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Oregon Federal Tax Subtraction

Level 7

With regard to the mostly corrected Federal Tax Subtraction on the Oregon Return--I bring news. After waiting over an hour, I spoke to a very dedicated person who asked me for info on a few returns that are sitting at Intuit and haven't been sent to Oregon. (I have about 20 sitting there, while another 40 have been sent to Oregon.) She was able to discover that there is an "FTS" (federal tax subtraction) hold on those. Apparently Intuit is going to check and correct/send those back to the preparer. That got me excited, and I checked all of my Oregon returns. And guess what--all the returns that have zero FTS have been forwarded to Oregon, and all the returns that do not show zero for an FTS are being held. So with just a little bit of help, I've been able to dope it out. Wouldn't it be nice instead if Intuit had someone who knew enough to provide that information? That person is certainly not visible, I can say that much. Anyway, for what it's worth, anyone filing Oregon should know what I just wrote. 

2 Comments 2
Level 15

The very dedicated person may be able to explain why Oregon put out a news release last week (see https://www.flashalert.net/id/DOR) that mentioned the FTS:

Stimulus Payments

Economic Impact Payments received during 2020 and early 2021 may impact the amount of federal tax subtraction that can be claimed on the 2020 Oregon personal income tax return. 

--and when you click on the link, you are told

Sorry! It seems that the page you're looking for was moved or deleted.

0 Cheers
Level 7

No, she cannot do that. She was able to find the code "FTS" and I took it from there. I think there is one person deep within the bowels of the software room who "mostly" understands the rule. That person, however, failed to understand that penalties and interest (form 1040, line 23) are not to be added to the amount of tax paid. So if you have, say, a 10% penalty for early 1099R withdrawals, those penalties, which are on line 23 and add to line 22 to make line 24, are not part of the subtraction. (I had a client yesterday for which the FTS included the interest and penalties on his early 1099R withdrawal.) Interestingly, the software person correctly excluded SE tax, which also goes on line 23, but failed to exclude penalties and interest. But as long as I know that person inside the software room made the error, I am not going to worry about it. I know how to override it. 

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