregon will appear on Lines 16S and 17S. Please refer to an actual Form 40P to see what I am referring to:

    http://www.oregon.gov/DOR/forms/personal/form-40p_101-055_2011.pdf


    In TurboTax, even when things have been input correctly, those unfamiliar with Oregon Form 40P may sometimes innocently think that there is a state tax form error, even when there is not. Could that be what is happening in this instance?

    If it is not, then I would respectfully suggest revisiting your W-2 and 1099-R entries in the TurboTax program.  You can delete just these data entry worksheets and do them over again if you need to.

    Thank you for asking your question, and good luck to you!

    Regards
    • batman_pdx thanks for the try but I am not clear on how that will resolve the problem.   Lets be clear - I do not reside in Oregon and have not since 2008.  I have filed a 40N in 2009 and 2010 because I had some non-pension income on a w-2  - as much as 5.4K per year.  However I had only  $2700 from non-pension income for 2011 and 19K from a pension.  I am concerned about the carryover from the fed to state forms as there seem to be some problem with the turbotax program.  Unless i simply do not file OR taxes, the 19K from my oregon pension will show up in both fed and OR tax forms unless I simply do not file in OR.  

      Your advice to go back and check the forms themselves is good advice.  I have done so but this does not seem to resolve the overall mismatch between fed and state.  I guess I will not file in OR as a way to resolve this.
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    Dear talkstotrees:

    Thanks for the additional information about your residency status and your souces of income.

    Based on your figures, you will not have to file an Oregon Form 40N . . . unless you had $1 or more in state income tax withheld, which would show up as a positive number in Box 17 of your W-2.  If not filing an Oregon return solves your issue, that that solution works just fine.

    As to why your pension would be showing up in both the F and S columns of Form 40N, the reason for that would probably be that you incorrectly, by mistake, input a state amount in the 1099-R entry screen.  Try revisiting your 1099-R entry screen, and leave the state values (bottom of the screen) blank.  In other words, don't tell the program at all that your pension has anything whatsoever to do with Oregon, and the amount should then only appear in the F column of your 40N (assuming you file one).

    If that's not the answer, then there is, respectfully, another minor data entry error somewhere on your return.  That could be difficult to track down without starting over from scratch, but I assure you that the Oregon TurboTax program does properly handle nonresident pension income . . . I've verified it for myself with my own Oregon software.

    Best of luck to you!

    Regards
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