Oregon Tax Form 40 - Full Year Resident Income Tax Return Instructions

Do I need to file?

You need to file if your gross income is more than the amount shown below for your filing status and age.

Amounts apply to full-year residents only.

Filing status Age  If gross income is more than: 
Can be claimed on another’s return Any $900 *
Single Under 65 $5,110
  65 or over $6,310
Married/RDP filing jointly Both under 65 $10,220
  One 65 or over $11,220
  Both 65 or over $12,220
Married/RDP filing separately Under 65 $5,110
  65 or over $6,110
Head of household Under 65 $6,385
  65 or over $7,585
  Under 65 $7,115
Qualifying widow(er) 65 or over $8,115

In addition, file a return if:

  • You are required to file a federal return.
  • — You had $1 or more of Oregon income tax withheld from your wages.

* The larger of $900, or your earned income plus $300, up to the standard deduction amount for your filing status.

New information

Registered domestic partners (RDPs). If you and your partner entered into an Oregon registered domestic partnership in 2008, you will have the same rights and responsibilities as married filers. For more information, download our publication Registered Domestic Partners in Oregon from our website.

Important! Civil unions, domestic partnerships, and same-sex marriages established in other states are not recognized in Oregon.

Federal tax liability subtraction. The federal tax subtraction limit has increased to $5,600 ($2,800 if married/ RDP filing separately). Note: The tax rebates (economic stimulus payments) from the IRS may reduce your 2008 federal tax subtraction. See page 15 or 20.

Standard deduction amounts. The standard deduction amounts have changed. See page 27 or the back of Form 40S.

Schedule OR-ASC. Schedule OR-A, Oregon Adjustments for Form 40 Filers, has been renamed OR-ASC.

529 Oregon College Savings Network. The subtraction for contributions to a 529 Oregon College Savings Network account in 2008 has increased to $4,000 for joint returns and $2,000 for all other returns.

Earned income credit. You can now claim 6 percent of your federal earned income credit for Oregon purposes. See page 17 or 32 for more details.

TRICARE provider credit. A credit of up to $2,500 is available for physicians participating in their first year in the TRICARE system.

Oregon Veterans’ Home physicians’ credit. A credit of up to $5,000 is available for physicians who provide medical care to residents of the Oregon Veterans’ Home.

Charitable checkoff. You can now donate all or part of your refund to Oregon Food Bank. See page 18.

Oregon National Guard Youth Challenge Program. Income earned by employees of the Oregon National Guard Youth Challenge Program is exempt up to a maximum of $6,000.

Please visit our website or contact us for more details concerning the new information listed above.

Important reminders

Payment options. You can pay your tax due directly from your checking or savings account or by credit card. See page 17.

Filing extension. Use Form 40-EXT to get an automatic six-month extension to file your 2008 Oregon return. See page 7.

Direct deposit. The Department of Revenue can deposit your refund directly into your account at most banks or other financial institutions. For direct deposit, contact your bank to make sure your deposit will be accepted and to get your correct routing and account numbers. The Department of Revenue is not responsible if your bank rejects your deposit. If the deposit is rejected, we will issue a paper check. See page 34.

Use blue or black ink only. Please use blue or black ballpoint ink for easier reading and faster processing. Equipment used to scan documents and checks cannot read gel ink or certain colors, especially red or purple, and using them will delay the processing of your return.

Federal law. Oregon is tied to the federal definition of taxable income.* Oregon will automatically adopt any future federal law changes to the definition of taxable income.

* There are two exceptions:

  • Internal Revenue Code (IRC) section 139A for federal subsidies for prescription drug plans, and
  • IRC section 199 for income attributable to domestic production activities, also known as qualified production activity income (QPAI).

Income under these sections is exempt from tax on the federal return. If you have either of these types of income, you will have an addition on your Oregon tax return. See page 19.

New information Have questions? See page 44.

General information

What income does Oregon tax?

An Oregon resident is taxed on all income, including income from outside the state. A nonresident of Oregon is taxed only on income from Oregon sources.

Residency

Am I a resident, a nonresident, or a part-year resident? The following will help you decide.

  • You are a full-year Oregon resident, even if you live outside Oregon, if all of the following are true:
    • You think of Oregon as your permanent home, and
    • Oregon is the center of your financial, social, and family life, and
    • Oregon is the place you intend to return to when you are away.
  • You are still a full-year resident if:
    • You temporarily moved out of Oregon, or
    • You moved back to Oregon after a temporary absence.
  • You may also be considered a full-year resident if you spent more than 200 days in Oregon during 2008 or you are a nonresident alien, as defined by federal law.
  • You are a nonresident if your permanent home was outside Oregon all year.
  • You are a part-year resident if you moved into or out of Oregon during 2008. You are not considered a part-year resident if:
    • You temporarily moved out of Oregon, or
    • You moved back to Oregon after a temporary absence.

Special-case Oregon residents. If you are an Oregon resident and you meet all of the following conditions, you are considered a nonresident for tax purposes.

  • You are an Oregon resident who maintained a permanent home outside Oregon the entire year, and
  • You did not keep a home in Oregon during any part of 2008, and
  • You spent less than 31 days in Oregon during 2008.

Important! A recreational vehicle (RV) is not considered a permanent home outside of Oregon.

Oregon residents living abroad. Usually you are considered a nonresident if you qualify for the federal earned income exclusion or housing exclusion for United States residents living abroad.

Filing status

Generally, you must use the same filing status for your Oregon and federal returns.

Exception for registered domestic partners (RDPs). As an RDP, you are no longer eligible to use the single filing status. For Oregon, you are generally required to use one of the following filing statuses: registered domestic partners filing jointly or registered domestic partner filing separately.

For more information, download the publication, Registered Domestic Partners in Oregon, from our website or contact us to order it.

Exceptions for married persons when each spouse has a different residency status:

  • Full-year resident and part-year resident. You may file separate Oregon returns. If you file separate returns for Oregon, you must use the married filing separately status. The full-year resident will file Form 40, and the part-year resident will file Form 40P. If you choose to file a joint return for Oregon, use Form 40P.
  • Full-year resident and nonresident. You may file separate Oregon returns. If you file separate returns for Oregon, you must use the married filing separately status. The full-year resident will file Form 40, and the nonresident will file Form 40N. If you choose to file a joint return for Oregon, use Form 40N.
  •  Part-year resident and nonresident. You may file separate Oregon returns. If you file separate returns for Oregon, you must use the married filing separately status. The part-year resident will file Form 40P, and the nonresident will file Form 40N. If you choose to file a joint return for Oregon, use Form 40N.

Need more information? Download the publication Married Persons Filing Separate Returns from our website or contact us to order it.

What form do I use?

Use Form 40S if ALL of the following are true:

  • You are a full-year Oregon resident, and
  • Your income is only from wages, unemployment, taxable interest, ordinary dividends, fellowship grants, and taxable scholarships not used to pay for housing, and
  • You claim the standard deduction on your return, and
  • Your Oregon taxable income is less than $100,000, and
  • You do not have pension or annuity income or IRA distributions, and Visit our website at www.oregon.gov/DOR. General information
  • You are not claiming more than two “Other credits,” and
  • You do not owe penalty or interest, and
  • You did not pay estimated tax during the year.

Use Form 40 if BOTH of the following are true:

  • You are a full-year Oregon resident, and
  • You cannot use Form 40S.

Use Form 40 if any ONE of the following is true:

  • You received Social Security, pension, or annuity income, or
  • You used taxable scholarship income for housing expenses and you qualify for the Oregon subtraction, or
  • You paid or should have paid estimated tax during the year, or
  • You have adjustments to income on your federal tax return, such as alimony or IRA deductions, or
  • You have Oregon additions or subtractions other than the federal tax subtraction (the most common ones are listed on the return), or
  • You are an Oregon resident in the military, living in Oregon, claiming the subtraction for military active duty pay, or
  • You itemize deductions on your Oregon return, or
  • You are married or an RDP filing separately and your spouse or RDP is itemizing deductions, or
  • You are a nonresident alien, as defined by federal law, who lived in Oregon the entire year, or
  • You are claiming more than two “Other credits,” or
  • You owe penalty or interest, or
  • You want to apply all or part of your refund to your 2009 estimated tax.

Use Form 40P if any ONE of the following is true:

  • You are a part-year resident, or
  • You are filing jointly and one of you is a full-year Oregon resident and the other is a part-year resident, or
  • You are filing jointly and both of you are part-year Oregon residents, or
  • You qualified as an Oregon resident living abroad for part of the year.

Use Form 40N if any ONE of the following is true:

  • You are a nonresident, or
  • You are a special-case Oregon resident (see page 5), or
  • You are filing jointly and one (or both) of you is a nonresident, or
  • You meet the military personnel nonresident requirements explained on this page, or
  • You qualified as an Oregon resident living abroad for the entire year.

Forms 40P and 40N are included in the Part-Year Resident and Nonresident booklet. Download the booklet from our website or contact us to order it.

Military personnel

Residents stationed in Oregon. If you are an Oregon resident stationed in Oregon, file Form 40.

Residents stationed outside Oregon. If you meet the requirements on page 5 for special-case Oregon residents or Oregon residents living abroad, file Form 40N from the Part-Year Resident and Nonresident booklet. File Form 40 if you don’t meet the listed requirements.

Nonresidents stationed in Oregon. Oregon does not tax your military pay while you are stationed in Oregon. File Form 40N if you or your spouse/ RDP had income from other Oregon sources, or to claim a refund of Oregon tax withheld from your military pay.

Need more information? For more information on military personnel and the military active duty pay subtraction, download the publication Military Personnel Filing Information from our website or contact us to order it.

Filing for a deceased person

You must file a final personal income tax return for a person who died during the calendar year if the person would have been required to file. See “Do I need to file?” on page 3. If a return is filed, please check the “deceased” box on the return. If you have been appointed personal representative or you have filed a small estate affidavit, sign the return “as personal representative” and have the spouse or RDP sign if a joint return. If there is no personal representative for a joint return, only the surviving spouse or RDP needs to sign. For more information, download Survivor’s Information from our website or contact us to order it.

Are you filing a return and claiming a refund for someone who is now deceased and there is no court- appointed personal representative? If so, file Form 243, Claim to Refund Due a Deceased Person, with the return. This allows us to issue the refund check in your name. Download the form from our website or contact us to order it.

When should I file my return?

The filing deadline for calendar year 2008 is April 15, 2009. If you cannot pay all or any of your tax by the due date, it’s important to file your return anyway to avoid a late-filing penalty.

Returns for other tax periods are due by the 15th day of the fourth month after the close of your tax year.

What if I need more time to file?

If you need more time to file, request an automatic six- month extension. Complete an Oregon extension form, Form 40-EXT, if:

  • You’re making a tax payment to Oregon and you can’t file your Oregon return by April 15, 2009, or
  • You are filing an extension for Oregon only.

Extensions must be filed by the due date of the return, April 15, 2009.

If you received a federal six-month extension and are expecting an Oregon refund, do not use Form 40-EXT. Oregon will allow the same extension. Be sure to check box 7b on your Oregon return. Do not attach a copy of your federal extension to your Oregon return. Keep a copy of your federal extension with your records.

If you need to complete Form 40-EXT, download it from our website or contact us to order it.

An extension does not mean more time to pay! You must pay all tax you expect to owe when you file your extension. If you do not pay all the tax due when you request an extension, you will owe interest on any unpaid tax after April 15, 2009, until the date of your payment. The 2009 interest rate is 6 percent per year. If the tax is not paid within 60 days of the date of our billing notice, the interest rate increases to 10 percent per year. You may also owe a late-payment penalty. If you cannot pay all of the tax you expect to owe, pay what you can. Call us as soon as possible to set up a payment plan to reduce penalties and interest.

Were you stationed in a designated combat zone? If you were stationed in a designated combat zone and received additional time to file your 2008 federal return and pay your 2008 tax, Oregon allows the same amount of time to file and pay. Write “Combat zone” in blue or black ink at the top left corner of your return.

Penalties

You will owe a 5 percent late-payment penalty on any 2008 tax not paid by April 15, 2009, even if you have filed an extension. See page 33.

If you file more than three months after the due date or extension due date, a 20 percent late-filing penalty will be added; so, you will owe a total penalty of 25 percent of any tax not paid.

Exception: For more information about penalty exceptions, go to our website and view Computing Interest on Tax You Owe.

A 100 percent penalty is charged if you do not file a return for three consecutive years by the due date of the third year, including extensions. The penalty is 100 percent of the unpaid tax for each of the three years.

2009 estimated tax

Estimated tax is the amount of tax you expect to owe after credits and Oregon tax withheld when you file your 2009 Oregon individual income tax return.

Oregon estimated tax laws are not the same as federal estimated tax laws. Use Oregon instructions to determine if you need to make estimated tax payments for 2009.

Do I need to make estimated payments? In most cases, people who expect to owe $1,000 or more on their 2009 Oregon income tax return after credits and withholding must make estimated payments. You may need to make estimated payments if:

  • You are self-employed and do not have Oregon tax withheld from your income.
  • You receive Oregon Lottery single ticket winnings of less than $5,000. (Note: Single ticket winnings of $5,000 or more are subject to Oregon withholding.)
  • You receive income such as pensions, interest, or dividends; Oregon tax is not withheld; and you expect to owe tax of $1,000 or more.
  • You’re a wage earner and expect to owe tax of $1,000 or more on your 2009 return. You may want to increase the amount your employer withholds from your Oregon wages. Download the publication Oregon Income Tax Withholding from our website or contact us to order it.

When do I pay? Estimated tax due dates for 2009 taxes are April 15, 2009*; June 15, 2009; September 15, 2009; and January 15, 2010.

If paying with a check or money order, send your payment with Form 40-ESV, Oregon Estimated Income Tax Payment Voucher. Download the publication Estimated Income Tax from our website or contact us to order it. If you are paying by credit card or electronic payment from your checking or savings account, see page 17.

* Please send your 2009 estimated tax payment and Oregon Form 40-ESV in a separate envelope from your 2008 Oregon income tax return. This will help us credit your payment more efficiently.

Interest on underpayment of estimated tax

You may owe interest for underpaying your estimated tax if:

  • You owe $1,000 or more on your return after credits and withholding, or
  • You paid less than 90 percent of the tax due on each estimated tax payment due date.

See the instructions for Form 40, line 51, on page 33.

Visit our website at www.oregon.gov/DOR. General information

What if I’m self-employed?

If you’re self-employed and do business in Multnomah, Clackamas, or Washington counties, you may need to file Form TM, TriMet Self-Employment Tax Return. If you’re self-employed and do business in Lane County, you may need to file Form LTD, Lane Transit District Self-Employment Tax Return. Go to our website to download the forms, or contact us to order either form.

Frequently asked questions

Is my tax return private information? Yes. All information provided on the return is confidential. Any Oregon Department of Revenue employee who gives out confidential information without your permission may be convicted of a Class C felony.

I’m moving. Will my refund check be forwarded to me? Yes. If you move after you file your return, give us your new address. Download a Change of Address form from our website or contact us. Remember to file a change of address form with your local post office.

What tax records do I need to keep? You need to keep:

  • A complete copy of all your federal and state returns, including “as if” returns, even if you use a tax practitioner or file electronically.
  • All original receipts, cancelled checks, statements, and other records you used to prepare your return. Save these records for at least three years from the due date of the return or three years from the date you file your return, whichever is later. If your return is reviewed during processing or audited, the law says you must show proof of your income and expenses.
  • All records from the sale, purchase, or exchange of property and investments. Keep these records for at least three years after you report the gain or loss on the property or investment.

For more information, download the publication Record-Keeping Requirements from our website or contact us to order it.

What if I need to change my Oregon return after filing? File an amended return. Use Form 40 or Form 40S to change (amend) your full-year resident return. Check the amended return box in the upper left corner of the form. You must also complete and attach the Oregon Amended Schedule to your amended return. Download the schedule and instructions from our website or contact us to order it.

Generally, you’re allowed three years from the due date of the original return to file an amended return to claim a refund. To amend a prior year return, use Form 40 or Form 40S for that year and the Oregon Amended Schedule. For prior year tax booklets or assistance, please visit our website or contact us.

What if I’m audited by the IRS or another state? If the IRS or another state makes changes that increase your Oregon taxable income, file an amended return to report and pay additional tax. If the changes reduce Oregon taxable income, you have two years from the date of the audit report to file an amended return to claim a refund. Include a copy of the audit report with your amended return.

General instructions for Forms 40

Step 1: Fill out your federal form.

Complete your federal return first. You must use the information from your federal return to complete your Oregon return.

Registered domestic partners (RDPs): To correctly determine your Oregon tax liability, you must complete a federal income tax return “as if” you were married filing jointly or married filing separately. Use the information you calculated on the “as if” federal return to complete your Oregon income tax return, unless otherwise indicated.

Step 2: Select the appropriate form.

To decide which form to use, see page 5. Not everyone qualifies to file Form 40S (short form).

Form 40 filers. You must attach a copy (front and back) of your federal Form 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ to your Oregon Form 40. Do not attach any federal schedules. We may ask you for copies of schedules or additional information later.

See “What tax records do I need to keep?” on page 8.

Step 3: Fill out the Oregon form.

Fiscal year filers only

Fiscal year filers must use Form 40. Write the ending date of your fiscal year in the space provided. Write “Fiscal year” in blue or black ink at the top left corner of your return.

Name and address

Type or clearly print your name, Social Security number, date of birth, complete mailing address, and daytime telephone number on your return. If you are married or an RDP filing separately, do not fill in your spouse’s or RDP’s name and SSN here. Enter it on line 3 instead. If the taxpayer died in 2008 or 2009, please check the “deceased” box next to their name.

Social Security number (SSN). The request for your SSN is authorized by Section 405, Title 42, of the United States Code. You must provide this information. It will be used to establish your identity for tax purposes only.

Individual taxpayer identification number (ITIN). If the IRS issued you an ITIN because you don’t have a Social Security number, enter your ITIN wherever your SSN is requested.

If you don’t have an ITIN, you need to request one from the IRS. In this case, write “Applied for” wherever your SSN is requested, or leave blank, and file your return by April 15, 2009. Do not attach your ITIN application (federal Form W-7) to your Oregon tax return. For a copy of Form W-7, go to the IRS website at www.irs.gov, or call the IRS toll-free at 1-800-829-1040. When the IRS issues you an ITIN, send a copy of your ITIN letter to the Oregon Department of Revenue.

Date of birth. Enter the month, day, and year you were born. For example, “09/22/1976.”

Check the boxes

Filing status 1-5

Check the box next to your filing status. Generally, you must use the same filing status you used on your federal return.

Exception for registered domestic partners (RDPs). As an RDP, you are no longer eligible to use the single filing status. For Oregon, you are generally required to use one of the following filing statuses: registered domestic partners filing jointly or registered domestic partner filing separately.

Exceptions for married persons when each spouse has a different residency status. For more information, see page 5.

If you are married or an RDP filing separately, fill in your spouse’s or RDP’s first name, last name (first four letters only), and Social Security number under box 3a or 3b. Do not fill in your spouse’s or RDP’s name or Social Security number in the heading of the return.

If you are filing as head of household, fill in the name of a person who qualifies you for head of household filing status next to box 4. Please enter only one name.

Exemptions 6a & 6b

Yourself and spouse/RDP. Check “Your self” and other boxes that apply. If someone else can claim you as a dependent (even if they did not), do not check “Yourself;” instead enter -0-in the total box on 6a unless you have a severe disability.

Severely disabled. Did you have a severe disability at the end of 2008? If so, you may claim an additional exemption credit. This credit is different from the disabled child credit. You may qualify for and claim the severely disabled exemption even if someone else can claim you as a dependent. You are considered to have a severe disability if any of the following apply:

  • You permanently lost the use of one or both feet, or
  • You permanently lost the use of both hands, or
  • You’re permanently blind, or
  • You have a permanent condition that, without special equipment or outside help, limits your ability to:
    • Earn a living, or
    • Maintain a household, or
    • Transport yourself.

Special equipment doesn’t include items such as eyeglasses, contact lenses, ordinary crutches, or hearing aids. Deafness alone does not qualify.

You don’t qualify for this exemption if:

  • You have a temporary disability from an injury or illness and are expected to recover, or
  • Your condition keeps you from doing your former work but does not prevent you from doing other kinds of work without special equipment.

If you have a permanent severe disability, your physician must write a letter describing it. Keep the letter with your permanent records in case we request a copy.

If you qualify, check the “severely disabled” exemption box on line 6a. If your spouse or RDP qualifies, check the “severely disabled” exemption box on line 6b. You and your spouse or RDP may also qualify for the loss of use of limbs credit. See instructions on page 16 or 31.

6c All dependents

Enter the number of your dependents in box 6c. Write their first names on the line. In most cases, you must claim the same dependents claimed on your federal return. If the first names of your dependents do not fit on the line, write the names on a statement instead. Number the statement and attach it to your return. Write “STM” and the statement number on line 6c.

6d Children with a disability

You may be entitled to an additional personal exemption for your dependent child who has a qualifying disability. To qualify, all of the following must be true:

  • Your child qualified as your dependent for 2008, and
  • Your child was eligible for “early intervention services” or received special education as defined by the State Board of Education of the state where the child attends school (learning disabilities or communication disorders alone do not qualify), and
  • Your child was considered to have a disability as of December 31, 2008, under the federal Individuals with Disabilities Education Act. Eligible disabilities include:
    • Autism.
    • Deaf-blind.
    • Hearing impairment.
    • Mental retardation.
    • Multiple disabilities.
    • Orthopedic impairment.
    • Other health impairment.
    • Serious emotional disturbance.
    • Traumatic brain injury.
    • Visual impairment.

You must get a statement of eligibility that confirms one of the disabilities listed and a cover sheet from one of the following:

  • The child’s Individualized Education Program (IEP), or
  • The child’s Individualized Family Service Plan (IFSP).

Keep the statement and cover sheet with your permanent records. Write your disabled child’s name on line 6d, “Disabled children only.” If the first names of your disabled children do not fit on the line, write the names on a statement instead. Number the statement and attach it to your return. Write “STM” and the statement number on line 6d. Also be sure to include the same child’s name on line 6c for “All dependents.”

7a Age 65 or older, or blind.

Check the boxes on line 7a if you or your spouse/RDP were age 65 or older or were blind on December 31, 2008. You are entitled to a larger standard deduction on Form 40S, line 10; or Form 40, line 26. If you or your spouse/RDP are permanently blind, you may also qualify for the severely disabled exemption credit. For box 6a and 6b instructions, see page 9.

7b Extension

If you filed for an extension, check box 7b. For more information, see page 7.

7c Federal Form 8886 , REIT, or RIC

Check box 7c if you filed federal Form 8886, Reportable Transaction Disclosure Statement or participated in a real estate investment trust (REIT) or regulated investment company (RIC).

7d Oregon Form 24

Did you file federal Form 8824 because you are deferring gain on exchanged property? If so, check box 7d on Form 40. Also, complete and attach Form 24, Oregon Like-Kind Exchanges/Involuntary Conversions. Download the form from our website or contact us to order it.

7e State School Fund

If there is a kicker refund, do you wish to donate all your kicker refund to the State School Fund? If so, check box 7e. The fund is used for public elementary and secondary education. The kicker amount, if any, will be determined in the fall of 2009. If you check the box, any kicker refund that you would have received in 2009 based on your 2008 Oregon income tax will be sent directly to the State School Fund. If you check the box, you cannot change your decision for the 2008 tax year.

Form 40 line instructions

The following instructions are for lines not fully explained on the form. For general Form 40 instructions, see page 9.

Amended return. If you are amending your 2008 return, check the box in the upper left corner of Form 40 and attach the Oregon Amended Schedule.

Do not fill in cents. You must round off cents to the nearest dollar. For example, $99.49 becomes $99.00, and $99.50 becomes $100.00.

8 Federal adjusted gross income

Enter your federal adjusted gross income from Form 1040, line 37; Form 1040A, line 21; Form 1040EZ, line 4; Form 1040NR, line 35; or Form 1040NR-EZ, line 10. You must attach a copy (front and back) of your federal return to your Oregon Form 40. This helps us verify your income and process your return faster.

Additions

Generally, additions are items not taxed by the federal government, but taxed by Oregon. Additions increase the income taxed by Oregon.

9 Interest and dividends on state and local government bonds outside of Oregon.

You must add to Oregon income any interest and dividends you received from state and local governments outside Oregon. You don’t pay federal tax on this interest, but you do pay Oregon tax.

Example: Include interest from state of Washington bonds or from San Francisco city bonds. Do not include interest from Oregon government bonds or interest from U.S. territories or possessions (such as Guam, Puerto Rico, or the Virgin Islands).

10 Other additions.

You may need to report one or more other additions explained here. Please identify the addition using the numeric code shown. If you have only one “Other addition,” enter the code on line 10x and the amount on lines 10y and 10. For example, if you’re reporting a $200 addition for claim of right, enter “103” on line 10x and “$200” on lines 10y and 10. If you’re claiming more than one “Other additions,” do not enter a code or amount on line 10x or 10y. Instead, check box 10z and attach Schedule OR-ASC to your return with the numeric codes and amounts of the additions. Enter the total from Schedule OR-ASC on line 10.

  • Federal deduction for long-term care insurance premiums [code 104]. Will you claim an Oregon long- term care insurance premiums credit this year? Did you claim a federal deduction on federal Schedule A for the premiums? If so, you must add to Oregon income the amount of premiums that resulted in a tax benefit on your federal return. Download the publication Long-Term Care Insurance Premiums Tax Credit from our website or contact us to order it.
  • Federal election on interest and dividends of a minor child [code 107]. Did you report interest or dividends of your minor child on your federal return? If so, you must add to Oregon income the amount subject to the special federal tax. Fill in the smaller of line 13 or 14 from federal Form 8814. Add to that any interest or dividends your child received from state and local governments outside Oregon.
  • Federal income tax refunds [code 109]. Did you get a federal tax refund in 2008 because you filed an amended federal return for a prior year or were audited? If so, you must add back the refund amount because it was claimed as part of your federal tax subtraction on your Oregon return for the prior year. Do not include the federal tax rebate (economic stimulus payment) you may have received.
  • Gambling losses claimed as an itemized deduction [code 105]. Did you claim gambling losses as an itemized deduction on your federal Schedule A? If so, you must add the gambling losses claimed as an itemized deduction that are more than the gambling winnings taxed by Oregon. For more information, see Oregon Lottery on page 22.
  • Lump-sum payment from a qualified retirement plan [code 115]. Did you complete federal Form 4972 to figure the tax on a qualified lump-sum distribution using the 20 percent capital gain election and/ or the 10-year tax option? If so, part or all of your lump-sum distribution will not be included in your federal adjusted gross income (AGI). The taxable amount of your distribution (federal Form 1099-R, box 2a) that isn’t included in your federal AGI is taxable to Oregon. Fill in the excluded amount on line 10 of your Oregon Form 40. Attach a copy of federal Form 1099-R to your Oregon return along with your Form(s) W-2 and other Form(s) 1099. For more information, please contact us.
  • The following additions apply to only a few people and are not explained in this booklet. For more information, go to our website or contact us.
    • 529 Oregon College Savings Network plan non- qualified withdrawal [code 117].
    • Basis adjustments [code 101].
      • Depletion in excess of property basis.
      • Depreciation difference for Oregon.
      • Gain or loss on the sale of depreciable property with different basis for Oregon.
      • Passive activity losses.
      • Suspended losses. Visit our website at www.oregon.gov/DOR. Form 40—Additions 19
    • Business credit, unused [code 122].
    • Claim of right income repayments [code 103].
    • Disposition of inherited Oregon farmland or forestland [code 106].
    • Domestic production activities deduction [code 102].
    • Fiduciary adjustments [code 100].
      • Accumulation distribution from a trust.
      • Federal estate tax on income in respect of a decedent.
      • Fiduciary adjustments from Oregon estates and trusts.
    • Individual Development Account (IDA) [code 113].
      • Non-qualified withdrawal.
      • Addback for IDA donation credit.
    • Itemized or business deduction addback for Oregon credits [code 104].
      • Contributions to: Child Care Fund, Oregon Cultural Trust, Oregon Production Investment Fund, or university venture fund.
      • Income taxes paid to another state.
      • Long-term care insurance premiums.
      • Self-employed long-term care insurance deduction.
    • Net operating loss non-Oregon source [code 116].
    • Oregon deferral of reinvested capital gain [code 118].
    • Partnership or S corporation modifications for Oregon [code 119].
    • Prescription drug plan subsidies [code 123].
    • Schedule A deduction addback for Oregon subtractions [code 105].
      • Gambling losses claimed as itemized deduction.
      • Oregon only Schedule A item.
      • Refund of Oregon only Schedule A items from a prior year.
    • Specially taxed income under federal law: passive foreign investment company income [code 115].

Subtractions

Generally, subtractions are items the federal government taxes but Oregon does not. Subtractions reduce the income taxed by Oregon.

13 2008 federal tax liability.

Carefully follow the instructions. Don’t confuse your federal tax liability on your federal return with the federal tax withheld on your Form(s) W-2. They are not the same.

Important! In 2008, the IRS began sending tax rebates (economic stimulus payments) to taxpayers. In most cases, taxpayers received $600 ($1,200 for married couples) and parents received $300 per child under age 17. The tax rebate you received must be subtracted from your federal tax liability when figuring your 2008 federal tax liability subtraction.

You may deduct your total federal income tax liability, after credits. Don’t fill in less than -0-or more than $5,600 ($2,800 if married/RDP filing separately).

RDPs: Use amounts from your actual return(s), not your “as if” return.

1. Enter your federal tax liability from Form 1040, line 56; Form 1040A, line 35; Form 1040EZ, line 11; Form 1040NR, line 51; or Form 1040NR-EZ, line 15. 1._________
2. Enter your tax on qualified retirement plans from Form 1040, line 59; or Form 1040NR, line 54; any recapture taxes you included on the dotted line of Form 1040, line 61; or Form 1040NR, line 57; and the amount on Form 1040NR, line 52. 2._________
3. Add lines 1 and 2. 3._________
4. Enter the tax rebate (economic 4. stimulus payment) you received from the federal government in 2008 and any rebate from Form 1040, line 70; Form 1040A, line 42; or Form 1040EZ, line 9. 4._________
5. Subtract line 4 from line 3 (if less 5. than -0-, enter -0-). 5._________
6. Enter $5,600 ($2,800 if married/ RDP filing separately). 6._________
7. Enter the smaller of line 5 or line 6 7. here and on Form 40, line 13. 7._________

Caution: Don’t include any of the following on line 2:

  • Self-employment tax.
  • Social Security and Medicare tax on tips.
  • Advance earned income credit payments.
  • Household employment taxes.

 Are you amending your 2008 return? See the Oregon Amended Schedule instructions to figure your subtraction for federal tax liability.

Did you pay additional federal tax in 2008 because you were audited or filed an amended return? If so, see page 21 for line 18 instructions.

The total of your federal tax subtraction (line 13), your federal tax from a prior year (line 18, code 309), and your foreign tax subtraction (line 18, code 311) cannot be more than $5,600 ($2,800 if married/RDP filing separately). The foreign tax portion of your federal tax subtraction cannot be more than $3,000 ($1,500 if married/ RDP filing separately).

14 Social Security and tier 1 Railroad Retirement Board benefits income.

Fill in the amount from federal Form 1040, line 20b; or Form 1040A, line 14b. If you have tier 2, windfall/vested dual, or supplemental Railroad Retirement Board benefits, these are subtracted on line 18. For more information, contact us.

15 Oregon income tax refund included in federal income.

Fill in your Oregon state income tax refund from federal Form 1040, line 10. Do not include local, county, or other states’ tax refunds.

16 Interest and dividends from U.S. government.

Fill in interest and dividends from the U.S. government that you included on your federal return. Include U.S. government interest and dividends you received through partnerships or grantor trusts. See line 18 to subtract U.S. government interest in IRA or Keogh distributions. Do not include interest on federal tax refunds in the subtraction.

Examples:

  • You can subtract interest from U.S. Series EE, I, or HH bonds and Treasury bills or notes.
  • You can subtract interest and dividends paid to you by organizations that invest in U.S. government securities. The payer may have given the percentage of interest and dividends from U.S. government securities on your Form 1099. Download the publication Interest and Dividends on U.S. Bonds and Notes from our website or contact us to order it.
  • If you reported interest or dividends of your minor child on your federal return, you can subtract any U.S. government interest included.
  • You must reduce U.S. government interest and dividends by any interest expense relating to U.S. government obligations deducted on your federal Schedule A.

 Note: When you sell or dispose of a U.S. government obligation, you must include any gain or loss in Oregon income.

17 Federal pension income.

You may be able to subtract some or all of your taxable federal pension included in 2008 federal income. This includes benefits paid to the retiree or the beneficiary. The subtraction amount is based on the number of months of federal service before and after October 1, 1991:

  • If all your months of federal service were before October 1, 1991, subtract 100 percent of the taxable amount of federal pension income you reported on your federal return.
  • If you have no months of service before October 1, 1991, you cannot subtract any federal pension.
  • If your service was both before and after October 1, 1991, subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide the months of service before October 1, 1991, by the total months of service. Round to three places (example: .4576 = 45.8 percent). Once you’ve determined the percentage, it will remain the same each year. Write the percentage on line 17a. If you have two federal pensions, write the second percentage on line 17b and enter your total subtraction amount on line 17. Figure the percentage for each pension separately.

Federal pension subtraction formula:

Months of service before 10/1/91
Total months of service
×
Federal pension amount included in federal income
=
Oregon subtraction

Example: Ann worked for the U.S. Forest Service from March 31, 1976, until January 7, 2008. She worked a total of 381 months; 186 months were worked before October 1, 1991. In 2008, she received taxable federal pension income of $35,000. Using the formula, her federal pension subtraction is:

186 / 381 × $35,000 = $17,080

She can subtract 48.8 percent—or $17,080 ($35,000 × 0.488)—of her taxable federal pension. She will continue to subtract 48.8 percent from Oregon income in future years.

18 Other subtractions.

You may qualify for one or more other subtractions explained below. Please identify the subtraction using the numeric code shown. If you have only one “Other subtraction,” enter the numeric code on line 18x and the amount on lines 18y and 18. For example, if you’re claiming a $100 Oregon Lottery subtraction, enter “322” on line 18x and “$100” on lines 18y and 18.

If you’re claiming more than one “Other subtractions,” do not enter a code or amount on line 18x or 18y. Instead, check box 18z and attach Schedule OR-ASC to your return with the numeric codes and amounts of the subtractions. Enter the total from Schedule OR-ASC on line 18. Do not use this line to subtract federal pension (use line 17 instead). For more information, go to our website or contact us.

  • 529 Oregon College Savings Plan [code 324]. You can subtract up to $4,000 for joint returns or up to $2,000 for all other returns for contributions made to a 529 Oregon College Savings Network account in 2008. If you contribute more than your limit, you can carry forward the remaining contribution not subtracted over the next four years. Keep a copy of your account statement with your tax records. For more information, go to www.oregon529network.com, or contact us.
  • American Indian [code 300]. Are you an enrolled member of a federally recognized American Indian tribe? You may be able to subtract all or part of your income if all of the following are true:
    • You are an enrolled member of a federally recognized American Indian tribe, and
    • Your income was from sources within federally recognized Indian country in Oregon, and
    • You lived in federally recognized Indian country in Oregon when the income was earned.

You must attach a completed copy of your Exempt Income Schedule for Enrolled Members of a Federally Recognized American Indian Tribe to your return. Download the schedule from our website or contact us to order it.

  • Federal tax from a prior year [code 309]. Did you pay additional federal income tax in 2008 because you were audited or you amended a prior year’s return? If so, you may be able to subtract the additional tax. This subtraction applies only to additional tax you paid because your return was changed. It does not include the tax from the original return or interest or penalties you paid.

Use the following worksheet to figure your subtraction for federal tax from a prior year.

1. Enter $5,600 ($2,800 if married/ RDP filing separately). 1.________
2. Enter your federal tax liability from Form 40, line 13. 2.________
3. Line 1 minus line 2. If the result is -0-, you cannot deduct your federal tax paid for a prior year. If greater than -0-, enter the result on line 3. 3.________
4. Enter the amount of federal tax you paid in 2008 for a prior year. 4.________
5. Enter the smaller of line 3 or line 4 here and on Form 40, line 18 and identify using code 309. 5.________
  • Individual Development Account (IDA) [code 314]. Did you deposit money into your IDA or did you report interest income from your IDA on your federal return? If so, you can subtract the amount deposited into your account and the interest income reported on your federal return. For more information, go to www.tnpf.org and review “IDA initiative,” or contact us.
  • Military active duty pay [code 319]. If you included U.S. military active duty pay in your federal taxable income, you may qualify for a subtraction on your Oregon return. You can subtract all active duty pay earned outside Oregon during the year plus up to $6,000 active duty pay earned in Oregon. Note: Your total subtraction cannot be more than your total taxable active duty pay income.

Guard and reserve annual training is considered active duty. Note: Weekend drills and training are considered active duty. Download Military Personnel Filing Information from our website or contact us to order it.

Example: Barry, an Oregon resident, enlisted in the Army in 1999. From January until August 2008, he was stationed at Fort Lewis, Washington. He earned $24,000 active duty pay there. From August until the end of the year, he served in Oregon as a recruiter. He earned $12,000 in Oregon. He can subtract the $24,000 earned outside Oregon and $6,000 earned in the state, for a total subtraction of $30,000.

  • Oregon National Guard and reserve pay subtraction [code 319]. The following questions will help determine if you can claim this subtraction.
    • Were you a member of the Oregon National Guard or reserves at any time during the year?
    • Were you required to be away from home overnight for at least three weeks consecutively?
  • If you answered yes to both of these questions, you can subtract all of the Oregon National Guard or reserve pay you earned while you met the above qualifications. For more information, visit our website and download Military Personnel Filing Information (150-101-657).

If you’re an enrolled member of a federally recognized American Indian tribe and a member of the U.S. Armed Forces who is stationed in Oregon, you may be eligible for an additional subtraction. For more information, please contact us.

  • Oregon Lottery [code 322]. Although Oregon does not tax Oregon Lottery winnings of $600 or less per ticket, the federal government does. Oregon Lottery includes Powerball tickets you purchased in Oregon.
  • You can subtract the following winnings included in your federal income from Oregon income:
    • Winnings of $600 or less from each single ticket or play, and
    • Annual payments from tickets bought before 1998.

Example 1: Cheryl had winnings of $200 from an Oregon Lottery scratch-off ticket in 2008. This income is included in her federal adjusted gross income. Oregon does not tax Oregon Lottery winnings of $600 or less per single ticket or play. Cheryl can subtract the $200 she won on the scratch-off ticket.

Example 2: David won two prizes in 2008: $1,000 from an Oregon Lottery scratch-off ticket and $500 playing an Oregon Lottery Keno game. David must include this $1,500 in his federal income, however, Oregon will not tax the $500 he won playing Keno. He can subtract $500 on his Oregon return because the winnings were from a single game and under the $600 limit. He cannot subtract any of the $1,000 he won on the scratch-off ticket, because the prize was more than $600 and is fully taxable to Oregon.

Do not subtract any other type of winnings such as winnings from tribal gaming centers. If you have gambling losses claimed as an itemized deduction, see page 19.

  • Tuition and fees deduction [code 308]. Did you claim a Hope or lifetime learning credit on your federal return? If so, you were not allowed a federal tuition and fees deduction because you claimed the federal credit. Because Oregon does not have credits similar to the Hope or lifetime learning credits, you can subtract the federal tuition and fees deduction on your Oregon return up to the amount you would have been allowed on your federal return. You can claim the lesser of $4,000 or your actual expenses. If you were not allowed a deduction on your federal return because you are someone else’s dependent, you cannot claim this subtraction.
  • The following subtractions apply to only a few people and are not explained in this booklet. For more information, go to our website or contact us.
    • Artist’s charitable contribution [code 301].
    • Basis adjustments [code 304].
      • Depreciation difference for Oregon.
      • Gain or loss on the sale of depreciable property with a different basis for federal and Oregon purposes.
      • Passive activity losses.
    • Capital Construction Fund (CCF) [code 339].
    • Claim of right income repayments [code 302].
    • Construction worker and logger commuting expenses [code 303].
    • Federal business credits [code 340].
    • Federal gain previously taxed by Oregon [code 306].
    • Fiduciary adjustments from Oregon estates and trusts [code 310].
    • Film production labor rebate [code 336].
    • Foreign tax [code 311].
    • Interest from local government bond [code 317].
    • IRA conversions or employee retirement plans (previously taxed) [code 327].
    • Land donations to educational institutions [code 316].
    • Mobile home park capital gain [code 338].
    • Mobile home tenant payment [code 344].
    • Mortgage interest credit [code 320].
    • Net operating loss [code 321].
    • Oregon investment advantage [code 342].
    • Oregon National Guard Youth Challenge Program [code 345].
    • Partnership or S corporation modifications for Oregon [code 323].
    • Public Safety Memorial Fund award [code 329].
    • Railroad Retirement Board benefits: tier 2, windfall/ vested dual, supplemental, and railroad unemployment benefits [code 330].
    • Scholarship awards used for housing expenses [code 333].
    • TRICARE income, first and second year participation [code 343].
    • U.S. government interest in IRA or Keogh distributions [code 331].

Deductions

You can claim net itemized deductions or Oregon’s standard deduction, whichever is larger, but not both.

  • If you claim itemized deductions, fill in lines 21–25.
  • If you claim the standard deduction, fill in line 26.

Note: If you’re married/RDP filing separately and one spouse/RDP itemizes, both must itemize deductions. If your spouse/RDP itemizes and you don’t, your standard deduction is -0-.

21 Itemized deductions.

You can claim your total itemized deductions after federal limitations as shown on federal Schedule A, line 29. You can claim itemized deductions for Oregon even if you don’t have enough deductions to itemize on your federal return. If you itemize for Oregon only, fill out a federal Schedule A for Oregon purposes. Be sure to include your state taxes even when itemizing for Oregon only, then subtract your Oregon state income tax on line 24. Use your federal adjusted gross income to figure the Schedule A limitations. Remember to keep Schedule A with your tax records.

22 Special Oregon medical deduction.

Were you or your spouse/RDP age 62 or older on December 31, 2008? If so, enter the amount from federal Schedule A line 1 or line 3, whichever is less. To claim this deduction, you must itemize your deductions for Oregon.

24 State income tax or sales tax claimed as an itemized deduction.

Fill in the amount of Oregon state income tax or any state and local sales tax you claimed as an itemized deduction on federal Schedule A, line 5. Don’t include local or county income tax amounts.

Are you claiming an Oregon credit for income taxes paid to another state and deducting the other state’s taxes on Schedule A? If so, include the other state’s 2008 net tax liability, or the other state’s 2008 tax claimed as an itemized deduction, whichever is less. For the credit instructions, see page 30.

Did you limit itemized deductions on your federal return because your adjusted gross income was more than $159,950 ($79,975 if married filing separately)? If so, you may need to complete a worksheet to figure how much Oregon income tax to subtract from itemized deductions. Download the publication Itemized Deductions Limit from our website or contact us to order it.

26 Standard deduction.

Your standard deduction is based on your filing status:

Single....................................................... $1,865
Married/RDP filing jointly ...............................3,735
Married/RDP filing separately
If spouse/RDP claims standard deduction ........ 1,865
If spouse/RDP claims itemized deductions ........ -0-
Head of household........................................ 3,005
Qualifying widow(er) .....................................3,735

Standard deduction—Age 65 or older, or blind. If you or your spouse/RDP are age 65 or older, or blind, you are entitled to a larger standard deduction amount. Use the chart below to determine your larger standard deduction.

1. Are you: ............. 65 or older? Blind?

If claiming spouse’s/RDP’s exemption,
is your spouse/RDP: ..... 65 or older? Blind?

2.

If your filing status is…
And the number of boxes checked in step 1 is…
Then your standard deduction is…
Single
1
 $3,065
 
2
 4,265
Married/RDP filing jointly
1
 4,735
 
2
 5,735
 
3
 6,735
 
4
 7,735
Married/RDP filing separately
1
 2,865
 
2
 3,865
 
3
 4,865
 
4
 5,865
Head of household
1
 4,205
 
2
 5,405
Qualifying widow(er)
1
 4,735
 
2
 5,735

Fill in the total standard deduction on Form 40, line 26.

Standard deduction—Dependents. If someone else can claim you as a dependent, your standard deduction is limited to the larger of:

  • Your earned income plus $300, up to the maximum allowed for your filing status, or
  • $900.

The limit applies even if you qualify but are not claimed as a dependent on another person’s return. See the standard deduction instructions for dependents on page 15.

Standard deduction—Nonresident aliens. The standard deduction for nonresident aliens (as defined by federal law) is -0-.

27 Total deductions.

Enter the larger of line 25 or line 26.

Oregon tax

29 Tax from tax tables or tax rate charts.

Figure the tax on your Oregon taxable income, line 28. Go to the tax tables or rate charts on pages 41–43. Fill in your tax amount on line 29 and check box 29a. Please double-check that the tax you entered is correct.

Example 1: A single Oregon taxpayer has taxable income of $19,500. The taxpayer will use column S on page 42. The tax is $1,556.

Example 2: A married couple has Oregon taxable income of $75,500. They are filing jointly. They will use the married/RDP filing jointly rate chart J on page 43. They figure their tax like this:

Tax from farm income averaging or farm asset capital gain method. If you qualify, you can compute your Oregon tax using one of the following methods:

Farm income averaging method. You can use the federal farm income averaging method even if you did not use farm income averaging on your federal return.

Use Form FIA-40, Oregon Farm Income Averaging for Full- Year Residents, to calculate tax on your farm income and other Oregon income. Download the form from our website or contact us to order it. Enter the tax amount from Form FIA-40, line 22, on Form 40, line 29. Check box 29b labeled “Form FIA-40.” Attach a copy of Form FIA-40 to your return.

Farm asset capital gain method. Did you sell or exchange capital assets primarily used in farming because you were getting out of a farming business? Or, did you sell or exchange a farming partnership, corporation, or other farming entity in which you held at least a 10 percent ownership interest? If the sale or exchange was not to a family member and you were getting out of a farming business completely, you may be eligible for a reduced tax rate on the net capital gain from the proceeds.

Use Worksheet FCG, Farm Liquidation Long-Term Capital Gain Tax Rate, to calculate tax on your net farm capital gain and other Oregon income. Download the worksheet from our website or contact us to order it. Enter the tax amount from Worksheet FCG, line 7, on Form 40, line 29. Check box 29c labeled “Worksheet FCG.” Do not attach a copy of Worksheet FCG to your return. Keep a copy with your records.

30 Interest on certain installment sales.

Do you have installment sales where you were required to pay interest on the deferred tax liability for federal purposes? If so, you must also compute interest for Oregon. The amount due for Oregon is computed the same as the federal amount. The interest rate is 0.50 percent per month for 2008.

Credits—Non-refundable

Most credits cannot be more than your Oregon tax liability. Some credits have a carryforward provision that allows you to use the unused balance in the next year. Use credits that cannot be carried forward first.

33 Exemption credit.

Your exemption credit may be reduced if your federal adjusted gross income (Form 40, line 8) is more than the threshold for your filing status.

If the charts below apply to you, follow the instructions in the box. Otherwise, complete the exemption credit worksheet.

34 Retirement income credit.

If you were age 62 or older on December 31, 2008, and receiving retirement income, you may qualify for a retirement income credit if:

  • Your household income is less than $22,500 ($45,000 if married/RDP filing jointly), and
  • Your Social Security benefits and/or tier 1 Railroad Retirement Board benefits are less than $7,500 ($15,000 if married/RDP filing jointly), and
  • Your household income plus your Social Security and/or tier 1 Railroad Retirement Board benefits is less than $22,500 ($45,000 if married/RDP filing jointly).

Retirement income includes payments reported in Oregon taxable income from:

  • U.S. government pensions (including military).
  • State or local government pensions.
  • Employee pensions.
  • Individual retirement plans.
  • Deferred compensation plans including defined benefit, profit sharing, and 401(k).
  • Employee annuity plans.

Use the following worksheet to figure your credit.

What is included in household income? Household income includes all taxable and nontaxable income of each spouse or RDP except:

  • Social Security and tier 1 Railroad Retirement Board benefits.
  • Your state income tax refund.
  • Pension income excluded from federal AGI that is a return of your contributions.
  • Pensions that are rolled over into an IRA.

Any losses claimed are limited to $1,000 for each activity. Depreciation is limited to $5,000.

The credit cannot be more than your tax liability. You cannot carry any amount that is more than your tax liability over to next year. You may claim this credit or the credit for the elderly or the disabled, line 36, but not both.

35 Child and dependent care credit.

You’re allowed an Oregon credit only if you qualify for the federal child and dependent care credit. You may still be able to claim the Oregon credit even if you can’t use all of your federal credit. Note to RDPs: Use your “as if” federal return to see if you qualify for the Oregon credit.

Did you pay 2007 child care expenses in 2008? If so, you may be able to use that amount to increase your 2008 Oregon child and dependent care credit. For more information, please contact us.

Carryforward. Your total 2008 child and dependent care credit can’t be more than your 2008 Oregon tax liability. You can carry forward any excess credit over the next five years. If the excess isn’t used within five years, it’s lost. See other credits instructions, page 31.

36 Credit for the elderly or the disabled.

The Oregon credit is 40 percent of your federal credit. You can claim an Oregon credit only if you qualify for the federal credit. Please complete federal Form 1040, Schedule R or federal Form 1040A, Schedule 3, even if you aren’t using the federal credit.

Multiply the amount on federal Form 1040, Schedule R, line 20; or Form 1040A, Schedule 3, line 20, by .40 (40 percent). Note to RDPs: Use your “as if” federal return to see if you qualify for the Oregon credit.

You can claim this credit or the retirement income credit, line 34, but not both.

37 Political contribution credit.

Fill in your total political contributions, up to $100 on a joint return or up to $50 on all others. Your contribution(s) of money must have been made during 2008 to any of the following:

  • A political party.
  • A qualified candidate (or the candidate’s principal campaign committee) for federal, state, or local office to be voted for in Oregon.
  • A political action committee certified in Oregon.

Download the publication Political Contributions Tax Credit from our website or contact us to order it.

38 Credit for income taxes paid to another state.

Did you pay income taxes to another state or U.S. territory on income that is also taxed by Oregon? If so, you may be able to claim this credit. If you were a full-year Oregon resident and had income taxed by Arizona, California, Indiana, or Virginia, you cannot claim the credit on your Oregon return. However, you can claim the credit on the nonresident return you file with those states. If income is taxed by Oregon and another state not listed here, claim the credit on your Form 40 Oregon resident return, line 38. If you only paid taxes to one other state, enter the two-letter state abbreviation on Form 40, line 38y and the credit amount on Form 40, line 38.

If you are claiming the credit for more than one state, do not enter a state abbreviation on line 38y. Instead check box 38z and attach Schedule OR-ASC to your return identifying the states and the credit amount for each state. Enter the total for all states from Schedule OR-ASC on Form 40, line 38.

This credit is only for state income tax. You cannot claim this credit for city or county income tax, sales tax, alternative minimum tax (AMT), property tax, school tax, or building funds.

Your credit is the smallest of the following:

  • The other state’s 2008 net tax liability.
  • Your Oregon tax liability after all credits, except credits for income taxes paid to other states.
  • The amount figured using the following formula:

Divide your modified adjusted gross income (MAGI) taxed by both states by your total MAGI. Multiply the result by your Oregon tax after subtracting all other credits.

Your MAGI taxed by both states/Your total MAGI × Your Oregon tax after subtracting all other credits

Your total MAGI equals the sum of lines 8 and 9 minus lines 14–17 of Form 40. Add the amount on Form 40, line 10, only if it’s income Oregon taxes but the federal government doesn’t. Subtract the amount on Form 40, line 18, only if it’s income the federal government taxes but Oregon doesn’t.

Caution: You can’t claim this credit and claim the tax you paid as an itemized deduction. On Form 40, line 24, in addition to the Oregon tax you claim as an itemized deduction, fill in the smaller of the following:

  • The other state’s 2008 tax claimed as an itemized deduction, or
  • The other state’s 2008 net tax liability.

If the credit is based on a tax liability paid in two different tax years, you may be required to restore the deduction to Oregon income in two different tax years. For more information, please contact us.

Important! You must attach a copy of the other state’s return and proof of payment to the back of your Oregon return.

39 Other credits.

You may qualify for other non refundable credits listed on pages 31–32. Please identify the credit using the numeric code. If you have only one “Other credit,” enter the numeric code on line 39x and the amount on lines 39y and 39. For example, if you’re claiming a $45 residential energy credit, enter “729” on line 39x and “$45” on lines 39y and 39. If you’re claiming more than one “Other credit,” do not enter a code or amount on line 39x or 39y. Instead, check box 39z and attach Schedule OR-ASC to your return with the numeric codes and amounts of the credits. Enter the total from Schedule OR-ASC on Form 40, line 39.

  • Biofuel consumer [code 744]. Do you use E85 or B99 fuel blends for your car? Do you heat your home with wood pellets or biodiesel that’s at least B20? If so, you may be eligible for this credit. Your credit is 50 cents per gallon of qualifying fuel blends, up to $200 per Oregon registered vehicle. For wood pellets, your credit is $10 per bone dry ton up to $200 per taxpayer. If heating your home with qualifying biodiesel, your credit is five cents per gallon up to $200. Contact the department for more information.
  • Child and dependent care carryforward [code 704]. Enter the amount of unused credit from a prior year. The prior year carryforward plus your current year’s credit can’t be more than your Oregon tax liability on Form 40, line 41. You can carry forward any excess credit from line 35 over the next five years. If the carryforward isn’t used within five years, it’s lost.
  • Individual Development Account donation (IDA) [code 715]. If you made a charitable contribution to the Oregon Individual Development Account program during 2008, you may qualify for a credit. The credit is the smaller of $75,000 or 75 percent of the donation made. It cannot be more than your 2008 Oregon tax liability. You can carry over any excess for the next three years. Any federal benefit due to a federal deduction must be reported as an Oregon addition. For more information, please contact us.
  • IDA withdrawal for home purchase [code 738]. Did you make a qualified withdrawal from your IDA to buy your home? If so, you can take a credit for your qualified withdrawal used to buy your home, up to $2,000. Contact us for more information.
  • Long-term care insurance premiums [code 716]. You’re allowed a long-term care insurance premiums credit if:
    • Your policy was issued in 2000 or later, and
    • You, your parents, or your dependents are the policy beneficiaries, and
    • You paid premiums for 2008.

The credit for single and joint filers is the smaller of 15 percent of the premiums paid or $500. If you’re married or an RDP filing separately, the combined credits on the spouses’/RDPs’ returns can’t be more than the credit they would have been allowed on a joint return.

Any federal benefit due to a federal deduction for the premiums must be reported as an Oregon addition. See page 19.

Employers paying for long-term care insurance for employees may also claim this credit.

Download the publication Long-Term Care Insurance Premiums Tax Credit from our website or contact us.

  • Loss of use of limbs [code 717]. If you have a permanent and complete loss of the use of two limbs, you can take a $50 tax credit. Your spouse or RDP can also claim a $50 credit if he or she qualifies. You can’t claim this credit for a dependent. Get a disability certification form from your county public health officer the first year you file for the credit. The health officer must sign the form. Keep the form with your permanent records. Do not attach it to your return.

You also qualify for an additional exemption for severely disabled persons. See page 9.

  • Oregon Cultural Trust [code 722]. If you donate to an Oregon nonprofit cultural organization during the tax year and you donate a matching amount to the Oregon Cultural Trust, you can claim a tax credit.

You can claim a tax credit of up to $500 per taxpayer ($1,000 on a joint return) for the amount you contributed to the Oregon Cultural Trust. Any federal benefit due to a federal deduction must be reported as an Oregon addition. For more information, please contact us. For more information about the Oregon Cultural Trust, go to www.culturaltrust.org.

  • Residential energy [code 729]. You must purchase a qualifying energy efficient appliance or vehicle or install a solar device or geothermal system. Renters who purchase qualifying equipment or systems may also apply for this credit. Only vehicles registered in Oregon qualify for this credit. For more information, go to the Oregon Department of Energy’s website at www.oregon.gov/ENERGY, or call 503-378-4040 (Salem) or 1-800-221-8035 (toll-free from an Oregon prefix).
  • The following credits apply to only a few people and are not explained in this booklet. For more information, go to our website or contact us.
    • Adoption expenses carryforward [code 700].
    • Advanced telecommunications facilities [code 701].
    • Biomass production/collection [code 743].
    • Business energy [code 703].
    • Business tax credits from flow-through entity [code 736].
    • Child Care Fund contributions [code 705].
    • Claim of right income repayments [code 706].
    • Crop donation [code 708].
    • Diesel engine repower or retrofit [code 734].
    • Electronic commerce zone investment [code 710].
    • Employer-provided dependent care assistance [code 707].
    • Employer scholarship [code 711].
    • Farmworker housing [code 712].
    • First Break Program [code 713].
    • Fish screening devices [code 714].
    • Involuntary move of a mobile home, non-refundable (for mobile homes moved in 2006 only) [code 741].
    • Low-income caregiver credit [code 718].
    • Mutually taxed gain on the sale of residential property [code 720].
    • On-farm processing machinery and equipment [code 721].
    • Oregon Production Investment Fund [code 737].
    • Oregon Veterans’ Home physicians [code 747].
    • Pollution control facilities [code 724].
    • Reforestation of underproductive forestlands [code 727].
    • Reservation enterprise zone [code 728].
    • Riparian land [code 735].
    • Rural EMTs [code 742].
    • Rural medical practitioners [code 731].
    • TRICARE provider [code 746].
    • University venture fund [code 739].
    • Water transit vessel [code 740].

Tax payments and refundable credits

42 Oregon income tax withheld.

Fill in the total Oregon tax withheld from your wages and other income shown on your Form(s) W-2, box 17 or on your Form(s) 1099. Don’t use the FICA (Social Security) tax withheld. Don’t use tax withheld from your wages by other states. Staple a readable copy of your Form W-2 from each job and any Form(s) 1099 showing Oregon income tax withheld to the lower front of your return.

If you don’t have a Form W-2 or 1099, you must provide other proof of your Oregon tax withheld, such as a copy of a final paycheck stub or a letter from your employer. If you file before February 1, 2009, we can accept only Form(s) W-2 or 1099 as proof.

If you have tax to pay this year, you may want to increase the amount your employer withholds from your 2009 wages for Oregon. Download the publication Oregon Income Tax Withholding from our website or contact us to order it.

43 Estimated tax payments for 2008.

Fill in the total estimated tax payments you made before filing your Oregon return. These payments were due April 15, 2008; June 16, 2008; September 15, 2008; and January 15, 2009. Include any payments you made with your Oregon extension. Also include any refund you applied to your 2008 estimated tax. If the department adjusted your applied refund, be sure to use the adjusted amount. If you need to verify your estimated payment amounts, please contact us.

44 Earned income credit (refundable).

You’re allowed an Oregon earned income credit only if you qualify for the earned income credit on your federal return. Your Oregon credit is 6 percent of your federal credit. For example, if your federal credit is $400, your Oregon credit is $24 ($400 × 0.06). Note to RDPs: Use your “as if” federal return to see if you qualify for the Oregon credit.

45 Working family child care credit (refundable).

This credit is available to low-income working families with qualifying child care expenses for a qualifying child under age 13 (or a child who qualifies for the additional exemption credit for a child with a disability). If the credit is more than your tax liability, the difference will be refunded to you. To see if you qualify, go to page 38.

46 Mobile home park closure credit (refundable).

Enter the amount from Schedule MPC, line 5. Attach Schedule MPC to your return. For more information, download the publication from our website or contact us to order it.

Penalties and interest

50 Penalty and interest.

Your tax is due by April 15, 2009. Your return is also due by April 15, 2009, unless you file for an extension.

Penalty. Include a penalty payment if you:

  • Mail your payment after April 15 (even if you have an extension to file).
  • File your return showing tax to pay after the due date or extension due date.

The late-payment penalty is 5 percent of the unpaid balance of your tax.

If you file more than three months after the due date or the extension due date, a 20 percent late-filing penalty will be added; that is, you will owe a total penalty of 25 percent of any tax not paid. To find out how to avoid a penalty, go to our website and view Computing Interest on Tax You Owe.

Interest. If you’re filing your return or paying your tax after April 15, 2009, include interest on any unpaid tax.

An interest period is each full month starting with the day after the due date. For example, April 16 to May 15 is a full month and an interest period.

The 2009 interest rate is 6 percent per year (0.50 percent per month).

Interest is figured daily for periods of less than a month. Here’s how to figure daily interest:

Tax × 0.000164 × number of days

If the tax isn’t paid within 60 days from the date of our bill, the interest rate increases to 10 percent per year.

Note: Don’t calculate interest if you file late and expect a refund. It may delay processing of your refund.

51 Interest on underpayment of estimated tax.

For 2008, you’ll have an underpayment if you paid less than 90 percent of the tax due on each estimated tax payment due date.

Use Form 10, Underpayment of Oregon Estimated Tax, to determine if you have an underpayment. Download the form from our website or contact us to order it. If you have an underpayment, you must file Oregon Form 10 with your return.

If you have an underpayment, fill in the amount of interest due from Form 10, line 34 on Form 40, line 51, and check the box. Attach Form 10 to your return. If you meet an exception, enter the exception number on line 51a and do not attach Form 10. If you used the Annualized Income Worksheet, check box 51b and file the form with your return.

53 Amount you owe.

You may pay with a check, money order, electronic payment, or credit card.

Payments from your checking or savings account or by credit card. See page 17.

Check or money order

  • Make your check or money order payable to “Oregon Department of Revenue.”
  • Write your daytime telephone number and “2008 Oregon Form 40” on your check.
  • Please use blue or black ballpoint ink. Do not use red or purple ink or gel pens.
  • Do not send cash or a postdated check.
  • Staple your payment and the Form 40-V payment voucher (below) to your return on top of your Form(s) W‑2 and 1099.

Payment plan. If you cannot pay in full now, pay what you can. Write “2008 Oregon Form 40” on your payment. Use the payment voucher, Form 40-V, on page 33. We will help you set up a payment plan for the amount you do not pay with your return. Contact us as soon as possible to reduce penalties and interest.

Special instructions. Do you owe interest on line 51 and have an overpayment on line 48? If the interest you owe is more than your overpayment, you have an amount due. Subtract line 48 from line 51 and enter the result on line 53.

Charitable donations. If you don’t have a refund but want to contribute to a charity listed on page 18, mail your donation to the charity’s address listed on our website. Please do not mail your donation to the Department of Revenue.

To finish your return, go to the signature block section on this page.

54 Refund.

You must have a refund on line 54 to use lines 55–72.

55 Estimated tax.

If you have a refund, you may apply part or all of it to your 2009 Oregon estimated income tax. Fill in the amount you want to apply. Do not fill in more than the amount on line 54.

Charitable checkoff donations

You can donate all or part of your refund to the charities listed on page 18. Donations will reduce your refund. You can donate to any or all of the charities on Form 40, lines 56–67. You can also donate to two other charities on Form 40, line 68 or 69, see page 18. Or, you can mail your donations to the addresses listed on our website.

For a description of the charities, go to page 18.

71 Net refund.

You must reduce your refund by any amounts applied to 2009 estimated tax (line 55) and donations on lines 56–69. By law, we cannot issue a refund if you file your return more than three years after the return’s due date.

72 Direct deposit.

Follow these instructions if you want us to deposit your refund directly into your bank account instead of mailing you a check:

  1. Contact your bank to make sure your deposit will be accepted and to get your routing and account numbers.
  2. Check the appropriate box, either checking or savings, but not both.
  3. Enter your nine-digit routing number. The routing number must begin with 01 through 12, 21 through 32, or 61 through 72.
  4. Enter the number of the account into which you want your refund deposited. The account number can be up to 17 characters (both numbers and letters). Do not include hyphens, spaces, or special symbols. Enter the number left to right and leave any unused boxes blank.

Signature block

Signature(s). Be sure to sign and date your return. If you’re filing a joint return, both spouses or RDPs must sign.

Minor child’s return. If your child must file a tax return, you may sign the child’s name as his or her legal agent. Sign the child’s name and then write “By [your signature], parent (or other legal guardian) of minor child.”

Preparer signature. Any person who prepares, advises, or assists in preparing personal income tax returns for another person in exchange for payment, gifts, or other compensation must be licensed and must sign the return. Contact the following agencies for more information on licensing, or to check the status of your Oregon tax practitioner:

  • State Board of Tax Practitioners in Salem, 503-378-4034 for licensed tax consultants and licensed tax preparers, or go to www.oregon.gov/OTPB.
  • • State Board of Accountancy in Salem, 503-378-4181 for public accountants and certified public accountants, or o to www.oregon.gov/BOA.

License number. Tax consultants, enter your license number. Certified public accountants, enter your certificate number.

 

Oregon Tax Help Links