I am an Oregon resident but earned all my income in Washington state in 2011 - do I need to file an OR tax return since I didn't earn any money in Oregon ?


Yes. Here's the answer to this question from oregon.gov:

3. I am moving into Oregon. What income will be taxed by Oregon?

As an Oregon resident, you are taxed on ALL income regardless of the source of the income. This includes, but is not limited to:

  1. Wages;
  2. Interest and dividends;
  3. Retirement income, even if earned prior to moving to Oregon;
  4. Rental income;
  5. Partnership and S-Corporation income;
  6. Business income;
  7. Unemployment benefits.

You may need to pay estimated taxes if you don't have Oregon withholding on your income.

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Unfortunately, you are required, but most states do have agreements with neighboring states that let the states share the collected taxes without the person having to pay double taxes. So being as this is your first tax return in your current situation, you might be wise to have a professional fill it out for you this year and then next year you can use it as a template.

Additionally, I really would like to see someone challenge this across state lines taxation in court. It sure seems to me that it is a inter-state tariff/duty, which the state's are expressly forbidden from doing in the constitution.

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    It is not across states. Oregon taxes Oregon residents on worldwide income (the same as the Federal Government does, and so many other states). The OP is Oregon resident. Washington charges taxes on WA-derived income, so the OP has to pay WA taxes as a foreigner earning money in WA, and OR taxes as a resident. WA taxes are credited towards the OR tax liability (refundable credit, IMHO), so there's NO double taxation involved. – littleadv Apr 12 '12 at 19:04
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    For that matter, there is no WA state individual income tax, so there's certainly no double taxation. – Zach Apr 13 '12 at 0:32
  • @littleadv:I don't see where I said there was double taxation. However, it definately is a tax across state lines. There are a number of ways to look at it. If you tax the person for the same earnings in 2 states then that is by definition across state lines. If you only tax based on where the money was made then that is a tarrif on the person as it is a charge on the person which could potentially limit their ability to import their product (theirself), which is the whole reason that states are prohibited from imposing tariffs between states. – Dunk Apr 13 '12 at 17:29
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    @Dunk I think the tin foil obstructs your view. How Oregon taxing Oregon resident is across any state lines? Where the income is derived from is irrelevant. If you let that criteria in - no-one will pay any tax because all the income will be channeled through non-taxing localities. If you tax the person for the same earnings in 2 states - you just asked me where you said there was double taxation. Well, there:-) But even that is not across state lines. WA would tax WA-derived income, nothing crossing state lines. OR taxes OR resident, no state lines crossed, again. – littleadv Apr 13 '12 at 17:38

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