Current through Register Vol. 63, No. 9, September 1, 2024
(1)
Credit qualifications. If you repaid income that was taxed in a prior year, you
may be eligible for a credit on your Oregon return. This rule applies to
repayments made on or after January 1, 2013 that are claimed on returns filed
after the effective date of this rule. To claim the credit, you must:
(a) Claim a federal credit or deduction under
Internal Revenue Code (IRC) section 1341; and
(b) Have paid Oregon tax in a prior year on
the income that you repaid.
(2) Credit calculation. Your Oregon claim of
right credit is the difference between the Oregon tax you paid in the prior
year and the Oregon tax you would have paid without including the repaid
income. Calculate your credit as follows:
(a)
Refigure the Oregon tax before credits in the year the income was originally
taxed by determining the tax for the year in which the income was originally
taxed without the repaid income. Do not change the federal tax subtraction or
any other items on the Oregon return.
(b) Subtract the refigured tax before credits
from the Oregon tax before credits as filed (or amended or adjusted, if
applicable). This is your claim of right credit.
Example
1 : In 2012, Jerry was required to repay $10,000 of the
unemployment compensation he had received in 2011. He claimed the claim of
right credit on his federal return, so he can also claim the credit for Oregon.
For 2011, Jerry had federal adjusted gross income (AGI) of $50,000 and Oregon
tax before credits of $3,568. Jerry refigures his 2011 Oregon tax before
credits without the repaid income. He reduces his federal AGI compared to what
was included in his original 2011 federal return by the amount repaid, $10,000.
All other Oregon items stay the same (including the federal tax subtraction).
The recalculated Oregon tax before credits is $2,668. The difference between
the refigured and original tax before credits is $900 ($3,568 minus $2,668).
Jerry's claim of right credit is $900.
(3) Federal deduction. If you claim a
deduction under IRC § 1341 on your federal return, you can allow the
deduction to flow through or you can claim a credit on your Oregon return.
Determine by comparing the following amounts:
(a) Calculate Oregon tax before credits for
the year of repayment with the deduction.
(b) Add back the federal deduction and figure
your Oregon tax before credits. Then subtract the Oregon claim of right credit.
(c) If the tax in (a) is less,
allow the deduction for Oregon also. If the tax in (b) is less, add back any
deduction as required under ORS
316.680(2)(i)
and claim the Oregon credit.
Example 2 : In
2012, Shannon had to repay wages of $3,800 from tax year 2010. She qualifies to
claim itemized deductions and chooses to claim the deduction on her federal
return. Oregon allows this deduction to flow through or allows her to claim the
credit instead. Her itemized deductions are mostly Oregon taxes, so her Oregon
itemized deductions are less than the standard deduction. Therefore, she will
not claim itemized deductions for Oregon and will claim the credit instead.
In 2010, she had federal AGI of $45,000 and her 2010 tax was
$2,988. If Shannon had not received the $3,800 she had to repay, her 2010 tax
would have been $2,679. Her 2012 credit is the difference of $342, which she
will claim on her 2012 Oregon return as a claim of right credit. There's no
addition required because she claimed the standard deduction for Oregon, so the
federal deduction did not flow through.
Publications: Publications referenced are available from the
agency.
Stat. Auth.: ORS
305.100
Stats. Implemented: ORS
315.104
