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Oregon taxing federal stimulus payments on 2020 returns


Jeff Smith

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The title to this thread is somewhat misleading, since Oregon does not consider the stimulus rebates to be taxable income.

However the calculation of Oregon Taxable Income can be affected in some situations.

Oregon allows a subtraction for Federal Tax Liability capped at $6,950.

Since the stimulus rebates are considered to to be credits which reduce Federal Tax Liability,

some Oregon taxpayers may end up paying $ 300 or $400 more in Oregon Tax due to the reduction in their Federal Tax Liability.

However many families whose Federal Tax Liability is zero due to EITC and or CTC wil not be affected.

Also higher income taxpayers whose Federal Tax Liability is not reduced below the $ 6,950 cap will not be affected.

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11 minutes ago, cbslee said:

Interesting, in Drake if you don't input the number received  you get a red error message.

This is annoying me with every return I work on. I hope we get a program update to allow the preparers to check the box at the bottom that says not to claim the RRC.

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On 2/23/2021 at 9:56 PM, cbslee said:

The title to this thread is somewhat misleading, since Oregon does not consider the stimulus rebates to be taxable income.

However the calculation of Oregon Taxable Income can be affected in some situations.

 

Right, it is a federal tax credit that can affect the federal tax subtraction along with AOC and PTC.  See Oregon pub 17 for details.

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The Oregon Legislature will be considering a bill just introduced to add back any reduction of the taxpayer's federal tax liability by the total stimulus rebates received.

Well, if clients don't want to wait to see what happens, my crystal ball says there will be  lots amendments for several hundred dollars.

I wonder could you just file the federal tax return and put the state return on hold until the situation is clarified.🤨

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If Oregon has a separate e-file signature form that the client will sign later, you could e-file the federal and hold the Oregon return for that later signature...

(I'm in CT which accepts the federal 8879, so I have no choice; well, I do for NY that decouples for my commuter returns.)

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