Hello,

I may be moving to the Portland area since my fiancee (we'll be married in three weeks) is interviewing for a job there. I'm an author, and since I don't need to be near an office, I was thinking of living in Vancouver, WA to save on state income taxes. If my fiancee (by then she'll be my wife) were to live with me in Washington, I understand she would still have to pay Oregon taxes on her Oregon income. If we both lived in Washington, however, would she still have to pay Oregon taxes on her half of my writing income (because WA is a community property state) or only on her Oregon employer's income?

And, on a related note, what if we were to keep two residences, and I lived primarily in Vancouver, WA, and she used the Portland residence just during the week. Would that help keep our Oregon tax liability down? Would it help if we filed separately? And, more out of curiosity than anything else, would it help if we weren't married? Or were WA registered domestic partners?

Thanks very much!

“If my fiancee (by then she'll be my wife) were to live with me in Washington, I understand she would still have to pay Oregon taxes on her Oregon income.”----->Due to lack of necessary information , I assume that you are full year residents of WA state and your spouse works in Oregon as a nonresident of Oregon. Then if this is the case, your spouse needs to file her return to Oregon on her Oregonian source income. As there is no state income tax in WA state, she can claim her Oregon income tax credit on her federal return on 1040 Sch A if she itemizes deductions. If not, she can’t claim her Oregon state tax credit.
“ If we both lived in Washington, however, would she still have to pay Oregon taxes on her half of my writing income (because WA is a community property state) or only on her Oregon employer's income?”---->s said above, as long as your spouse earns earned and unearned income in Oregon, she needs to file her return as a non-resident of Oregon to Oregon State. She doesn’t have to pay half of your writing income to Oregon. Your writing income that you earn in WA State is NOT subject to Oregon income tax.

I see. Thanks very much. We'd be moving from Northern Virginia so are wondering how to set ourselves up. I'm still not entirely clear on the nuances, and really appreciate your help. Would my wife be taxed for half my writing income under the WA community property laws if we had two apartments, and she stayed in Portland during the workweek (making her a resident, I imagine), and I worked and lived in Vancouver?

“ Would my wife be taxed for half my writing income under the WA community property laws if we had two apartments, and she stayed in Portland during the workweek (making her a resident, I imagine), and I worked and lived in Vancouver?”---->No as said previously.( I assume that your spouse is a full year resident of Oregon) then as a full year resident of Oregon, your spouse needs to pay her tax on her Oregon source income ( if she still has income from WA, she needs to pay tax on her WA source income to Oregon as a full year resident of Oregion)to Oregon ( her filing status is MFS in Oregon NOT MFJ)and can claim her state income tax on her federal return on 1040 Sch A as said above; you, as a full year resident of WA don't need to pay tax on your WA source income to WA.No state income tax in WA state. However, both you and your spouse can file your federal return aas MFJ or MFS whatever status you want. As said, your income in WA is Not subject to tax to Oregon.

I see. I though the community property laws in WA made it more complicated. Thank you very much for your help!