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'It can add up': Tax experts say working from home in Washington can benefit those employed by Oregon companies

Oregon income tax does not apply to work done outside the state including in Washington, which doesn't have an income tax.

VANCOUVER, Wash. — People who live and work in Washington don't pay income tax. But what about all the people who live in Washington and are now working from home for an Oregon company? They could be in for a big increase in their tax refund, according to tax experts.

Since COVID-19 hit, Penny Ecaruan has been working from her Vancouver home for a Beaverton-based company.

“I definitely don't mind not having the 26-mile each way commute!” Ecaruan said. 

She’s also looking forward to the tax benefits she's expecting from this year.

The Oregon Department of Revenue only taxes employees for income earned while in Oregon. That means money earned from a full day's work in Washington, wouldn't apply. Ecaruan has been working from her Vancouver home since March.

“It's definitely a money-saver,” said Ecaruan, “Right now, with the economy the way it is, we should take advantage of any situation we can.”

Many people assume that income taxes are based off where an employer is located, not where the employee works. Oregon rule 150-316-0165 provides this clarification: "Physical presence is determined by the actual physical location of the employee performing the services and not by the location of the employer... employees who work in Oregon and at an alternate work site located outside of Oregon may allocate their compensation under the provisions of this rule."

“There's a ton of people looking for advice with Oregon's income tax being 9%,” said tax attorney RJ Sohler of Portland-based Sohler Whitman law firm. “That's a lot of money when we start talking six, seven months of work-from-home.”

Sohler said while everyone should consult an accountant or attorney about their personal situation, the most important thing anyone can do is document what days they worked in what state.

“You're not really avoiding taxes, you're just not having to pay what you didn't do in Oregon,” he said.

To figure out what wages are taxable by Oregon, the state's income tax guide suggests taking the number of days you actually worked in Oregon and dividing them by the number of days you worked anywhere, and multiplying it by your total wages.

“I talked to somebody on this topic this week and she had determined that it was almost a $300 per month savings for her,” said Sohler. “It can add up, it can be real money for people that may just never have heard of it.”

Ecaruan said thankful she knows about the tax option in year when there hasn’t been a lot of positive news.

“Out of the bad comes some good,” said Ecaruan. “We just try to reach for the good and carry on.”