How should taxpayers file when they moved to Virginia in June 2014?

Plain-English summary

Virginia agreed that the married couple became domiciliaries only when they moved from State A to Virginia in June 2014. They were therefore part-year residents, not full-year residents.

They had to file Form 760 PY and report income, deductions, additions, subtractions, and modifications attributable to the period they lived in Virginia. Personal exemptions and a standard deduction, if used federally, had to be prorated by the resident period.

Difficulty obtaining one spouse's W-2 did not remove the filing obligation. Virginia would adjust the estimated assessment after receiving the part-year return.

Citations and references

• Va. Code §§ 58.1-302 and 58.1-303

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-78

Original ruling text

May 2, 2018

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to * (the “Taxpayers”) for the taxable year ended December 31, 2014.

FACTS

The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayers, a husband and wife, may have been required to file a Virginia individual income tax return for the 2014 taxable year. A review of the Department's records showed that the Taxpayers had not filed a return. The Department requested additional information from the Taxpayers to determine if their income was subject to Virginia income tax. When the Taxpayers did not respond to the information request, the Department issued an assessment. The Taxpayers filed an appeal, contending that they resided in Virginia beginning in June 2014.

DETERMINATION

Residency

Virginia Code § 58.1-302 sets forth two classes of residents, a domiciliary resident and an actual resident. The domiciliary residence of a person means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia.

The Taxpayers concede they moved to and changed their domiciliary residence to Virginia from * (State A) in June 2014.

Part-Year Residents

Virginia Cod e § 58.1-303 provides that a taxpayer who becomes a resident of another state during the taxable year is subject to taxation for the period in which he was a Virginia resident. Accordingly, Virginia taxable income is computed by determining income, deductions, subtractions, additions and modifications attributable to the period of residence in Virginia. In addition, part-year residents may claim a portion of their Virginia personal exemptions, but the exemptions will be prorated based upon the number of days that the taxpayer was a Virginia resident. Further, part-year residents may claim a prorated Virginia standard deduction if they claim the standard deduction for federal income tax purposes.

Because the Taxpayers changed their domiciliary residence to Virginia in June 2014, they would be considered part-year residents under Virginia law. Individuals who move into Virginia during a taxable year would file a part-year resident return (Form 760 PY). As such, the Taxpayers should file a 2014 Form 760 PY and report only the income they received while residing in Virginia. The Taxpayers indicate that the wife is having difficulty getting her 2014 Federal Form W-2. Such difficulty does not alleviate the Taxpayers' responsibility to file a return.

The requested return should be filed within 60 days of the date of this letter and mailed to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23216-7203, Attention: *. Once the return is received, it will be processed and the assessment will be adjusted accordingly. If such return is not filed within the allotted time, the assessment will be adjusted based on the best available information, and collection action will resume.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department's web site. If you have any questions regarding this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1508.B