Could a person who moved out of Virginia avoid adjustments to the standard deduction and personal exemption on a 2010 part-year return?

Plain-English summary

Virginia upheld its corrections to the part-year resident's standard deduction and personal exemption. A person who abandons Virginia domicile during the year is taxed as a resident only for the Virginia-resident portion of that year.

The standard deduction was prorated using the ratio of Virginia-attributable federal adjusted gross income to total federal adjusted gross income. Personal exemptions were generally prorated using Virginia-resident days over 365, although no day-based proration applied when all federal adjusted gross income was attributable to Virginia.

The taxpayer offered no evidence that the Department's calculations were wrong. The fact that he no longer lived in Virginia did not eliminate errors on the earlier part-year return.

Common questions

Q: How was the standard deduction prorated?
A: By the share of federal adjusted gross income attributable to Virginia.

Q: Were personal exemptions always prorated by days?
A: Generally yes, unless all federal adjusted gross income was attributable to Virginia.

Citations and references

• Va. Code §§ 58.1-205 and 58.1-303(B).
• 23 VAC 10-110-40(B).

Subject

Taxpayer made errors when calculating the Virginia income tax on part year return..

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-103

Original ruling text

June 19, 2012

Re: § 58.1-1821 Application: Individual Income Tax

Dear *:

This will reply to your letter in which you seek correction of the Virginia individual income tax assessment issued to * (the "Taxpayer") for the taxable year ended December 31, 2010. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer filed a 2010 Virginia part-year resident income tax return. During processing, the Department adjusted the Taxpayer's standard deduction and personal exemption and issued an assessment for additional tax, penalty, and interest. The Taxpayer appeals the assessment, contending he is not liable for the assessment because he is not a resident of Virginia.

DETERMINATION

Under Va. Code § 58.1-303 B, a taxpayer that abandons his Virginia domicile and establishes a new domicile outside Virginia during a taxable year is taxable as a resident of Virginia for only that portion of the taxable year during which he was a resident of Virginia. Under Title 23 of the Virginia Administrative Code (VAC) 10-110-40 B, the allowable standard deduction of a part-year resident is prorated based on that portion of federal adjusted gross income (FAGI) attributable to Virginia as compared with FAGI. In addition, personal exemptions are generally prorated by multiplying the amount of the exemption by the ratio of days of residence in Virginia to 365 days. However, if all of the FAGI of a part-year resident is attributable to Virginia, the individual may claim the allowable personal exemptions without any proration based upon days of residence.

Pursuant to Va. Code § 58.1-205 any assessment of tax by the Department is deemed prima facie correct. This means that the burden of proof is upon the Taxpayer to establish that the assessment is incorrect. The Taxpayer has provided no evidence that the Department's adjustment is incorrect. The fact that the Taxpayer no longer resides in Virginia has no bearing on the error the Taxpayer made when calculating the Virginia income tax.

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

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4870201783.D