Oregon state tax form

[eklabbers]

I was wondering if someone could help me out here. I'm doing my own taxes filling out federal form 1040 and Oregon state form 40. On the federal form I fill in CLEAN FUEL $2000 on line 35 and then deduct that amount from my income on line 36. Now, on the state tax form it instructs me to fill in my federal adjusted gross income from line 36. But the state tax form also allows me to deduct $1500 for clean fuel (line 18). Since my federal adjusted income is already without the federal deduction, am I deducting money twice?

I hope someone can clarify this for me.

Thanks,

[kjb516]

I just had the pleasure of doing my taxes last week. For the $1,500 Oregon tax credit, you need to mail an completed application to the Oregon Department of Energy (Oregon Department of Energy site for Hybrids). I also included photocopies of my vehicle registration, purchase agreement and window sticker, though the representative I spoke with said that this wasn't really needed. Within a few weeks, you will get a confirmation letter back.

On the Oregon Income tax return (form 40), I entered the $1,500 credit on line 41 (other credits) with a code of 729 (as per my tax consultant).

[eklabbers]

Yeah, I did that a few months ago and have the letter from the Oregon Dept of Energy. I put the tax credit on my state form on line 18 with the term Clean fuel on the dotted line. But my question was whether it is correct to enter your gross federal income as the start point for the state taxes, as that already includes the $2000 federal deduction.

[DanMan32]

That is interesting. Taking a CREDIT on an already deducted income for the same thing.

If there is no place on the Oregon form to add back the federal AGI hybrid deduction, and they instruct you to use line 36, ENJOY!

I was just going to type that you may be able to deduct the salestax from your federal to boot, but I just remembered you don't have sales tax, so I guess you'll be taking the state income tax deduction instead. Assuming you are itemizing on the federal.

[eklabbers]

That's what I thought too! I don't see any place to put it back and didn't find anything in the instructions. And we don't have sales tax, so we take the deduction. Sweet!

[kjb516]

I finally got my forms back from my tax preparer this morning and the $2,000 from the federal deduction was subtracted from my gross income on the state form. So it appears that my accountant agrees with your previous assumption.

Either that or we'll both find ourselves getting audited. ops:

[xevious]

I just received my refund check from Oregon dept. of revenue. My tax return was kicked into the "manual review" process, and I had to answer some questions about the line 36 deductions on the federal form 1040, but this was routine and polite rather than an attempt at an Inquisition revival.

Given the fact that both TurboTax and the state agreed that my return was kosher, I'm confident in stating that yes, you absolutely get BOTH the federal clean-burning fuel deduction, which adjusts the net earnings on both your federal and state returns, AND you get the Oregon state hybrid electric vehicle credit.

Quite a nice incentive for buying a Prius!

[amped]

Another bit of good news is that both the Federal deduction and Oregon credit may be claimed on separate returns for multiple purchases within the same family. I just filed for Prius #3 and #4 on our 2004 returns. The first two breezed right through last year, so I expect the same on the '04 returns. Oregon is very generous. The credit also applies to a leased Prius, may be carried forward indefinitely, or resold to another Oregonian.

Note that 2005 is the last year for the $2,000 Federal deduction and the new Prius must be purchased during the 2005 calendar year. The deduction declines to $500 in 2006. The good news is that the Oregon credit continues into (IIRC) the 2008 model year for a select group including Prius.

I'll be ordering my 2006 Prius in a couple of months for delivery in November. The interesting thing is that buyers of my used Prius don't care about the credit, they're just happy to get one quickly. Hopefully that attitude prevails when I sell the '05's later this year.

[eklabbers]

Hey Ken,

I reread these posts as I was checking my taxes before sending it in. And you were right. On the Oregon state tax form, it is a tax credit, not a deduction. Instead of getting a refund of $400, I will be getting $1700! Thanks for posting your info!

[kjb516]

<div class='quotetop'>QUOTE(eklabbers\";p=\"75874)</div>

On the Oregon state tax form, it is a tax credit, not a deduction. Instead of getting a refund of $400, I will be getting $1700![/b]

Yet another reason to love living in the Great Northwest!

When I called the 800 number for Oregon Department of Energy to answer a few questions I had on the application, not only did I get immediately transferred to a live person, but she was also quite helpful, knowledgeable and more than willing to stay on the line until every newbie question I had was answered. This was certainly a shock for me (a born and bred New Yawka) to deal with a truly helpful government employee.

I received my Oregon state refund within two weeks (direct deposit) and immediately blew it on mountain bikes for my wife and myself (can I get another tax credit on them?). If this trend keeps up, I may be gasoline free in a few years.