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The calculations on the web site are aimed at the majority of people who are wage earners. If your income comes from business, use line 15 or 28 of your Oregon State tax form 40S or 40 and enter 0.00 in the box for wages. The calculation won’t work without it.
You also have to select how often you are paid and how many pay periods remain in 2003. The calculate button is at the bottom of the form, not visible unless you scroll down to it.
This is the law as it stands right now. There is a signature campaign for a referendum to repeal this tax package by vote of the people in February of 2004. Here are the tax increases:
Income tax surcharge:
Effective dates are 2003 and 2004 tax years (possibly 2005 also).
This provision adds a surcharge to the amount of taxes you pay, it is based on the Oregon taxes, not on your income. The percentage of the surcharge increases as your Federal Adjusted Gross Income (AGI) goes up.
For example: if your total tax is $2,000 and you have $2,000 withheld from your paycheck, ordinarily you would owe no tax. Under the new law, if you are single, with a Federal AGI of $40,000, your surcharge is 5% and you would owe an additional $100 tax.
Senior medical expense deduction
Effective tax years 2003 and foward.
Two changes have affected the special senior medical deduction. First, the age at which you qualify is increasing and, second, the deduction gets smaller as your income goes up.
In 1991, Oregon defined seniors for the purpose of this law as those who reached age 58 by the last day of the year. For every year from 1999 to 2002, the medical deduction applied to those age 62 and older. For 2003 you must be 63, 2004 you must be 65 and 2005, you must be 66 to qualify. If you were born AFTER 1940, you do not qualify for this special deduction until 2006 (at least).
For example: if you have a special Oregon medical deduction (under the old law) of $3,000 and you are single with an AGI of $35,000, your deduction would be reduced to $600, 3,000 x 20% (or 100% - 80%).
SUV tax:
Effective tax years 2003 and forward.
This is retroactive to all of 2003. If you take business depreciation on a vehicle weighing between 6,001 and 14,000 pounds, you will have to pick up the amount of that deduction as income on your Oregon return. There are exemptions for farmers, construction companies and wood-products industries. The law specifically says that real-estate sales is NOT construction. The effect of this is as follows:
If you buy a $30,000 SUV weighing over 6,000 pounds, you can deduct the entire amount on your Federal taxes. If you do so, you will need to report additional taxable income of $30,000 on your Oregon tax return. Even if you use regular depreciation of $6,000 on your Federal return, you still need to pick up that amount as Oregon taxable income if the vehicle is over 6,000 pounds.
Taxes paid by corporations:
Under prior law, all S Corporations and C Corporations showing a loss were required to pay a minimum of $10 in Oregon tax. The new law increases the minimums significantly. S Corporations with annual gross revenues under $1,000,000 will pay $250 per year. If revenues exceed one million dollars, the tax will be $500.
Others:
There are other tax increases in this law, but most of them apply to very few people with the exception of the property tax discount.
Prior to the new law, there was a 3% discount available if you paid your property tax bill when it arrived in November. This has been halved to a 1 1/2% discount.
Other new taxes are a long-term care facility tax, cigarette taxes, reduction of the tax deductions that corporations are allowed for their dividend income and tax exemptions available to corporations having foreign trade income.
If you have any questions about this new law or would like a copy of the text of the law, email us at: Epstein & Costol.
