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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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My employer is located in Oregon. I am located in Arkansas.

Customer Question

My employer is located in Oregon. I am located in Arkansas. Did not live in Oregon at all. Both states deduct state taxes. I just completed my tax return and have to pay Arkansas and I only get about 1/5 back from what I paid into Oregon. Is that just unavoidable? Doesn't seem fair to pay taxes in a state that you do not reside or have anything to do with other than my employer is located there.
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.

Your state tax liability is based on both - your residency AND the location of your workplace.
Thus if your workplace is in Oregon - your wages are income from Oregon sources and subject to Oregon income tax.
If that is correct - you need to file Oregon tax return as a nonresident - and will be taxed ONLY on income from Oregon sources.

So - be sure that you file your Oregon tax return - and it is possible to have a refund for taxes over withheld from your wages.

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As you are a resident of Arkansas - all your worldwide income is taxable for that state - including income you earned in Oregon.
So - it is possible that some of your income is taxed in both states.
In this case - you may claim a credit for taxed paid to other states on your Arkansas resident tax return.

However - we may not expect a full refund.
Your refund is NOT based on what you paid to Oregon - but that is a refund of Arkansas taxes.
If your Arkansas tax liability is lower - you woudl be refunded that portion only.

Any questions?

Customer: replied 10 months ago.
Partially...Oregon withheld $10,246 over all of 2015. I became an Arkansas resident as of June 2015 via Washington State which has no state tax to file. Arkansas withheld $1250 from June through Dec. so what would be the math?
Expert:  Lev replied 10 months ago.

Withholding is not your tax liability - the purpose of withholding to cover possible tax liability.

But the actual tax liability is determined ONLY when you prepare the tax return.

If you was NOT Oregon resident - you will need to file Oregon nonresident tax return for the whole year - and most likely a part of that withheld amount will be refunded by that state.

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Expert:  Lev replied 10 months ago.

When you prepare your Arkansas tax return - you will file as a part year year resident - and You will be ONLY taxed for your income after you become a resident of Arkansas. So not all your income will be taxed but only a part of income you received after June 2015 when you became a resident.
So - you will calculate your credit for taxed paid to other states based on your Arkansas tax liability - and that credit may not be more than that liability.

So - the maximum you may receive from Arkansas is the amount which your employer withheld and remitted to that state.

You should not expect Arkansas to pay you back taxes which they never received.

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