When a second state return is required
- You live in one state and physically work in another
- You moved between states mid-year
- You own rental property in a state where you do not live
- You worked temporarily in another state — a project, a season, a rotation
- You sold a business or property with income sourced to another state
Residency is not the same as sourcing
Two separate questions decide a multi-state return, and conflating them is the most common error we see. Residency determines which state taxes your worldwide income. Sourcing determines which state may tax a particular dollar. A Washington resident is not taxed by Oregon on worldwide income — but Oregon-source wages are still Oregon-source wages.
| Your situation | Likely Oregon filing | Key question |
|---|---|---|
| WA resident, works on-site in Portland | OR-40-N, non-resident | How many days were physically worked in Oregon? |
| WA resident, fully remote from home for an OR employer | Often a refund return | Were services performed outside Oregon? |
| WA resident, hybrid schedule | OR-40-N on the Oregon-work portion | Do you have a defensible day count? |
| OR resident, works in Vancouver | OR-40, resident, worldwide income | No Washington wage tax exists to credit |
| Moved mid-year | OR-40-P, part-year | What is the exact date residency changed? |
Credits for tax paid to another state
Where two states both tax the same income, the resident state usually gives a credit for tax paid to the other. The credit is limited, the mechanics differ by state, and getting the order of operations wrong can cost real money. Washington complicates this in a way people do not expect: since Washington has no personal income tax, an Oregon resident who works in Vancouver has no Washington tax to credit and simply pays Oregon on the lot.
My employer withheld Oregon tax but I worked from home in Washington all year. Can I get it back?
Very likely yes, by filing an Oregon non-resident return claiming the refund. See remote work for an Oregon employer — this is one of the most common recoverable overpayments in the region.
How many states can you file?
All of them. In practice most of our multi-state work is Oregon, Washington, California, Idaho and Arizona, plus relocations from anywhere.
Do I need to track my workdays?
If you work in more than one state, yes — contemporaneously. A calendar you kept all year is evidence; a reconstruction in April is an estimate. See hybrid workday allocation.
What about local taxes in the other state?
They apply on the same sourcing logic. A Washington resident working in Portland can owe Metro SHS on Oregon workdays even though they never owe Oregon tax on their Washington income.
Talk it through before filing season starts
Start with a complimentary 15-minute introductory call about your situation and whether we are a good fit. No tax advice is given on that call.
Written by
Enrolled Agent, Oregon Licensed Tax Consultant
License number: Enrolled Agent 00160070-EA · Oregon Licensed Tax Consultant 35746-C
Heather has spent more than a decade preparing individual and business returns across the Portland metro and the Columbia Gorge, and holds unlimited rights to represent taxpayers before the IRS.
Last reviewed
This page is general information about Oregon, Washington and federal tax rules, not advice about your own return. Thresholds and rates change every year. Figures were verified as of August 2026 — check the linked official sources, or talk to us about your situation.