Accurate Advice Newsletter – February 2015

2015 Oregon Tax Changes

With the start of tax season comes a host of changes to not only federal law, but state laws as well. This year, a number of things are changing in Oregon, here is an overview of some of the changes.

New Oregon tax forms

All Oregon tax forms have been changed and updated, just be aware that the Oregon tax return will now look different and has an additional page (originally it was 2 pages, now it’s 3) when you receive your return.

Updated federal tax subtraction and exemption credit

This year, the federal tax subtraction on the Oregon return goes up to $6450 ($3225 for Married Filing Separate returns.) The Oregon Exemption Credit goes up a few dollars to $194. Neither of these are a substantial difference from last year.

Changes to Oregon 529 plans

A big change has been made to Oregon 529 plans starting now for 2016, they have been expanded to include uses for  education expenses and expenses for individuals with disabilities. If you already had a 529 plan for college savings nothing will change. 529 accounts are now being relabeled as 529 ABLE (Achieving a Better Life Experience) accounts.

To be eligible, the disabled beneficiary must’ve become disabled before the age of 26. As long as the money from the 529 ABLE account is used for qualifying expenses it will not be counted as income to the individual. It also will not affect the benefits they receive through SSI or SSDI because it is not counted as income to the individual.

A “qualified disability expense” means any expense related to the designated beneficiary as a result of living a life with a disability. These include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses to enhance the person’s quality of life.

 2015 Oregon Tax “Kicker”

The 2015 Oregon tax “Kicker”, also known as the Surplus Refund Credit, will be available to Oregon residents that had a tax liability in 2014. The credit is equal to 5.6% of your 2014 Oregon tax liability.

You also have the option of donating your Surplus Refund Credit to the Oregon State School Fund directly on your tax return. Just remember if you elect to donate your kicker to the school fund, it is irrevocable and cannot be changed by amending your tax return if you change your mind.

The Launch of Oregon Revenue Online

The Oregon Department of Revenue has launched a new online site called Oregon Revenue Online. This site will allow you to view correspondence from the department of revenue, make a payment, view past year tax returns, securely submit documents to the Department of Revenue, build a payment plan and view and make changes to your tax account information. You can sign up for this free service at .

New Oregon Tax Treatment for Certain Pass-Through Entities

Starting for tax year 2015 there is a new election to have Pass-Through Income from a Qualified Partnership or S-Corporation taxed at a lower rate. The rates are as follows:

  • For the first $250,000 of taxable income, the tax rate is 7 percent;
  • For taxable income exceeding $250,000 but not exceeding $500,000, the tax rate is 7.2 percent;
  • For taxable income exceeding $500,000 but not exceeding $1 million, the tax rate is 7.6 percent;
  • For taxable income exceeding $1 million but not exceeding $2.5 million, the tax rate is 8 percent;
  • For taxable income exceeding $2.5 million but not exceeding $5 million, the tax rate is 9 percent; and
  • For taxable income exceeding $5 million, the tax rate is 9.9 percent.

To qualify you must meet the following criteria:

  1. The taxpayer materially participates in the day-to-day operations of the business;
  2. The partnership or S corporation employs at least one person who is not an owner, member or limited partner of the partnership or S corporation; and
  3. At least 1,200 aggregate hours of work in Oregon are performed during the tax year by employees of the pass-through entity who are not owners, members or limited partners of the pass-through entity.

This election must me made every year. You may choose to use this alternate calculation for your pass-through income, but it must be made on the original return and it is irrevocable. If later you decide to amend your return, you will not be able to change the election, even if it is favorable to do so.