When considering changing your tax withholding, it is important to separately consider your federal and state tax situation. For example, if you received a federal refund last year and owed Oregon tax, raising your allowances COULD mean that you would be subject to a Oregon underpayment penalty.

Good news – you can adjust your federal and state withholding allowances separately. The Oregon income tax withholding brochure from the Oregon Department of Revenue describes situations where your withholding may differ from your tax liability

• You are in a dual-earner household filing a joint return;
• You have more than one job;
• You have large amounts of nonwage income;
• You have large deductions;
• You claim federal credits that don’t apply to Oregon,
such as federal child tax credit; or
• You claim Oregon credits not accounted for on the
federal tax form, such as Oregon Working Family
Child Care Credit.

You can change your Oregon allowances by submitting a form W-4 and writing “for Oregon only” on the top of the form. The brochure includes Oregon adjustment guidelines, and a calculator for high-income earners.

If you made charitable gifts or purchased tax-deductible memberships to any of Oregon’s arts, heritage and humanities based non-profits this year, There’s still time to receive a generous tax credit provided by the Oregon Cultural Trust.

The Oregon Cultural Trust is building a permanent endowment fund for culture, providing grant awards to cultural organizations throughout the state, and working to increase participation in cultural programming.  Since 2002, the Trust has raised $17million in contributions, including $3.37 million in fiscal 2008.

The Trust is funded by private contributions from individuals and corporations who:

1. donate to any number of non-profit cultural organization
2. make a matching gift to the Oregon Cultural Trust.

To take advantage of the Cultural Tax Credit for the 2009 tax year, a donor must follow these steps:

Step One: Contribute any amount to one or more of Oregon’s qualifying non-profit cultural organizations during 2009.  (A searchable list of 1200 qualifying organizations can be found at www.culturaltrust.org)

Step Two: Make a matching gift to the Oregon Cultural Trust before December 31^st, 2009. You can donate on-line at their secure website www.culturaltrust.org

Step Three: Take a 100%, dollar-for-dollar tax credit against your Oregon Income Tax equal to your gift to the Oregon Cultural Trust up to $500 for individuals, $1,000 for couples filing jointly or $2,500 for Oregon corporations.

To illustrate: A couple who makes a $1,000 contribution to Oregon Public Broadcasting and a $1,000 contribution to the Oregon Cultural Trust will receive a $1,000 tax credit on their Oregon Income Tax, a $1,000 deduction on their state income tax and may receive a $2,000 federal deduction. The tax benefits of charitable contributions depend on your personal tax situation. You should consult your personal tax adviser if you have any questions.  Further information about the Oregon Cultural Trust can be found at www.culturaltrust.org or by calling the Trust at 503-986-0088.

For more details, please read the CCH summary.  Hat tip to TFB for the summary and link to CCH

CCH Summary