I work in the Oregon and live in Washington. Work 2 of the 5 days at home. I can deduct those 2 days from my earned income in Oregon taxes. Can I deduct time off/holidays

[DanielV01 · Accepted solution]

Yes.  You will need to allocate your income for the amount of income you actually earned in Oregon.  While there are states that treat telecommuters (if that is how you're working in Washington for the company) as still working in their state, Oregon is not one of them.  So you will be able to allocate, or split, the amount of income that you work in Washington (good idea since there's no state tax there) and Oregon.  There's a good chance that Oregon will ask for substantiation on this, so make sure you have records to send them when they do).

You will look for the screen Oregon source Income and Adjustments.  You will enter the amount of income you physically worked in Oregon.  How do you determine this?  Use the following information, taken from Oregon Publication 17 (guideline to tax laws):

When you count the number of days you actually worked in Oregon and the number of days you actually  worked everywhere, don’t include holidays, vacation days, or sick days. These aren’t days that you actually worked. Your employer paid you for these days based on the days you worked. However, include your sick pay, holiday pay, and vacation pay in total wages. (Italics added, bolding original)

Use this formula to determine total wages taxable by Oregon:

Days actually worked in Oregon (divided by) Total days actually worked everywhere wages (multiplied by) Total wages = Oregon wages (Format modified from orignial publication)

[keithketring]

I live in Washington State and primarily telecommute from Washington for my job in Oregon. On occasion, I will work a full day in Oregon. I already understand that I can prorate my tax filings for the days I work in Washington versus the days I work in Oregon. However, more often then not, I will start my day working from my home office in Washington, will drive to my business office in Oregon for a one to two hour meeting, and then drive back home where I will work the remainder of the day. Does this count as a Washington workday or an Oregon workday? I am currently tracking the hours I work part days in Washington versus Oregon.

[Critter]

For those days where you drive in for a short meeting I would not count those days for OR.

[TomD8]

<<I am currently tracking the hours I work part days in Washington versus Oregon.>>

If you're actually tracking hours, you could calculate based on fractions of a day, based on an 8-hour day.  For example, 4 hours spent in OR would be 0.5 of a workday.

Since WA has no income tax, all you have to keep track of is your days spent in OR.

[SteveH25]

I have the same concern.  Thanks for the detailed response.  Very helpful. 🙂

[SteveH25]

Great information.  Thanks.  🙂

I have a related question.  Should bonuses be included in the the total wages for the for the calculation of the Oregon taxable portion?

Thanks in advance!

Steve

[TomD8]

@SteveH25 --

Yes, bonuses should be included in the calculation.

[SteveH25]

Thanks TomD8.  I kind of figured that would be the case.

[keithketring]

Steve,

For more information on this topic see the Oregon Department of Revenue document "2020 Publication OR-17, Oregon Individual Income Tax Guide". Page 47 lists Oregon taxable income and provides a formula to determine total wages taxable by Oregon. And, yes Oregon taxes you on "income earned from work performed in Oregon, including sick pay and other benefits."

The formula essentially divides your days actually worked in Oregon by the total number of actual work days and then multiplies that by your total wages to come up with your "Oregon Wages". I called the Oregon Department of Revenue to ask for a definition of "Days actually worked in Oregon" because I had many where I began and ended my workday in my home office but went to Oregon for only a portion of the day.

You'll want to keep a record of full and partial days you work in Oregon in case you get audited. You'll also need a letter from your employer on company letterhead stating that you telecommute and/or travel for business outside of the State of Oregon.

[SteveH25]

Thank you Keith.  🙂

[sunalmittal]

Hi Keith, could you share how do you keep track of hours/days worked in OR/WA? Is it through some calendar app? Is that self declaration enough proof if Oregon state were to come back and ask for one?

Thanks

Sunal