2020 Publication OR-40-FY, Oregon Income Tax Full-Year Resident Forms and Instructions, 150-101-040-1

On January 11, February 18, March 16, and April 1, 2021 we updated: lines 3 and 8 of the table on page 13, added federal unemployment exclusion information, and information to reflect Director's Order 2021-01. 2020 Oregon Income Tax Form OR-40 Instructions Full-year Resident Check out our online services Revenue Online is a secure online portal that provides access to your tax account at any time. You can: • Check the status of your refund. • View and print letters from us. • Make payments or schedule future payments. • Securely communicate with us. • Update your information. • Check balances and view your account history. • File an appeal. Visit www.oregon.gov/dor and click on “Revenue Online” to sign up. • May 17, 2021 is the due date for filing your return and paying your tax due. • File electronically—it’s fast, easy, and secure. See “Electronic filing.” • Find out if you qualify for the earned income credit. See “Tax payments and refundable credits.” • Find out if you qualify for the working family household and dependent care credit. See Schedule OR-WFHDC for details. • Are you a veteran? Find out about veterans’ benefits at www.oregon.gov/odva. • These instructions aren’t a complete statement of laws or Oregon Department of Revenue rules. If you need more information, see Publication OR-17 or contact us. www.oregon.gov/dor 150-101-040-1 (Rev. 04-02-21) Contents Electronic filing . 3 Form OR-40 line instructions . 13 Federal tax law . 3 Additions . 13 New information . 4 Subtractions . 13 Important reminders . 4 Deductions . 14 General information . 5 Oregon tax . 15 Do I need to file an Oregon return? . 5 Credits—nonrefundable . 16 Residency . 5 Tax payments and refundable credits . 16 What form do I use? . 6 Penalties and interest . 17 Military personnel . 6 Amount due and payment options. 18 What if I need more time to file. 6 Refund. 19 Penalties . 7 Direct deposit . 20 2021 estimated tax . 7 Before you file . 21 What if I need to change my return after filing? . 7 Avoid processing delays . 21 General instructions for Form OR-40 . 9 Tax return mailing addresses . 22 Check the boxes . 9 Tax tables . 23 Name and address . 10 Tax rate charts . 25 Filing status . 10 Exemptions . 10 Do you have questions or need help? Internet In person www.oregon.gov/dor Offices are located in Salem, Portland, Eugene, Bend, • Download forms, instructions, and publications. Gresham, and Medford. Find hours and directions to • Access additional information not included in these our offices on our website. instructions. Our main office is located at: Revenue Online 955 Center St NE Salem, OR 97301-2555 www.oregon.gov/dor (click on Revenue Online) • Securely communicate with us. Email or write • Check your refund status. • Make or schedule payments. questions.dor@ oregon.gov • View your account history. preguntas.dor@ oregon.gov • Find out how much you owe. • File an appeal. Oregon Department of Revenue • View letters and your Form 1099-G, if applicable. 955 Center St NE Salem OR 97301-2555 Phone • Include your name and daytime phone number. 503-378-4988 or 800-356-4222 • Include the last four digits of your SSN or ITIN. Monday–Friday, 7:30 a.m.– 5 p.m. To request printed forms or publications: Closed Thursdays from 9–11 a.m. Closed holidays. Forms Wait times may vary. Oregon Department of Revenue Contact us for ADA accommodations or assistance in PO Box 14999 other languages. Salem OR 97309-0990 Photo on cover: Comet Neowise over Mount Jefferson as seen from Bend, Oregon on July 17, 2020. 150-101-040-1 (Rev. 04-02-21) 2 2020 Form OR-40 Instructions Electronic filing E-filing is the fastest way to file your return and receive 1. Ask your tax preparer. your refund. The speed and accuracy of computers If your tax preparer is an authorized IRS e-file pro- allow electronic returns to be received and processed vider, your preparer can electronically file your fed- faster than paper returns, greatly reducing errors and eral and Oregon returns. Many Tax-Aide and Tax delays. E-filing uses secure technology to ensure the Counseling for the Elderly (TCE) sites set up by the safety of your personal information when it’s sent to IRS are authorized IRS e-file providers. the IRS and the Department of Revenue. 2. Use online tax preparation software. Oregon participates in the IRS Federal/State E-file pro- You can file your federal and state returns from your home, work, or library computer using Oregon- gram. This program allows you to electronically file approved online tax preparation products. Go to our both your federal and Oregon returns at the same time. website at www.oregon.gov/dor/e-filing­­ for a list of If you’ve already filed your federal return, you can still tax preparation products to use in preparing your electronically file your Oregon return. federal and Oregon returns. If you haven’t tried e-file yet, why not this year? Join You may be eligible for free e-file. Several tax more than 1.8 million other Oregon taxpayers who preparation software providers offer free online electronically file their Oregon returns. electronic tax filing. For free online tax preparation You can take advantage of e-file in one of two ways: programs, go to ­­www.oregon.gov/dor/e-filing. Federal tax law No extension to pay. Oregon doesn’t allow an exten- Section 199A of the Internal Revenue Code (IRC). Due sion of time to pay your tax, even if the IRS allows an to the way Oregon’s returns are designed, no addition extension. Your 2020 Oregon tax is due May 17, 2021. is required. Oregon is also disconnected from IRC Sec- tion 139A , the tax exemption for federal subsidies for Federal law connection. Oregon has a rolling tie to employer prescription drug plans. If you have this type changes made to the definition of federal taxable of business income, you’ll have an addition on your income, with the exceptions noted below. For all other Oregon return. purposes, Oregon is tied to federal income tax laws as amended and in effect on December 31, 2018. Oregon is disconnected from IRC Section 529 tax exemption for earnings on college savings plan funds Unemployment benefits exclusion. The federal exclu- used for K-12 tuition. Oregon College and MFS 529 Sav- sion of up to $10,200 in unemployment benefits applies ings Plans may be used for higher education expenses to Oregon. Your federal exclusion flows through to only. If you based a previous subtraction or credit on your Oregon return. contributions that are withdrawn and used for K-12 Oregon exceptions to federal law. Oregon is discon- tuition, you'll have an addition or credit recapture on nected from the business income deduction allowed by your Oregon return. 150-101-040-1 (Rev. 04-02-21) 3 2020 Form OR-40 Instructions New information Due Date Extension. Director's Order 2021-01 extended to claim 12 percent of the federal credit amount as an the Oregon tax filing and payment deadline from Oregon credit. All other taxpayers, who qualify for the April 15, 2021 to May 17, 2021. As a result, interest and federal earned income tax credit, are now able to claim penalties with respect to the Oregon tax filings and 9 percent of the federal credit amount as an Oregon payments extended by this Order will begin to accrue credit. See instructions for line 33. on May 18, 2021. Political contribution credit. The AGI limit for claim- Oregon wildfires and other federal disasters. Certain ing this credit has been lowered to $150,000 for married Oregon counties were declared to be a federal disaster taxpayers filing a joint return and $75,000 for all others. area due to wildfires and straight-line winds in Sep- See instructions for line 24. tember 2020. If you were affected by this or another Oregon 529 College Savings Network and ABLE presidentially-declared disaster during the 2020

TAX POLICY CENTER BRIEFING BOOK Key Elements of the U.S. Tax System TAXES AND THE FAMILY What are marriage penalties and bonuses? XXXX Q. What are marriage penalties and bonuses? A. A couple incurs a marriage penalty if the two pay more income tax filing as a married couple than they would pay if they were single and filed as individuals. Conversely, a couple receives a marriage bonus if they pay less tax filing as a couple than they would if they were single. CAUSES OF MARRIAGE BONUSES AND PENALTIES Marriage penalties and bonuses occur because income taxes apply to a couple, not to individual spouses. Under a progressive income tax, a couple’s income can be taxed more or less than that of two single individuals. A couple is not obliged to file a joint tax return, but their alternative—filing separate returns as a married couple—almost always results in higher tax liability. Married couples with children are more likely to incur marriage penalties than couples without children because one or both spouses could use the head of household filing status if they were able to file as singles. And tax provisions that phase in or out with income also produce marriage penalties or bonuses. Marriage penalties are more common when spouses have similar incomes. Marriage bonuses are more common when spouses have disparate incomes. Overall, couples receiving bonuses greatly outnumber those incurring penalties. MARRIAGE PENALTIES Couples in which spouses have similar incomes are more likely to incur marriage penalties than couples in which one spouse earns most of the income, because combining incomes in joint filing can push both spouses into higher tax brackets.

Employee’s Withholding Certificate OMB No. 1545-0074 Form W-4 ▶ (Rev. December 2020) Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. ▶ Department of the Treasury Give Form W-4 to your employer. 2021 Internal Revenue Service ▶ Your withholding is subject to review by the IRS. Step 1: (a) First name and middle initial Last name (b) Social security number Enter Address ▶ Does your name match the Personal name on your social security card? If not, to ensure you get Information City or town, state, and ZIP code credit for your earnings, contact SSA at 800-772-1213 or go to www.ssa.gov. (c) Single or Married filing separately Married filing jointly or Qualifying widow(er) Head of household (Check only if you’re unmarried and pay more than half the costs of keeping up a home for yourself and a qualifying individual.) Complete Steps 2–4 ONLY if they apply to you; otherwise, skip to Step 5. See page 2 for more information on each step, who can claim exemption from withholding, when to use the estimator at www.irs.gov/W4App, and privacy. Step 2: Complete this step if you (1) hold more than one job at a time, or (2) are married filing jointly and your spouse Multiple Jobs also works. The correct amount of withholding depends on income earned from all of these jobs. or Spouse Do only one of the following. Works (a) Use the estimator at www.irs.gov/W4App for most accurate withholding for this step (and Steps 3–4); or (b) Use the Multiple Jobs Worksheet on page 3 and enter the result in Step 4(c) below for roughly accurate withholding; or (c) If there are only two jobs total, you may check this box.

ITEMIZING on STATE and FEDERAL TAX INCOME RETURNS: IT’S (NOW MORE) COMPLICATED David Weiner December 2, 2020

ITEMIZING ON STATE AND FEDERAL TAX INCOME RETURNS: IT’S (NOW MORE) COMPLICATED David Weiner December 2, 2020 A taxpayer’s decision to itemize deductions or to claim the standard deduction on their income tax return is often framed as a simple calculation: Claim the greater of the two so as to minimize tax liability. But in states that require taxpayers to use the same status on their state income tax return as on their federal return, this general rule can produce conflicting results if taxpayers examine liability separately on their federal and state returns. Itemized deductions might be greater than the standard deduction on a state income tax return, but the reverse could be true on a federal return. Recent federal law changes have further complicated the choice. When the federal standard deduction was nearly doubled beginning in 2018, many more taxpayers found a conflict between the best itemization scenario on federal and state income tax returns. Those taxpayers must now calculate their federal and state income taxes under both scenarios if they want to minimize their combined state and federal income tax liability. Many taxpayers in states that link federal and state itemization choices are affected. In Maryland, for example, more than 200,000 taxpayers could benefit by itemizing on their federal returns when that may not be the obvious choice. In this brief, I examine the links between federal and state itemization decisions and explore the implications of relaxing state rules requiring that state itemization choices match federal ones. elatively few federal taxpayers itemize deductions on their income tax returns under current law, and those who do tend to have very high incomes.

Hoover Classics : Flat Tax hcflat ch2 Mp_35 rev0 page 35 2. What’s Fair about Taxes? economists and politicians of all persuasions agree on three points. One, the federal income tax is not sim- ple. Two, the federal income tax is too costly. Three, the federal income tax is not fair. However, economists and politicians do not agree on a fourth point: What does fair mean when it comes to taxes? This disagree- ment explains, in large measure, why it so difficult to find a replacement for the federal income tax that meets the other goals of simplicity and low cost. In recent years, the issue of fairness has come to overwhelm the other two standards used to evaluate tax systems: cost (efficiency) and simplicity. Recall the 1992 presidential campaign. Candidate Bill Clinton preached that those who “benefited unfairly” in the 1980s [the Tax Reform Act of 1986 reduced the top tax rate on upper-income taxpayers from 50 percent to 28 percent] should pay their “fair share” in the 1990s. What did he mean by such terms as “benefited unfairly” and should pay their “fair share?” Were the 1985 tax rates fair before they were reduced in 1986? Were the Carter 1980 tax rates even fairer before they were reduced by President Reagan in 1981? Were the Eisenhower tax rates fairer still before President Kennedy initiated their reduction? Were the original rates in the first 1913 federal income tax unfair? Were the high rates that prevailed during World Wars I and II fair? Were Andrew Mellon’s tax Hoover Classics : Flat Tax hcflat ch2 Mp_36 rev0 page 36 36 The Flat Tax rate cuts unfair? Are the higher tax rates President Clin- ton signed into law in 1993 the hallmark of a fair tax system, or do rates have to rise to the Carter or Eisen- hower levels to be fair? No aspect of federal income tax policy has been more controversial, or caused more misery, than alle- gations that some individuals and income groups don’t pay their fair share.

A FairTaxSM White Paper Your federal tax burden under current law and the FairTax by Ross Korves As farmers and ranchers prepare 2006 federal income tax returns or provide income and expense information to accountants and other tax professionals, a logical question is how would the tax burden change under the FairTax? The FairTax would eliminate all individual and corporate income taxes, all payroll taxes and self-employment taxes for Social Security and Medicare, and the estate tax and replace them with a national retail sales tax on final consumption of goods and services. Payroll and self-employment taxes The starting point in calculating the current tax burden is payroll taxes and self-employment taxes. Most people pay more money in payroll and self-employment taxes than they do in income taxes because there are no standard deductions or personal exemptions that apply to payroll and self-employment taxes. You pay tax on the first dollar earned. While employees see only 7.65 percent taken out of their paychecks, the reality is that the entire 15.3 percent payroll tax is part of the cost of having an employee and is a factor in determining how much an employer can afford to pay in wages. Self-employed taxpayers pay both the employer and employee portions of the payroll tax on their earnings, and the entire 15.3 percent on 92.35 percent of their self-employed income (they do not pay on the 7.65 percent of wages that employees do not receive as income); however, they are allowed to deduct the employer share of payroll taxes against the income tax.

Note: The draft you are looking for begins on the next page. Caution: DRAFT—NOT FOR FILING This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information. Do not file draft forms and do not rely on draft forms, instructions, and publications for filing. We do not release draft forms until we believe we have incorporated all changes (except when explicitly stated on this coversheet). However, unexpected issues occasionally arise, or legislation is passed—in this case, we will post a new draft of the form to alert users that changes were made to the previously posted draft. Thus, there are never any changes to the last posted draft of a form and the final revision of the form. Forms and instructions generally are subject to OMB approval before they can be officially released, so we post only drafts of them until they are approved. Drafts of instructions and publications usually have some changes before their final release. Early release drafts are at IRS.gov/DraftForms and remain there after the final release is posted at IRS.gov/LatestForms. All information about all forms, instructions, and pubs is at IRS.gov/Forms. Almost every form and publication has a page on IRS.gov with a friendly shortcut. For example, the Form 1040 page is at IRS.gov/Form1040; the Pub. 501 page is at IRS.gov/Pub501; the Form W-4 page is at IRS.gov/W4; and the Schedule A (Form 1040/SR) page is at IRS.gov/ScheduleA.

The Fair Tax 1 Running head: THE FAIR TAX The Viability of The Fair Tax Jonathan Clark A Senior Thesis submitted in partial fulfillment of the requirements for graduation in the Honors Program Liberty University Fall 2008 The Fair Tax 2 Acceptance of Senior Honors Thesis This Senior Honors Thesis is accepted in partial fulfillment of the requirements for graduation from the Honors Program of Liberty University. ______________________________ Gene Sullivan, Ph.D. Thesis Chair ______________________________ Donald Fowler, Th.D. Committee Member ______________________________ JoAnn Gilmore, M.B.A. Committee Member ______________________________ James Nutter, D.A. Honors Director ______________________________ Date The Fair Tax 3 Abstract This thesis begins by investigating the current system of federal taxation in the United States and examining the flaws within the system. It will then deal with a proposal put forth to reform the current tax system, namely the Fair Tax. The Fair Tax will be examined in great depth and all aspects of it will be explained. The objective of this paper is to determine if the Fair Tax is a viable solution for fundamental tax reform in America. Both advantages and disadvantages of the Fair Tax will objectively be pointed out and an educated opinion will be given regarding its feasibility. The Fair Tax 4 The Viability of the Fair Tax In 1986 the United States federal tax code was changed dramatically in hopes of simplifying the previous tax code. Since that time the code has undergone various changes that now leave Americans with over 60,000 pages of tax code, rules, and rulings that even the most adept tax professionals do not understand.

Embargoed Until 10am September 14, 2011 Statement of Leonard E. Burman Daniel Patrick Moynihan Professor of Public Affairs Maxwell School Syracuse University Before the Senate Committee on Finance Tax Reform Options: Marginal Rates on High-Income Taxpayers, Capital Gains, and Dividends September 14, 2011 Chairman Baucus, Ranking Member Hatch, Members of the Committee. Thank you for inviting me to testify on tax reform options affecting high-income taxpayers. I applaud the committee for devoting much of the past year to examining ways to make the tax code simpler, fairer, and more conducive to economic growth, and I’m honored to be asked to contribute to those deliberations. In summary, here are my main points: Economic theory suggests that the degree of progressivity should balance the gains from mitigating economic inequality and risk-sharing against the costs in terms of disincentives created by higher tax rates. The optimal top tax rate depends on social norms and the government’s revenue needs. Experience and a range of empirical evidence suggests that the rates in effect in the 1990s would not unduly diminish economic growth. However, a more efficient option would be to broaden the base (reform or eliminate tax expenditures and eliminate loopholes) to achieve distributional goals while keeping top rates relatively low. The biggest loophole is the lower tax rate on capital gains. Several bipartisan tax reform plans, including the Bipartisan Policy Center plan that I contributed to, would tax capital gains at the same rate as other income. Combined with a substantial reduction in tax expenditures, this allows for a cut in top income rates while maintaining the progressivity of the tax system.

Policy and Research 109 SW 9th Street Phone: 785-368-8222 PO Box 3506 Fax: 785-296-1279 Topeka KS 66601-3506 www.ksrevenue.org Mark A. Burghart, Secretary Laura Kelly, Governor NOTICE 21-02 CHANGES TO DEDUCTIONS FOR INDIVIDUALS (JULY 29, 2021) Standard Deduction During the 2021 Legislative Session Senate Bill 50 was passed and signed into law. This Bill amended K.S.A. 79-32,119 to change the standard deduction for individuals filing Kansas income tax returns. Specifically, Section 9 of the Bill includes new statutory language, found in subsection (c)(2), which provides: (2) For tax year 2021, and all tax years thereafter, the standard deduction amount of an individual, including husband and wife who are either both residents or who file a joint return as if both were residents, shall be as follows: Single individual filing status, $3,500; married filing status, $8,000; and head of household filing status, $6,000. In accordance with the new law, for tax years 2021, and all subsequent tax years, the base standard deduction will be: $3,500 for single filing status; $8,000 for married filing joint status; $4,000 for married filing separate status; and $6,000 for head of household filing status. Itemized Deductions Senate Bill 50 also amended K.S.A. 79-32,120 to expand the ability to claim itemized deductions for individuals filing Kansas income tax returns. Specifically, Section 10 of the Bill includes new statutory language, found in subsection (a)(1)(B), which provides: (B) For tax year 2021, and all tax years thereafter, an individual may elect to deduct the Kansas itemized deduction in lieu of the Kansas standard deduction, regardless of whether or not such individual’s federal taxable income is determined by itemizing deductions from such individual’s federal adjusted gross income.

How Marriage Penalties Change under the 2001 Tax Bill Adam Carasso and C. Eugene Steuerle* *Adam Carasso is a research associate and C. Eugene Steuerle is a senior fellow at the Urban Institute. This paper could not have been written without support from the Annie E. Casey Foundation, the Ford Foundation, and the George Gund Foundation. Views expressed are those of the authors and do not necessarily reflect those of The Urban Institute, its board, or its funders. 1 Abstract This paper examines how the various provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) change marriage penalties and subsidies for different, hypothetical pairings of heads of household with single workers filing a joint return. Heads of household are assumed to have two children—both eligible for the earned income tax credit (EITC) and Child Tax Credit—and the analysis is conducted for families with total adjusted gross incomes (AGI) of up to $80,000, with special attention to those families with combined AGI of $35,000 or less who often face marriage penalties from expenditure programs. Additionally, our simulations take place in 2010 when all provisions of EGTRRA will be fully implemented, although we present our results in real 2001 dollars. Our research focus was to examine the additional marriage penalties that heads of household face in the way of loss of valuable tax benefits for which two single, childless taxpayers who marry would not be eligible. We modeled the impact of six pertinent provisions from the tax bill: the refundable, doubled child credit, the new 10 percent tax bracket, the newly expanded EITC for married couples, the new standard deduction for married couples, the new 15 percent tax bracket for married couples, and the new 25 percent tax bracket.

Transcript Prepared By the Clerk of the Legislature Transcriber's Office Floor Debate March 08, 2018 [LB42 LB44 LB379 LB439A LB439 LB697 LB808 LB811 LB826 LB874 LB944 LB977 LB982 LB990 LB993 LB1008 LB1047 LB1048 LB1081A LB1082 LB1090 LB1112 LB1132 LR296 LR340 LR341 LR342] PRESIDENT FOLEY PRESIDING PRESIDENT FOLEY: Good morning, ladies and gentlemen. Welcome to the George W. Norris Legislative Chamber for the thirty-ninth day of the One Hundred Fifth Legislature, Second Session. Our chaplain for today is Senator Williams. Please rise. SENATOR WILLIAMS: (Prayer offered.) PRESIDENT FOLEY: Thank you, Senator Williams. I call to order the thirty-ninth day of the One Hundred Fifth Legislature, Second Session. Senators, please record your presence. Roll call. Mr. Clerk, please record. CLERK: I have a quorum present, Mr. President. PRESIDENT FOLEY: Thank you, Mr. Clerk. Are there any corrections for the Journal? CLERK: I have no corrections. PRESIDENT FOLEY: Thank you, sir. Any messages, reports, or announcements? CLERK: Mr. President, at this time I have neither messages, reports, nor announcements. PRESIDENT FOLEY: Thank you, sir. (Doctor of the day introduced.) Let us proceed to the agenda, General File 2018 senator priority bills. Mr. Clerk. CLERK: LB42 is a bill by Senator Hilkemann. (Read title.) Introduced on January 5 of last year, at that time referred to the Transportation Committee. The bill was reported to General File. There are Transportation Committee amendments, Mr. President. (AM1965, Legislative Journal page 700.) [LB42] PRESIDENT FOLEY: Thank you, Mr. Clerk. Senator Hilkemann, you're recognized to open on LB42. [LB42] 1 Transcript Prepared By the Clerk of the Legislature Transcriber's Office Floor Debate March 08, 2018 SENATOR HILKEMANN: Thank you, Mr.

2020 Individual Income Tax For a fast refund, file electronically! Balance due? Pay electronically and choose your payment date. See back cover for details. ksrevenue.org in Kansas. For individuals, it is usually the home. For businesses, In This Booklet it is where the items are used (office, shop, etc). General Information . 3 Do I owe this tax? Kansans that buy goods in other states or K-40 Instructions. 6 through catalogs, internet, mail-order companies, or from TV, Form K-40. 11 magazine and newspaper ads must pay Kansas use tax on the Schedule S . 13 purchases if the goods are used, stored or consumed in Kansas Schedule K-210 . 15 and the seller does not charge a sales tax rate equal to or greater Schedule S Instructions . 17 than the Kansas retailers’ sales tax rate in effect where the item is Tax Table. 20 delivered or first used. EXAMPLE: An Anytown, KS resident goes Tax Computation Worksheet . 27 to Missouri to purchase a laptop computer during a Missouri sales Taxpayer Assistance . Back cover tax “Holiday.” The cost of the computer is $2,000. The Anytown Electronic Options . Back cover resident will owe Kansas use tax of 8.95% (current Anytown rate) on the total charge of $2,000 when that resident brings the laptop Important Information computer back to Anytown, KS. ($2,000 X 0.0895 = $179.00). How do I pay the Compensating Use Tax? To pay Kansas use CHILD AND DEPENDENT CARE CREDIT. tax on your untaxed out-of-state purchases made during calendar This credit is for child and dependent care year 2020, refer to the instructions for line 20 of Form K-40.