Virginia State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Virginia, with full citations and the original source on every page.
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Can someone remain domiciled in Virginia after moving to West Virginia yet still receive Virginia's credit for West Virginia tax withheld from wages?
Yes. The taxpayer established substantial West Virginia ties by selling her Virginia home, taking a West Virginia job, and buying a home there, but she kept her Virginia driver's license and vehicle r…
When may a Virginia resident subtract pension income attributable to contributions that another state taxed, and is tax-software guidance enough proof?
Only when the taxpayer proves that the retirement contributions were deductible for federal purposes but nevertheless taxed by another state when made. The couple showed later South Carolina taxation …
Can Virginia issue a 2013 income-tax refund claimed on a return filed after the three-year deadline because the taxpayer relied on an accountant?
No. A Virginia overpayment may be refunded only if the Department discovers it or receives the taxpayer's written claim within three years after the original timely-return deadline. The 2013 return wa…
Could unused Virginia land-preservation tax credits pass through a residuary will clause when the credit holder died before July 1, 2018?
No. Virginia formerly treated land-preservation credits as personal to the taxpayer and not transferable at death. The 2018 legislation newly allowed transfers by will, bequest, other transfer instrum…
Does entering active duty or claiming a former military home of record automatically end Virginia domicile for a service member or spouse?
No. The wife entered active duty in November 2015, but the Servicemembers Civil Relief Act does not erase a Virginia domicile established before military service. The husband was retired, and his form…
Why did a Virginia part-year resident owe more tax after correctly excluding pre-move income from Virginia?
The extra tax did not come from taxing State A income. On the original return, the taxpayer had already reduced federal adjusted gross income by the pre-Virginia income. The amended return correctly r…
Could a taxpayer receive the overpayment shown on a June 2018 original 2014 return after Virginia separately refunded payment of a mistaken nonfiler assessment?
No. Virginia discovered that the employer had failed to report tax withheld from employees, so it refunded the amount the taxpayer had paid to satisfy the resulting nonfiler assessment. But the separa…
Can a federally taxable IRA distribution qualify for Virginia's first-time home-buyer savings-account subtraction when used to buy a first home?
Potentially. Virginia's first-time home-buyer rule can apply to an account at a financial institution, and the fully federally taxable IRA distributions met the requirement of being taxable income att…
Does Maryland wage withholding relieve a Virginia resident commuter from Virginia income tax under the Virginia-Maryland reciprocity agreement?
No. Virginia's reciprocal agreement with Maryland generally assigns a Virginia resident's commuting wages to Virginia only. The taxpayer was a Virginia resident, worked in Maryland, earned only wages …
Was a military spouse exempt from 2014 Virginia tax by claiming the service member's state when she had stayed there only 30 days before a planned overseas move?
No. The pre-2018 military-spouse rule protected a spouse present in Virginia solely to accompany a service member under orders only when the spouse and service member shared the same domicile. Althoug…
Did a leave-and-earnings statement alone prove a military couple remained domiciled outside Virginia after moving there in 2015?
No. The Servicemembers Civil Relief Act prevents a service member, and in qualifying circumstances a spouse with the same domicile, from changing domicile solely because of military orders. But it doe…
Did new school, property, license, and vehicle evidence overturn Virginia's finding that a couple kept Virginia domicile during foreign assignments?
No. Virginia reconsidered the prior ruling because the couple offered new domicile evidence, but the material did not show permanent or indefinite intent to remain in either foreign country or abandon…
Did an employer relocation to Louisiana change a taxpayer's domicile when he kept Virginia voting, licensing, registration, and mailing ties?
No. The taxpayer lived and worked in employer-provided Louisiana housing and said he intended to remain, but he kept a Virginia driver's license, vehicle registration, voter registration and voting hi…
Could a Virginia resident subtract all retirement distributions when deductible contributions had previously been taxed by Pennsylvania?
No, not the entire distributions. Virginia's subtraction applies when retirement-plan contributions were deductible for federal purposes but still taxed by another state. The taxpayer proved that Penn…
Would Virginia postpone a 2015 resident income-tax assessment while the taxpayer worked on amending and resolving the federal return?
No. A Virginia resident who meets the applicable filing rules must file a Virginia return even while disputing or amending a federal return. After the taxpayer failed to document a federal resolution …
Could a taxpayer revive decades of Virginia assessments through a late appeal that gave no objective facts, specific errors, or valid legal authority?
No. Virginia received the appeal on December 18, 2018, so its 90-day jurisdiction reached only assessments issued on or after September 19, 2018; only the 2014 assessment qualified. That portion still…
Could Virginia residents claim an out-of-state credit merely because South Carolina tax was withheld when they appeared to owe no South Carolina tax?
No. Va. Code § 58.1-332(A) requires a Virginia resident to be liable for and actually pay income tax to the other state. The couple's 2017 South Carolina income fell below that state's nonresident fil…
Did illness or disability suspend Virginia's three-year deadline when a taxpayer filed a refund return 27 days after the deadline?
No. A 2014 Virginia refund return had to be filed by May 1, 2018, three years after its original May 1, 2015 due date. The taxpayer filed on May 28, 2018. Although the return eliminated Virginia's ear…
Could a taxpayer obtain late reconsideration of a 2014 domicile ruling or avoid 2015 Virginia residency with evidence of a 2016 out-of-state condo?
No. The request to reconsider the 2014 determination was dated and received well after the 45-day deadline in 23 VAC 10-20-165(F), so that ruling and assessment became final. For 2015, the same Virgin…
Could taxpayers keep Virginia itemized deductions for 2014-2016 after repeatedly failing to provide records substantiating the claimed expenses?
No, not without supporting records. Virginia generally begins with federal return information, but it may look behind deductions when evidence suggests they do not conform to federal law. Taxpayers mu…
Could a Virginia taxpayer deduct the remaining college-savings or ABLE contribution carryover in full upon reaching age 70?
Yes. Virginia college savings contributions are ordinarily deductible up to $4,000 per contract or account each year, with excess carried forward. Once the purchaser or contributor reaches age 70, the…
Could a Virginia resident avoid income tax by denying a contract to pay, limiting tax to government workers, or charging assessments to a Treasury account?
No. Virginia taxes residents with Virginia taxable income under its statutes; liability is not a gift, voluntary contract, or rule limited to government employees and contractors. Starting the state c…
Was a retirement-plan loan offset taxable by Virginia when employment ended before the move but the full distribution and offset occurred after becoming resident?
Yes. Ending employment while still a Texas resident did not itself create the taxable plan-loan-offset distribution. The promissory note required repayment before a full distribution or deduction of t…
Could taxpayers exclude a 2013 retirement distribution by claiming the husband lived elsewhere or that another state had taxed the underlying contributions?
No. The couple's own returns reported a July 2012 move to Virginia and full-year Virginia residence in 2013, while a questionnaire showed the husband spent 275 nights in Virginia. Their home, licenses…
Should Virginia residents subtract Arkansas-source income from federal adjusted gross income or claim a credit for Arkansas income tax paid?
They had to use a credit, not a subtraction. Virginia taxes a resident's federal adjusted gross income subject to specific state modifications, and no modification generally removes income merely beca…
Could a school-system independent contractor claim Virginia's subtraction for federal and state employees earning $15,000 or less?
No. Va. Code § 58.1-322.02(16) allowed the first $15,000 of salary for a federal or state employee whose total annual salary from all employment was $15,000 or less. The husband performed work for a l…
How did Virginia adjust a 2014 net operating loss carried to 2012, and did Schedule E income qualify for Maryland's border-state credit?
Virginia required a state-specific NOL computation rather than simply copying the federal Schedule 1045 amount. The federal NOL had to be adjusted for Virginia fixed-date conformity items, and itemize…
Was income earned by a bona fide tribal member from work pursued on the tribe's Virginia reservation exempt even if the member lived off reservation?
Yes. Virginia clarified that the exemption turned on bona fide tribal membership and income derived from activities pursued on that tribe's reservation, not on the member also residing there. A tribal…
Can a Virginia taxpayer use the government-employee salary subtraction for a federal retirement annuity reported on Form 1099?
No. The subtraction applies to qualifying salary earned as a federal or state employee, not a federal retirement annuity reported on Form 1099. The Department also rejected reliance on return instruct…
Does selling a financial-planning company that uses proprietary spreadsheets and software qualify for Virginia's technology-business capital-gain subtraction?
No. A financial-planning and investment-management company did not become a qualified technology business merely because proprietary spreadsheets, forms, charts, graphs, and other programs were includ…
May part-year Virginia residents exclude income earned before moving to Virginia when calculating the credit for low-income individuals?
No. For the credit for low-income individuals, a part-year resident starts with federal adjusted gross income and may make only the Virginia additions and subtractions authorized by statute. Income ea…
Does a notice saying a taxpayer plans to appeal preserve Virginia's 90-day tax-appeal deadline if it gives no grounds or supporting facts?
No. A complete Virginia administrative appeal had to state the taxpayer's grounds and relevant facts within 90 days after the assessment was mailed. The taxpayer's letter was only a notice of intent, …
Did a taxpayer successfully abandon Virginia domicile after moving for an indefinite job, listing the Virginia home for sale, and relocating with a spouse?
Yes. The Commissioner found that the taxpayer changed domicile in March 2014 by leaving for indefinite employment, physically relocating with his spouse, listing the Virginia home for sale, using the …
Is a Land Preservation Tax Credit application timely if the taxpayer says it was mailed on time but the Department never received it until after the deadline?
No -- the credit was denied because the application was not received by the deadline. Taxpayers claimed the Land Preservation Tax Credit on their 2016 return for a donation made November 21, 2016. Und…
If a taxpayer filed separate federal and Virginia returns, can Virginia hold him to a later amended joint return he never signed?
No -- the assessment was revised in the taxpayer's favor. He originally filed his 2013 Virginia return separately from his spouse; the Department later received an amended 2013 joint return, processed…
What is Virginia's income tax subtraction for investing in a certified Virginia REIT, and who qualifies?
Virginia allows an individual and corporate income tax subtraction for income from an investment made on or after January 1, 2019 and before December 31, 2024 in an entity the Department has certified…
Could Virginia estimate 2014-2016 income tax from available information when a resident failed to file returns, and did reliance on a preparer excuse penalties?
Yes. After the taxpayer failed to respond adequately or file returns for 2014-2016, Virginia could estimate liability from IRS and other information in its possession. Reliance on a tax professional d…
Could taxpayers obtain a refund on a 2010 Virginia return first filed in October 2014 by measuring the deadline from an extended due date?
No. Because the original 2010 Virginia return was filed after the extended due date, the extension was not valid for measuring the refund period. The taxpayers had three years from the original May 2,…
Did a three-year foreign work assignment change a taxpayer's Virginia domicile for the 2014 income-tax year?
No. The taxpayer's three-year foreign employment commitment and temporary immigration status did not show an intent to remain abroad permanently or indefinitely. He also retained two Virginia residenc…
Did a military spouse become domiciled in Virginia after buying a home and obtaining a Virginia driver's license?
No. Although the couple bought a Virginia home and the spouse obtained a Virginia driver's license, she kept substantial ties to the prior state and later surrendered the Virginia license. Virginia fo…
How did Virginia limit a resident's credit for Delaware income tax when Delaware computed nonresident tax using an allocation percentage?
Virginia limited the credit to the lesser of Delaware tax paid or Virginia tax on the Delaware income actually subject to tax. It applied Delaware's allocation percentage to Delaware net taxable incom…
Was a taxpayer a Virginia resident when he spent only 161 days there but kept a long-term job, home, license, vehicles, and voting ties?
Yes. The taxpayer was not an actual resident because he spent only 161 days in Virginia, but he remained a domiciliary resident. His long-term Virginia job, home, voter registration and voting, vehicl…
Did living and working in another state from a recreational vehicle establish a new domicile when Virginia ties remained?
No. Even if the husband acquired ties to the other state through work and living there in an RV, he did not prove abandonment of Virginia. The Virginia home, vehicle and RV registrations, driver's lic…
When did a taxpayer end Virginia domicile after a temporary move to one state before permanently settling in another?
Virginia domicile continued until June 2014. The taxpayer's temporary move to an intermediate state did not establish a new domicile, and the actions showing residence in the destination state occurre…
Could Virginia assess additional 2014 tax from a final IRS income adjustment when the taxpayers filed no amended Virginia return?
Yes. Virginia began with federal adjusted gross income, required taxpayers to report the final federal change, and could assess at any time when they failed to amend. The Department relied on IRS data…
Did working and leasing homes in another state end Virginia domicile when the taxpayer kept a Virginia home, spouse, vehicles, and license?
No. The taxpayer established work and residences in the other state, but did not prove abandonment of Virginia. His spouse and home remained in Virginia, along with vehicle registrations, a driver's l…
Could taxpayers overturn a 2015 Virginia assessment by saying they filed and paid when the records they cited related to 2014?
Not on the evidence provided. The May 2015 filing and payment would have related to 2014, and Virginia had no record of a 2015 return or tax payment. The best-information assessment stood, but the tax…
What deduction could a Virginia contributor claim for prepaid tuition or ABLE contributions after reaching age 70?
At age 70, the contributor could deduct the remaining prepaid-tuition balance after subtracting prior deductions, rather than staying under the usual $4,000 annual limit. Virginia applied the same app…
Could Virginia residents claim an income-tax credit for the District of Columbia Unincorporated Business Franchise Tax paid on sole-proprietor income?
No. Virginia classified the District of Columbia Unincorporated Business Franchise Tax as a franchise tax rather than the broad-based individual income tax required for the credit. Denying the credit …
Was a taxpayer who worked 165 days in another state still a Virginia resident when he spent 200 days in Virginia and kept his home, license, vehicles, and voting ties there?
Yes. The taxpayer was both a Virginia domiciliary and an actual resident because he did not abandon Virginia and spent 200 days there. He still could claim Virginia's limited credit for income tax pai…
Did military assignments outside Virginia change a service member's domicile when he kept Virginia licensing, registration, and voting ties?
No. Military orders and leases in other states did not by themselves change domicile. The service member showed neither a new domicile elsewhere nor abandonment of Virginia, where he kept a driver's l…
Did temporary overseas work establish new domiciles when a married couple kept a Virginia home, licenses, voting ties, and a vehicle registration?
No. The overseas moves appeared temporary, and the couple did not prove abandonment of Virginia. They retained a Virginia home, active driver's licenses, voter registration, and a vehicle registration…
Could Virginia accept a Qualified Equity and Subordinated Debt Tax Credit application postmarked after the April 1 deadline?
No. Form EDC and supporting documents had to be submitted by April 1 for the preceding tax year. Because the application was postmarked April 23, 2018, Virginia denied the 2017 credit; the annual $5 m…
Could Virginia accept a Qualified Equity and Subordinated Debt Tax Credit application postmarked after the April 1 deadline?
No. Form EDC and supporting documents had to be submitted by April 1 for the preceding tax year. Because the application was postmarked April 18, 2018, Virginia denied the 2017 credit; the annual $5 m…
Did renting homes and filing resident returns in two other states end Virginia domicile when the taxpayer kept Virginia licenses, vehicles, and voting ties?
No. The taxpayer did not prove abandonment of Virginia because she kept a Virginia driver's license, vehicles, and voter registration and later identified herself as a Virginia resident. She could cla…
Did a later merger or acquisition eliminate Virginia's long-term capital-gain subtraction when the company qualified at the time of investment?
No. The statute tied the subtraction to an investment in a qualified business and did not require the company to remain qualified until the stock was sold. Because the business qualified when the inve…
Did taxpayers qualify for Virginia's 2017 tax amnesty after filing an unpaid 2014 return and paying the later assessment during the amnesty period?
Yes. Although the assessment was issued after the program's ordinary June 15 cutoff, the guidelines had a special rule for unpaid returns filed while the taxpayer was not under audit. Because the taxp…
Did working abroad change Virginia domicile when the taxpayer kept a Virginia home, license, voter registration, vehicles, and later returned?
No. Even if the taxpayer established a home abroad, he did not prove abandonment of Virginia. He kept a Virginia residence, driver's license, voter registration, and vehicle registrations and returned…
Did foreign work and advice from an employer or tax preparer prove that a taxpayer was not a Virginia resident in 2014?
No. Temporary work abroad did not by itself abandon Virginia domicile, and the taxpayer supplied no requested evidence of a permanent new home. Filing Virginia resident returns before, during, and aft…
Could taxpayers reverse Virginia assessments after failing to report an IRS deduction change and failing to document later itemized deductions?
Not on the existing record. The 2010 appeal was already exhausted, and Virginia upheld 2011 because the taxpayers failed to report the final IRS reduction of their deductions. For 2014 through 2016, t…
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These are official tax letter rulings and advisory opinions issued by Virginia's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.