Important Information
Personal income taxes are the
foundation of Oregon's General Fund. The pay-as-you-earn system of personal
income tax withholding provides a consistent and stable revenue stream to support
the public services Oregonians rely on.
What is withholding?
"Withholding" is the portion
of your wages you have withheld from your paychecks to cover your anticipated
income tax liability for the year. Your employer withholds the amount you specify—based
on how you fill out the state and federal employee's withholding allowance
certificates—and sends it to the Oregon Department of Revenue and the IRS,
where it's applied to your tax account. The total amount withheld from your
paychecks is reported on the Form W-2 that your employer sends to you in late
January or early February. When you file your personal income tax return for
the year, you'll subtract your withholding from the amount of tax you owe. If the
amount you owe is more than the amount withheld, you'll have to pay the
difference. If the amount you owe ends up being less than what was withheld,
you'll be due a refund.
Has there been a recent change to withholding?
In the past, most Oregon employees
used federal Form W-4 for Oregon withholding purposes. However, the Tax Cuts
and Jobs Act of 2017 (TCJA) made changes to the federal tax code that
directly impact how federal withholding allowances are calculated. These
changes mean using federal Form W-4 to calculate Oregon withholding allowances
may no longer result in adequate withholding for Oregon personal income taxes.
We’ve
created Form OR-W-4, Oregon Employee’s
Withholding Allowance Certificate, for employees to calculate accurate
allowances for Oregon withholding. We've also created a Spanish version of this
form, Formulario
OR-W-4. Both forms can be found at www.oregon.gov/dor/forms.
How do I determine the correct amount of withholding needed?
You can determine the correct number of allowances you need to claim by completing the
worksheets attached to Form OR-W-4 or by using the online Oregon withholding
calculator. We urge all Oregon employees to verify their state withholding
amount. Once you have determined the correct amount to claim, complete Form
OR-W-4 and submit it to your employer.
Withholding Calculator
If you would like to use the withholding calculator, click on the link below.
Oregon's withholding calculator will help you determine the number of allowances you should report on Form OR-W-4. Our withholding calculator doesn't ask you to provide personal information, such as your name, Social Security Number, address, or bank account information.
Once you input all the information for your situation, you'll receive details about your results and instructions on how to update your state income tax withholding using the new Oregon Form OR-W-4. The calculator also works for pension income withholding.
What tax or pay information do I need to get started?
At a minimum, you'll need your most recent pay stub from each job you (and your spouse, if filing jointly) have held this year. Pay stubs will help you calculate your projected income and current withholding for the entire year, and will tell you how much you've already withheld.
It may be helpful to have last year's Oregon and federal income tax returns available. The more complete the information you provide is, the more accurate your results will be.
The withholding calculator will ask you for current year estimates of
the following amounts:
- Your gross wages (from jobs).
- Your spouse's gross wages (if married and filing jointly).
- Other income you might have, including:
- Pension income.
- Unemployment.
- Self-employment income.
- Income from the sale or rental of property.
- Adjustments to your income, such as student loan interest.
- Oregon additions to or subtractions from your federal income, including:
- Interest income that isn't taxed on your federal return.
- 529 college savings plan subtraction.
- Special medical subtraction.
- Itemized deductions for Oregon.
- Oregon tax credits you'll be claiming.
- If you plan on claiming the Working Family Household and Dependent Care credit, you'll need to provide an estimate of the care expenses you expect to pay during the current year.
If you have questions while using the calculator, click on the information icons  for assistance. For information on federal income tax withholding or to adjust your federal withholding allowances, visit the IRS website. |
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Take me to the calculator
Frequently asked questions
General information
A: Yes. Employees should check their withholding at the
beginning of each year or when their personal circumstances change. It's
especially important for certain people to check their
withholding, such as those who:
- Have dependents.
- Itemize their deductions.
- Claim Oregon additions, subtractions, or tax credits.
- Have two or more jobs.
- Work part of the year.
- Have high income or complex tax returns.
- Had a large tax refund or large tax bill last
year.
A: Your marital status determines which formula your
employer will use to calculate the tax to be withheld from your paycheck. This
is because the tax rates and standard deduction amounts are different depending
on whether you are married or single. There is no head of household status for
withholding formulas. A person who files with the head of household status is
considered single for withholding purposes.
A: An allowance represents a portion of your income that is
exempt from tax. On your Oregon tax return, this portion can take the form of a
credit against tax, a deduction, or a subtraction. The more allowances you
claim on Form OR-W-4, the less tax your employer will withhold.
A: Not necessarily. If you are in a two-earner family, or you have more than one job, it's possible that you will still owe tax even if you claim zero allowances. This is because both the federal and Oregon withholding formulas are based on each person or family having just one job and filing a simple tax return each year. If you work more than one job or have other income, you may not have enough withheld even if you don't claim any allowances. In some cases, you may want to have additional tax withheld every paycheck so that you don't have tax to pay when you file your return. If your other income is high enough, you might need to consider making estimated tax payments throughout the year, too.
A: Some people have more complicated tax situations and face
the possibility of being under-withheld. This possibility is greater now with
the changes at the federal level. Use the worksheets with Form OR-W-4 to help
you determine the correct amount of withholding, or for more accurate results,
use the withholding calculator.
A: If you under-withhold, there won't be enough put aside to cover the taxes you owe when you file your return. If the difference between what you withhold and what you owe is more than $1,000, you'll be charged interest on the amount owed unless you make estimated payments throughout the year. For more information, see the instructions for making estimated tax payments in Publication OR-ESTIMATE. A: Some employees are over-withheld on their taxes, meaning
that they'll pay more in tax during the year than what they'll owe when they
file their returns. They might receive a large refund when they file their
return, but they'll have less money in each paycheck throughout the year. If
your taxes are over-withheld, use the withholding calculator to find the
right number of allowances that will leave you with more money in each paycheck,
while still making sure that enough is withheld to cover your tax when you file
your return. A: Your withholding is based upon your estimated tax liability for the year. Your Oregon tax liability is different than your federal tax liability, as the tax rates and other items you claim on your return, such as deductions and credits, are different for federal and state taxes. |
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Form OR-W-4
A: Taxpayers who need to change the amount of tax withheld
from their paychecks need to complete Form OR-W-4 and give it to their
employer. Use the worksheets that come with the form or, for more accurate
results, use the withholding calculator to help you complete the form.
A: Your employer isn't required to give you Form OR-W-4, but
we've asked that they provide it. If your employer doesn't give you a copy of Form OR-W-4 to complete,
you can get the form and instructions from our website, or you can contact us
and we'll send you a copy.
A: Your employer is only required to withhold tax from your pay
and submit it to us. It's up to you to specify how much Oregon tax they should
withhold. If you don't specify your withholding for Oregon, they have to use
your federal Form W-4 to calculate your Oregon withholding. If you don't give
them a federal form or an Oregon form, they'll withhold Oregon tax as if you
are single and claiming zero allowances. This may not be enough withholding to cover the taxes you owe.
A: You should complete all worksheets in the Form OR-W-4
that pertain to your situation. The more information you fill out, the more
accurate your withholding will be.
A: No. You only give the first part of the form—the part
that you sign—to your employer. Keep the worksheets for your own records.
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Tax calculator
A: You should check your withholding whenever your personal or financial situation changes because those can impact your tax liability. Earlier in the year is better than later, since withholding takes place throughout the year. Waiting until later in the year means there are fewer pay periods to make changes, which could have a bigger impact on each
paycheck.
A: The withholding calculator looks at your situation as of
the day you use it. If you've started a new job during the year, or you're
checking your current withholding arrangement, the calculator will make
recommendations for your withholding for the rest of the year. It will also recommend
what you should do next year if your personal or financial situation doesn't
change.
A: No. The withholding calculator doesn't store your
personal or financial information. It doesn't ask for your name or other
identifying information, either.
A: It's a taxpayer's responsibility to check their
withholding and determine if it's accurate for their personal situation.
Payroll offices and human resource departments are responsible only for
processing the Form OR-W-4. It's important to remember people working in these
offices do not know the rest of someone's personal financial situation, and
they are not responsible for giving you tax advice. Employees who have tax
questions should consult with a trusted tax professional. If you have questions
about the withholding calculator or Form OR-W-4, contact us.
A: We use this information to determine your child tax
credit on the federal return. You may qualify for a child tax credit of $2,000
if your dependent is under 17, or $500 if the dependent is age 17 or older. This
goes into the calculation to determine your federal tax subtraction on the
Oregon return.
A: No. Enter the wages that you'll be reporting when you
file your return. The calculator will use the starting and ending dates to
figure out how much the job pays for the year.
A: It is really important that you enter each job separately
because the withholding calculation will be off if you combine all the jobs.
This is because each employer uses the same basic withholding formula, which
treats each job as if it's the only income you have. The formula includes the
standard deduction and an estimate of the federal tax subtraction you'll claim
on your return. It also applies the tax rates that would apply if you only had
one job. The calculator needs to know how many times these deductions and tax
rates will be applied by your employers. That way, it can figure all of that in
when it makes its recommendation.
A: No, the calculator assumes you will have the job for the
same length of time in 2020. If your personal or financial situation changes
for 2020 (for example, your job starts in summer 2019 and continues for all of
2020, or your part-time job becomes full-time), you are encouraged to come back
in early 2020 and use the calculator again.
A: You can enter these separately or enter just your net
wages, but don't do both. If you enter them separately, the calculator will
figure out the net wages for you.
A: The calculator figures out your withholding based on your
annual wages, including the amount you're paid each pay period and any bonuses.
First, it figures out your net wages for the year based on starting and ending
dates you enter, as well as how often you're paid. Then it adds any bonus
amounts you'll receive and uses that total to figure out how much you should
have withheld for the year.
A: The calculator uses your filing status, number of
allowances, and amount withheld to date to determine how much would be withheld
for the entire year if you didn't change anything. Because some taxpayers
change their allowances during the year, having this information allows the
calculator to figure out how much needs to be withheld for the rest of the
year.
A: Enter the amount you'll include on your federal return as
"other income" and enter the same amount again as an Oregon
subtraction.
A: Yes. You don't have to have wages (or other income that is subject to
withholding) to use the calculator. There is a checkbox you can click that will
allow you to skip entering wages. Instead of suggesting allowances or an
additional withholding amount per period, the calculator will tell you how much
your annual estimated payments should be.
A: Form OR-W-4 uses only some of your personal and financial
information and is a rough estimate. The calculator is more accurate and takes
everything in your situation into account.
A: The results for 2019 factor in taxes you've already had withheld for this year. If your withholding wasn't correct, the results will tell you what to claim for the rest of the year to get back on track. The recommendation for 2020 assumes that your financial and personal situations will be the same as 2019, but it doesn't factor in any taxes that were already withheld.
A: No, the refund amount on the calculator is a refund of
withheld tax only. Refundable credits are included in the calculation only to
the point where your tax liability would be zero and any withheld tax would be
refunded to you. If you claim refundable credits when you file your return, the
amount of your actual refund may be greater than what the calculator says.
A: If the annual wages at your highest-paying job are more
than $100,000 and you're single, or more than $200,000 and you're married, the
formula your employer uses won't include allowances. The calculator takes this into account and won't
suggest any allowances if we know the employer won't use them when they compute
the tax to withhold from your pay.
A: Even if your federal itemized deductions are different,
enter your Oregon itemized deductions in the calculator. The calculator will
use those deductions when figuring your federal tax subtraction. In some cases,
this calculation may be slightly off, but the difference shouldn't be much. If your
Oregon itemized deductions are less than the federal standard deduction, the
calculator will use the federal standard deduction when figuring the federal
tax subtraction.
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Disclaimer: This FAQ is for informational purposes only and may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.