Do we pay income tax to the state we live in or the one we work in?
I’ve never really thought of it because I’ve always lived in the state I worked in. I know someone looking to move to Portland,OR (where they have a huge income tax but no sales tax). Vancouver, WA is only a 15 minute drive away, so she’s thinking of moving there (where there is no income tax and a huge sales tax). Will she pay income tax to Oregon because she’ll work there or will she be spared because she’ll live in Washington?
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She’ll file a non-resident tax return with Oregon. Oregon will tax her on her Oregon-source income.
VANCOUVER, Wash. — Many of the jobs that anchor Clark County’s economy are across the Columbia River in Oregon. But those jobs come at a price — an Oregon levy that can claim as much as 9 percent of taxable income Washingtonians earn in that state.
The tax long has been a sore point, with cross-river commuters complaining they must pay thousands of dollars to an Oregon state government that provides them with few benefits and no say in how the money is spent.
Both states, unless there is a reciprocity agreement in effect between the 2 states. In the case of WA and OR, there is none. And since WA has no income tax there would not likely ever be one anyway.
In your case, you’ll file an OR non-resident return, listing ONLY the income earned in OR.
She will pay Oregon Tax and attached a Nonresident form to Orgeon’s state return.