Oregon is putting a portion of your 2014 Oregon taxes back into your pocket. As mandated by the Oregon Constitution, the rebate is to be issued when the calculated revenue for a given biennium exceeds the forecast revenue by at least two percent.
(Not) A Pile of Money
The kicker will be in play for the first time since 2007, providing a rebate to anyone who paid taxes to the state of Oregon in 2014. With a rebate rate of only 5.6% for the 2015 kicker, this will be the second lowest rebate rate Oregon has seen; so temper your expectations as 2007 was a lofty 18.6%.
What does all this talk about kickers and rebate rates mean for you exactly? Quite simply, the kicker will pay back 5.6% (the rebate rate) of your Oregon tax liability before credits. The Oregonian has an excellent kicker calculator for you to estimate how much you might get back. There is another difference from prior kickers which brings with it some caveats, so let us briefly explain.
Show Me the Money
Let’s go back to the 2007 kicker, your money came by way of a check in the mail from the state of Oregon. This year, your money comes by way of your 2015 Oregon income tax return. That means if you paid income tax to Oregon in 2014, even if you owe nothing to Oregon in 2015, you need to file a 2015 Oregon income tax return.
What Should I Do?
How exactly does your money come to you via the income tax return? It will act as a refundable credit, which is to say it will discount your Oregon income tax liability. If your kicker exceeds your tax liability, you will receive a refund check. Hence why you will need to file in 2015 whether required or not.
It can also reduce your next quarterly estimated tax payments, as Oregon underpayment penalties are calculated based on Oregon income tax liability after all refundable credits are applied. So, in effect, you may see money more immediately than April, it will just be in the form of savings on those pesky quarterly payments.
To best determine how the kicker impacts your individual tax situation, as always, you should contact your tax advisor. Also, please note that the kicker calculator linked above is not an official calculator; to avoid possible underpayment penalties, discuss your situation with your tax advisor prior to reducing any planned quarterly tax payments.
This blog post is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern.