Oregon Military Filing Information
New for 2015
If you performed active military service in 2015, and your Defense Finance and Accounting System payroll address was outside Oregon, Oregon considers you to be a nonresident and will not tax your military pay. This new law is retroactive to January 1, 2012 and applies to all members of the Armed Forces, including National Guard and reserve components, performing active service as defined in 10 USC 101(d) (3), other than annual training duty or inactive-duty training.
You are a full year resident of Oregon if:
1. You temporarily moved out of Oregon, or
2. You moved back to Oregon after a temporary absence.
3. You may also be considered a full-year resident if you spent more than 200 days in Oregon during 2016 or you’re a nonresident alien, as defined by federal law.
Your pay is subject to tax, although the pay could qualify for certain subtractions. Oregon law was changed to allow military personnel performing active service within Oregon to be treated as nonresidents for tax purposes if their address in the payroll records of the Defense Finance and Accounting System (DFAS) is outside Oregon, regardless of where they are domiciled.
This change is retroactive to January 1, 2012 for tax on military pay for active service within Oregon and tax on non-Oregon source income. If you performed active service in Oregon in 2012, 2013, or 2014, but had an address outside of Oregon in the DFAS payroll records during that time, you may file an amended return to claim a refund of the tax paid on your military pay and income from non-Oregon sources. Interest will not be paid on these amended returns. The tax is not refundable for years prior to 2012.
If you are filing as a nonresident of Oregon because you are in the state for military service, your military pay while stationed in the state is not taxable. File a nonresident return if you had other income from Oregon sources, or to claim a refund of Oregon tax withheld from your military pay.
Active Duty Subtractions:
You may qualify for more than one subtraction for U.S. military active duty pay. To be eligible for the subtractions, the active duty pay must be included in federal adjusted gross income (AGI). Active Duty pay, reenlistment bonuses, Guard and reserve annual training, weekend drills, and inactive duty training are considered active duty pay.
The Oregon military active duty pay subtractions are:
1. Active duty outside Oregon- As of August 1, 1990, you can subtract active duty pay earned anywhere outside Oregon until the date the president sets as the end of combat zone activities.
2. Guard and reserve away from home- Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time.
3. Other Military pay- You may subtract any remaining taxable military pay after removing the above subtractions, up to $6,000.
Total Subtractions: You may qualify for more than one military pay subtraction. However, the total subtraction amount cannot be more than the total military pay included in your Federal AGI.
Nonresident spouse of military member stationed in Oregon
The federal Military Spouse Residency Relief Act prevents Oregon from taxing your Oregon wages if you meet certain criteria. If you are in Oregon only to be with your spouse who is stationed here and you both are domiciled outside of Oregon, your Oregon wages are exempt from Oregon tax and are not Oregon-source income. Note: This exemption does not apply to spouses who are also members of the military.
You are not required to file an Oregon return unless you had other income from an Oregon source or Oregon taxes withheld from your pay. Examples of Oregon-source income:
• Nonmilitary wages or business income earned by your spouse in Oregon,
• Earnings from an Oregon rental property.
If you file, use Form 40N. Include all of your wages on line 8 in the federal column only. Don’t include your exempt income (or your spouse’s military pay) in the Oregon column. There is no further adjustment for your exempt wages. For information about the military pay subtraction for your spouse’s military pay, see Nonresidents stationed in Oregon.
If Oregon taxes were withheld from your exempt wages, you should file Form W-4 with your employer. At the top, write "For Oregon Only—exempt military spouse" and write exempt on line 7. Your employer may require proof that you qualify for the exemption
Extension for filing your return
You can get an extension to file your return but not to pay your tax. You must pay the entire tax by the due date to avoid interest and penalty charges.
You are allowed the same extension period for Oregon as allowed for your federal return. Do you need an extension to file only your Oregon return? Or, do you have a federal extension but need to make a payment to Oregon with your extension? Use Oregon Form 40-EXT. Go to our website to download the form or call us to order the form.
Were you stationed in a combat zone or contingency area? Did you receive additional time to file your federal return and pay your 2016 tax? If so, Oregon allows the same additional time to file and pay your Oregon tax. Write "Combat Zone" in blue or black ink at the top of the return.
For further information regarding Oregon and Military filing click here