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Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience:  CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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Multi State Income Tax issue

Customer Question

I am looking at a new job offere where I will live in Oregon, and work in California (commute) - and I am concerned about being taxed by both CA and OR for the same income. How do I avoid double taxation? My work is to be divided with about 60% in CA and 40% in OR from my home office. Thanks, Laura
Submitted: 11 years ago.
Category: Tax
Expert:  Christopher Phelps replied 11 years ago.
Income earned in CA will be taxed by CA.  thus, you will be required to file a non-resident tax return reporting the income.  OR will also tax the income by virtue of your residency status.  However, OR will also allow you to take a credit for the taxes paid to CA on your CA income (up to the amount OR is taxing you).   You report the credit on line 40 of Form 40.
Customer: replied 11 years ago.
Reply to Christopher Phelps's Post: Thank you for the fast reply Chris, and I am hoping for a small clarification. Will the credit for taxes paid to CA on my OR form completely offset the amount that I pay to CA? In otherwords, hopefully it isn't the same as a deduction that simply reduces my taxable income - I am hoping that my OR taxes are reduced fully by the amount paid to CA. I'll add a bonus for the clarification :)
Expert:  Christopher Phelps replied 11 years ago.

It may not.  OR will only give you a credit up to the amount of OR tax you incur as a result of that "double-taxed" income.


Thus, if you have $60,000 of income taxable by both CA and OR, and the CA tax is $5,000, but the OR tax on that income is only $3,000, then you will receive a $3,000 credit on your OR return.


The credit would only be similar if the tax rates schedules applicable to your income for OR and CA were similar.   

 
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience: CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Christopher Phelps and 4 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Christopher Phelps's Post: Thanks Chris, that sounds fair and makes sense.Thanks for the fast responses. Laura

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