Is 50% of a spouse's income who lives/works in Washington subject to Oregon taxes if the other spouse lives/works in Oregon?

This is the REASON I THINK THIS RULE MIGHT BE IN PLACE. I have written much more on this than you can see, but I'll try to boil it down. They key for sourcing income is whether the "job" is performance of personal services. That occurs where someone works. The other key is residency. where one lives permanently and intends to always return. As a resident you can file jointly, even if you live in different states. States typically give other states a deduction for tax paid in another state for earning in that state. Mr. in WA and Ms in OR Now for the fun. Mr. Washington has (I think) 0% income tax. Ms.Oregon has 11% If each spouse makes $100k, by strict sourcing rules, and assuming that state returns were married filing separate, there would be the $100k made in OR would pay $11k and the $100k in WA would escape tax. Total tax paid = $11k If community is forced, then Mr. WA is deemed to earn his $50K and her $50k and pays no tax. Ms Oregon is deemed to earn her $50k and his $50k. and pays $11k tax. But watch what happens when Mr. WA earns $200k and Ms Oregon earns $1. Without the application of community and purely through sourcing, Mr. WA earns $200K and pays nothing. Ms OR earns $1 and pays a dime. Oregon loses all its $11k tax But with forced community rules (income splitting) . Mr. WA is deemed to earn his $100K community and her $0.50 and pays no tax. Ms Oregon is deemed to earn her $100k half and his $0.50. and pays $11k tax. So, ORegon wants 11% tax (high) on any spouses that work in places like Washington, and Alaska. That's sort of what they might be up to..... It may be another reason why marriage is on the decline.

This is another beautiful example of states going right to the edge of the Constitution to tax anybody that even has a remote connection to their state. Greedy is what it is. Christopher Larson www.bellevue-tax-attorneys.com www.insightlawfirm.wordpress.com