OAR 150-316-0084
Credit for Income Taxes Paid to Another State — Computation

(1)

General: This rule explains the computation of the credit for taxes paid to another state on mutually taxed income.

(a)

Residents: An Oregon resident is allowed a credit for taxes paid to another state on mutually taxed income if the other state does not allow the credit. See section (3) of this rule for information on calculating the credit for an Oregon resident.
Example 1: Bob, an Oregon resident, receives partnership income derived from Virginia sources and joins in a multiple nonresident filing with that state. If Virginia does not allow a credit for taxes paid to Oregon on the multiple nonresident tax return, then Bob may claim a credit on the Oregon resident return.
Example 2: Elizabeth, an Oregon resident, receives income from California property. Because California allows Oregon residents to claim a credit for mutually taxed income on the California nonresident return, Elizabeth is not allowed to claim the credit on the Oregon resident return.

(b)

Nonresidents: Under ORS 316.131 (Credit allowed to nonresident for taxes paid to state of residence), an Oregon nonresident is allowed the credit if the state of residence allows Oregon residents to claim a credit for mutually taxed income on the nonresident return filed with that state. See section (4) of this rule for information on calculating the credit for an Oregon nonresident.

(c)

Part-year residents: A person who is a resident for a part of the taxable year and a nonresident for the rest of the year figures the credit under section (3) of this rule for the portion of the year the individual was a resident and under section (4) of this rule for the nonresident portion of the year.

(2)

Definitions. For purposes of this rule, the following definitions apply:

(a)

“Adjusted gross income” means federal adjusted gross income as defined in the Internal Revenue Code section 62 and the corresponding regulations.

(b)

“Modified adjusted gross income” means adjusted gross income as modified under ORS Chapter 316 (Personal Income Tax), but only as to items related to federal adjusted gross income.

(c)

“Items related to federal adjusted gross income” means items of income, gain, loss, exclusion or deduction that are used to arrive at federal adjusted gross income. It does not include items that are unrelated to determining federal adjusted gross income, such as the federal income tax subtraction under ORS 316.695 (Additional modifications of taxable income) or the additional medical expense deduction provided by ORS 316.695 (Additional modifications of taxable income)(1)(d)(B).
Example 3: Jon, an Oregon resident, has $40,000 of adjusted gross income, including $10,000 of rental income taxed both by Oregon and another state. Jon also receives a lump-sum distribution of $8,000 from a private pension plan. Because Jon chooses to use the 5-year averaging method to compute federal tax on the distribution, the $8,000 is not included in his adjusted gross income of $40,000. Jon computes modified adjusted gross income as follows:
$40,000 — Adjusted Gross Income

(5,000)

— Less - U.S. Bond Interest

(2,000)

— Less - Civil Service Retirement (pre 10⁄1/1991 service)
17,000 — Add - California Municipal Bond Interest
8,000 — Add - Pension distribution
$58,000 — Modified Adjusted Gross Income

(d)

“Mutually taxed income” means that portion of modified adjusted gross income that is both reported to and taxed by Oregon and another state.
Example 4: Matt, an Oregon resident, reports adjusted gross income of $21,000, including gain on the sale of Hawaii property of $5,000. For Hawaii tax purposes, the $5,000 gain is increased by a basis adjustment of $250. For Oregon tax purposes, the gain is reduced by a basis adjustment of $1,000. Matt’s modified adjusted gross income is $20,000, ($21,000 of adjusted gross income less the $1,000 Oregon basis adjustment.) The mutually taxed income is $4,000 ($5,000 gain on sale of Hawaii property less the $1,000 Oregon basis adjustment), which is the amount of modified adjusted gross income that is taxed by both Hawaii and Oregon.
Example 5: Assume the same facts as Example 4, except that both Hawaii and Oregon require a basis adjustment that increases the gain by $1,000. In this case, the mutually taxed income is $6,000 ($5,000 gain on sale of Hawaii property plus the $1,000 basis adjustment for both Oregon and Hawaii.)
Example 6: Verne, an Oregon resident, sold property that he owned in Colorado for a gain of $128,000. On Verne’s Oregon resident return, Oregon allowed $100,000 of losses against the $128,000 of income. Colorado did not allow the losses to be offset or deducted because the losses were not Colorado-sourced losses. Thus, Colorado taxed the entire $128,000 gain. The amount of mutually taxed income is $28,000 because that is the amount of gain upon which tax is actually calculated by both states.

(e)

“Total income on the return of the other state” means the other state’s taxable income plus any amounts subtracted for itemized deductions, a standard deduction, or exemptions.

(f)

“Net tax” means state income tax liability (whether Oregon or the other state) after all credits except the credit for taxes paid to another state.

(g)

“Oregon tax based on mutually taxed income” means that portion of Oregon net tax that is attributable to mutually taxed income. It is figured using this formula:

(A ÷ B)

x C = D, where
A = mutually taxed income
B = modified adjusted gross income
C = Oregon net tax
D = Oregon tax based on mutually taxed income.

(h)

“Other state’s tax based on mutually taxed income” means that portion of net tax of the other state that is attributable to mutually taxed income. It is figured using this formula:

(A ÷ E)

x F = G, where
A = mutually taxed income
E = total income on the return of the other state
F = other state’s net tax
G = other state’s tax based on mutually taxed income.

(3)

Computing the credit for an Oregon resident. An Oregon resident figures the credit as the lesser of:

(a)

The Oregon tax based on mutually taxed income; or

(b)

The tax actually paid to the other state.
Example 7: Jim’s modified adjusted gross income of $40,000 includes rental income taxed to Idaho and Oregon of $4,000. His Oregon net tax is $2,000 and his Idaho net tax (not including the Idaho Building Fund tax) is $100. Jim figures his allowable credit as follows:

(Mutually taxed income ÷ modified adjusted gross income)

x net Oregon tax = Oregon tax based on mutually taxed income.

($4,000 ÷ 40,000)

x $2,000 = $200
Jim’s allowable credit is $100, which is the lesser of the Oregon tax based on mutually taxed income or the income tax actually paid to Idaho of $100.

(4)

Computing the credit for a nonresident. The credit allowed to a nonresident is the lesser of the following amounts:

(a)

Oregon tax based on mutually taxed income (as defined under (2)(g));

(b)

The other state’s tax based on mutually taxed income (as defined under (2)(h));

(c)

The tax actually paid to the other state; or

(d)

Oregon net tax.
Example 8: Dieter is a California resident with total income of $50,000 sourced to Oregon and Idaho. He files an Oregon nonresident return reporting $20,000 of income and $1,800 of tax; an Idaho nonresident return reporting $30,000 of income and $2,700 of tax; and a California resident return reporting $50,000 of income and $4,000 of tax. Dieter figures his allowable credit as follows:

(a)

Oregon tax based on mutually taxed income equals $1,800 [($20,000 ÷ 20,000) x 1,800 = $1,800].

(b)

California tax based on mutually taxed income equals $1,600 [($20,000 ÷ 50,000) x 4,000 = $1,600].

(c)

Tax actually paid to California equals $4,000.

(d)

Oregon net tax equals $1,800.
Dieter’s credit on the Oregon nonresident return is $1,600, which is the lesser of these amounts.

(5)

Special Filing Status. Filing status may affect the computation of the credit allowed by ORS 316.082 (Credit for taxes paid another state). If a husband and wife file separate returns for Oregon and also file separate returns for another state, the credit is limited. Each spouse may claim only his or her portion of the actual taxes he or she paid to the other state (subject to all other limitations provided under this rule) in computing the allowable credit.

(6)

If one spouse is a resident of Oregon and the other is a resident of a community property state and files a separate return in that state, the Oregon resident may be entitled to a credit for taxes paid to the other state on mutually taxed income. For purposes of this rule, the mutually taxed income is that which is earned and reported to the other state by the nonresident but included in the income of the Oregon resident by virtue of the laws of the community property state. The amount of the other state’s tax paid on mutually taxed income is determined using the following ratio:

(Separate spouse’s mutually taxed income ÷ total income on other state’s return)

x other state’s net tax.
Example 9: Bruce is an Oregon resident; his wife, Sue, is an Idaho resident. Each files a separate state tax return for Oregon. If Idaho, as a community property state, finds that each spouse has a one-half interest in the earnings of the other spouse, then Bruce is considered to have earned one-half of Sue’s earnings. Under Oregon law, Bruce is taxable by Oregon on all of his individual earnings, plus his one-half interest in Sue’s earnings. Because Bruce is being taxed by Idaho and Oregon on the same item of income, he is entitled to claim a credit on the Oregon tax return based on the mutually taxed income.

(7)

If a husband and wife file a joint return for Oregon, the entire amount of taxes either or both spouse paid to the other state (subject to all other limitations provided under this rule) may be claimed for purposes of computing the credit allowed under this statute. It does not matter which filing status the taxpayers use for the other state.

(8)

If a husband and wife file separate returns for Oregon but file a joint return for another state, the allowable credit is limited as follows. Each spouse may claim a credit for taxes paid to another state (subject to all other limitations provided under this rule) based on the following ratio:

(Separate spouse’s mutually taxed income ÷ total income on other state’s return)

x other state’s net tax.
Example 10: Mark and Beth are part-year residents who elect to file separate Oregon returns and a joint Idaho return. Mark has $2,000 income taxed by both Oregon and Idaho and Beth has $8,000 income taxed by both Oregon and Idaho. The total income taxed by Idaho is $40,000 and the total Idaho income tax liability is $2,400. The amount of Idaho taxes Mark may use in computing his credit is $120 ($2,000 ÷ $40,000 x $2,400). The amount of Idaho taxes Beth may use in computing her credit is $480 ($8,000 ÷ $40,000 x $2,400).

Source: Rule 150-316-0084 — Credit for Income Taxes Paid to Another State — Computation, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-316-0084.

150–316–0006
Application of Capital Losses and Capital Loss Carryforwards 150–316–0007
Policy — Application of Various Provisions of the Federal Internal Revenue Code 150–316–0009
Policy — Application of Various Provisions of Tax Law to Domestic Partners 150–316–0015
Adoption of Federal Law 150–316–0020
Tax Reform Act of 1984 Adjustments 150–316–0025
Definition: “Resident” 150–316–0027
Status of Individuals in a Foreign Country 150–316–0035
Oregon Net Operating Losses — Treatment After 1984 150–316–0040
Administrative and Judicial Interpretations 150–316–0043
Qualified Business Income Reduced Tax Rate (QBIRTR) 150–316–0045
Taxable Income of Nonresidents and Part-year Residents 150–316–0050
Farm Capital Gain 150–316–0055
Transitional Provision to Prevent Doubling Income or Deductions 150–316–0060
Taxable Income of Resident 150–316–0065
Social Security and Railroad Retirement Benefits Eligible for Subtraction 150–316–0080
Credit for Income Taxes Paid to Another State 150–316–0082
Credit for Taxes Paid to Another State When Paid by a Pass-Through Entity 150–316–0084
Credit for Income Taxes Paid to Another State — Computation 150–316–0086
Credit for Income Taxes Paid to Other States — Proof Required and Procedure for Obtaining the Credit 150–316–0088
Addition of Taxes Paid to Another State Claimed as an Itemized Deduction 150–316–0090
Credit for Duplicative State Taxation Relating to Different Years 150–316–0115
Disabled Child Exemption Credit 150–316–0120
Credit for Political Contributions 150–316–0125
Credit for the Gain on the Sale of a Residence Taxed by Another State 150–316–0130
Credit for Installation of Alternative Energy Devices 150–316–0135
Proration of Income and Deductions for Nonresidents and Part-Year Residents 150–316–0145
Proration for Pass-through Entity Income of Part Year Oregon Residents 150–316–0150
Separate or Joint Federal Returns for Spouses in a Marriage 150–316–0155
Nonresident Partners: Guaranteed Payments 150–316–0157
Nonresident Partners: Other Methods of Allocation and Apportionment 150–316–0165
Gross Income of Nonresidents 150–316–0167
Gross Income of Nonresidents 150–316–0169
Gross Income of Nonresidents 150–316–0171
Gross Income of Nonresidents 150–316–0173
Gross Income of Nonresidents 150–316–0175
Gross Income of Nonresidents 150–316–0179
Student Loan Interest Deduction — for Part-Year and Nonresidents 150–316–0181
Moving Expense Deduction — for Part-year and Nonresidents 150–316–0183
Gross Income of Nonresidents 150–316–0185
Gross Income of Nonresidents: Waterway Workers 150–316–0195
Alimony Deduction — for Part-Year and Nonresidents 150–316–0197
Nonresident Deduction for Contributions to IRA, Keogh, or Qualified Medical Savings Accounts 150–316–0205
Credit for Taxes Paid to State of Residence 150–316–0225
Retirement Income Credit 150–316–0230
Subtraction for Previously Taxed Contributions 150–316–0234
“Withholding Statement” and “Exemption Certificate” 150–316–0235
Withholding: Basis of Amount Withheld 150–316–0237
Employees Exempt from Withholding 150–316–0239
Withholding on Fringe Benefits 150–316–0241
Independent Contractor Definition 150–316–0243
Personal Liability of Responsible Officers, Members, or Employees for Taxes Withheld 150–316–0250
Bonding Requirements for Delinquent Withholding Employers 150–316–0255
Withholding by Employers 150–316–0257
Employer’s Election of Method of Computing Withholding 150–316–0265
Withholding Payments: Cash Basis 150–316–0267
Additional Time to File Reports 150–316–0275
Treatment of Payroll Based Program Overpayments 150–316–0282
Exemptions for Military Personnel 150–316–0284
Penalty 150–316–0290
Procedure for Correcting the Filing of Withholding Certificates 150–316–0295
Credit for Tax Withheld 150–316–0297
Where Taxpayer Reports on Fiscal Year Basis 150–316–0305
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150–316–0307
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans 150–316–0315
Alternative Withholding Payment Method for Employers to Avoid Undue Burden 150–316–0320
Voluntary Withholding for Retired Members of the Uniformed Services 150–316–0325
Voluntary Withholding for Civil Service Annuitants 150–316–0330
Semiannual Reports and Payments 150–316–0332
Withholding: Payment Due Dates 150–316–0334
Withholding Tax Payment Requirements for Agricultural Employers 150–316–0336
Employee’s Rights 150–316–0345
Requirement to use Electronic Funds Transfer 150–316–0347
Electronic Funds Transfer. Payroll taxes and corporation estimated income and excise taxes not combined in determining mandate. Payments to be included. 150–316–0355
Withholding: Payment and Reports 150–316–0357
Waiver of Termination Reports 150–316–0359
Withholding: Annual Report by Employer 150–316–0361
Combined Reports and Statewide Transit Tax Reports: Agricultural Employers 150–316–0370
Liability for Unpaid Withholdings 150–316–0372
Officer Liability: Joint Determination of Liability Conference 150–316–0380
Withholding Penalties 150–316–0385
Nonresident Alternate Filing 150–316–0390
Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return 150–316–0395
Tax Treatment of Unincorporated Organization 150–316–0400
Resident and Nonresident Estates and Trusts 150–316–0402
Oregon Qualified Trust Tax Return 150–316–0410
Fiduciary Adjustment 150–316–0415
Accumulation Distribution Credit for Oregon Taxes Paid by Trust During Income Accumulation Years 150–316–0420
Taxable Income of Nonresident Estate or Trust 150–316–0425
Oregon Multiple Funeral Trust Tax Return 150–316–0427
Persons Required to Make Returns 150–316–0435
Petitioning Department to Equally Split Joint Liability 150–316–0440
Innocent Spouse, Separation of Liability, and Equitable Relief Provisions 150–316–0445
Liability of Fiduciaries 150–316–0450
Decedent’s Estate: Request for a Final Tax Determination 150–316–0452
Decedents’ Estate: Application for Discharge from Personal Liability for Tax on Decedent’s Income 150–316–0465
Estimated Tax 150–316–0470
Allocation of Joint Estimated Tax Payments 150–316–0475
Estimated Tax: Farmer’s and Fisher’s 150–316–0480
Estimated Tax: Application of Prior Year Overpayment (Refund) 150–316–0485
Tax Used to Compute Underpayment of Estimated Tax 150–316–0487
Estimated Tax: Underpayment Interest Not Imposed if There is a Casualty, Disaster or Other Unusual Circumstances 150–316–0489
Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause 150–316–0491
Estimated Tax: Partnership and S Corporation Income of Part-year Residents and Nonresidents 150–316–0493
Required Installments for Estimated Tax 150–316–0495
Estimated Tax: Joint Return to Single or Separate Return 150–316–0497
Estimated Tax: Single or Separate Returns to Joint Return 150–316–0505
Oregon Lottery Winnings and Losses 150–316–0507
Modification of Federal Taxable Income: Interest and Dividends 150–316–0509
U.S. Government Obligations 150–316–0511
Addition for Original Issue Discount (OID) 150–316–0513
Modification of Federal Taxable Income: Adding Interest or Dividends of the United States Exempted by Federal Income Tax Law 150–316–0515
Modification of Federal Taxable Income: Adding Federal Estate Tax Attributable to Income in Respect of a Decedent Not Taxable by Oregon 150–316–0519
Gain or Loss Upon the Sale of State and Municipal Bonds of Other States (Foreign States) 150–316–0525
U.S. Government Interest in Retirement Accounts 150–316–0530
Pool of Assets that Qualify to Pay State Exempt-Interest Dividends 150–316–0535
Federal Tax Deduction: Accrual Method of Accounting Required 150–316–0537
Adjustment of Federal Tax Liability 150–316–0545
Election to Include Child’s Unearned Income — Addition Required 150–316–0550
Special Oregon Medical Subtraction 150–316–0555
Modification of Federal Taxable Income: Itemized vs. Standard Deduction 150–316–0557
Modification of Federal Taxable Income: Oregon Income Tax Claimed as an Itemized Deduction 150–316–0559
Modification of Federal Taxable Income: Previously Taxed Contributions to Pension or Annuity 150–316–0565
Basis of Depreciable Assets Moved into Oregon 150–316–0567
Property Subject to Accelerated Cost Recovery System 150–316–0569
Adjustment to Income for Basis Differences 150–316–0575
Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions 150–316–0580
Definition for Severely Disabled Exemption 150–316–0585
Exemption for Blind and Severely Disabled 150–316–0590
Substantiation for Permanently Severely Disabled 150–316–0595
Exempt Income of Native Americans 150–316–0600
Oregon Investment Advantage Apportionable Income Exemption 150–316–0605
Military Pay Subtraction 150–316–0607
First-time Home Buyer Savings Account 150–316–0610
Road Construction Worker’s Travel Expenses 150–316–0615
Substantiation Required for Construction Worker and Loggers Expenses 150–316–0625
(Miscellaneous) Valuation of Forest Land or “Farm Use” Land for Oregon Inheritance Tax Purposes 150–316–0630
Scholarship Awards used for Housing Expenses 150–316–0635
Subtraction for Land Contributed to Educational Institutions 150–316–0640
Subtraction for Qualified Investment of Severance Pay 150–316–0650
Waiver of Frivolous Return Penalty Imposed Under ORS 316.992 150–316–0652
Frivolous Return Penalty
Last Updated

Jun. 8, 2021

Rule 150-316-0084’s source at or​.us