Federal v. Oklahoma Non-resident Income Tax Return question?

Question

I have self-employment income in Texas but also have to fill out an Oklahoma nonresident income tax return for income coming from some oil well rights.

On my Oklahoma nonresident/part-year income tax return (Form 511NR) , there is a Federal Amount column and an OK Amount column. Both have an item called "Total Federal adjustments to income". I'm subtracting $304 worth of self-employment tax deductions from the Federal Amount column, but do I also subtract it from the OK Amount column? (resulting in a lower Adjusted gross OK source income)

Let me know if there's something else you need to know, I might have missed something important.

Phil Marti · Accepted Answer

No.  There is no OK-source income tied to the SE tax adjustment.Phil MartiVITA/TCE VolunteerClarksburg, MD

mammondee · Answer

It depends on what kine of Oklahoma "oil well rights you have". It they are working interests, and therefore reported on schedule C, subject to self employment taxes, then a percentage of the SE adjustment on the Federal return may be from this Oklahoma source income. If this is the case, you are entitled to that portion of the adjustment that is allocable to the OK income as an adjustment on the OK NR return.

However if what you have are "royalty" or "lease bonus" income, these are reported on Sch E not subject to SE tax. Therefore all the SE adjustment on the federal return is assumed from income with it's source outside of Oklahoma.

Gene E. Utterback, EA, ABA · Answer

It depends on what kine of Oklahoma "oil well rights you have". It they are working interests, and therefore reported on schedule C, subject to self employment taxes, then a percentage of the SE adjustment on the Federal return may be from this Oklahoma source income. If this is the case, you are entitled to that portion of the adjustment that is allocable to the OK income as an adjustment on the OK NR return.

However if what you have are "royalty" or "lease bonus" income, these are reported on Sch E not subject to SE tax. Therefore all the SE adjustment on the federal return is assumed from income with it's source outside of Oklahoma.

Federal v. Oklahoma Non-resident Income Tax Return question?

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