OAR 150-316-0088

Addition of Taxes Paid to Another State Claimed as an Itemized Deduction

Official textus-or/regssecure.sos.state.or.uslast amended Sep 01, 2016

# (1)

(1) If a taxpayer claims a credit for taxes paid to another state and the tax is also included as an itemized deduction, the taxpayer must restore to Oregon income the lesser of:

(a) The amount of the other state's net tax liability for the year in which the Oregon credit is claimed; or

(b) The amount of the other state's tax for that year that is included in itemized deductions.

Example 1: On his Oregon tax return, Joe claims a credit for taxes paid to Idaho of $100. His tax liability to Idaho for the same year is $150. He also claims an itemized deduction of $200 for taxes that Idaho withheld from his wages. Joe must add $150 to Oregon income, which is the lesser of his Idaho tax liability or the amount claimed as an itemized deduction for that year.

# (2)

(2) If the credit for taxes paid to another state is based on a tax liability that is paid in two different tax years, the taxpayer may be required to restore the deduction to Oregon income in two different tax years.

Example 2: Jim claims a credit of $250 on his Oregon tax return. His net tax liability to Idaho is $250. Jim deducts $200 tax withheld by Idaho as an itemized deduction on his Oregon return. He must add $200 to Oregon income, which is the lesser of his Idaho liability or the amount claimed as an itemized deduction that year. If Jim claims the $50 balance owing to Idaho as an itemized deduction for Oregon in the year he pays it, he must add that amount to Oregon income in that same year.

Example 3: Lois makes her fourth quarter estimated tax payment of $400 for 1999 to Montana on January 18, 2000. Her 1999 Montana tax liability is $350 and she claims a credit of $350 on her 1999 Oregon return. In 2000, Lois made $700 of estimated payments to Montana for tax year 2000. Her 2000 Montana tax liability is $950 and she claims a credit of $950 on her 2000 Oregon return. For tax year 2000, Lois claims $1,100 in Montana tax as an itemized deduction ($400 plus $700). Lois's addition on the 2000 Oregon return is $1,050: $350 tax liability for 1999 plus $700 of estimated payments for 2000.

Example 4: Same facts as in Example 3, with the following additional facts: Lois makes her 2000 fourth quarter estimated tax payment of $250 on January 16, 2001. During 2001, Lois pays $1,500 in estimated tax. She claims $1,750 as an itemized deduction ($250 plus 1,500). Her 2001 Montana tax liability is $1,400 and she claims a credit of $1,400 on the 2001 Oregon return. Lois's addition to income for 2001 is $1,650: $250 from tax year 2000 and $1,400 from tax year 2001.

Amendment history

Renumbered from 150-316.082(4), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16

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