Must married federal or state employees combine their salaries when testing Virginia's $15,000 employee-salary subtraction?

Subject

Married individuals who are federal and/or state employees are not required to combine their salaries for purposes of Va. Code § 58.1-322 C 24.

Plain-English summary

A husband and wife were both federal employees in 2015. The husband earned more than $15,000 and the wife earned less than $15,000. Virginia initially disallowed the subtraction for the wife's salary because their combined salaries exceeded $15,000.

The Tax Commissioner reversed that result. Va. Code § 58.1-322 C 24 applied to each federal or state employee whose total annual salary from all employment was $15,000 or less. Married employee-spouses did not combine their salaries for this test. Because the wife qualified as a federal employee and earned below the threshold, the couple could subtract her qualifying salary and the 2015 assessment was abated.

What this means for you

Under the statute applied in this 2017 ruling, the threshold was employee-specific, not household-wide. One spouse's higher salary did not disqualify the other spouse's otherwise eligible federal or state salary.

Citations and references

• Va. Code § 58.1-322 C 24.
• 5 U.S.C. § 2105(a).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 17-25

Original ruling text

March 17, 2017

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, 2015.

FACTS

The Taxpayers, a husband and wife, were both federal employees during the 2015 taxable year. The husband's total salary was more than $15,000 and the wife's total salary was less than $15,000 during 2015. The Taxpayers claimed a subtraction for the amount of the wife's salary income pursuant to Virginia Code § 58.1-322 C 24.

The Department disallowed the subtraction because the Taxpayers' combined salaries were more than $15,000. The Taxpayers appeal, contending the wife's salary met the requirements for the subtraction.

DETERMINATION

Virginia Code § 58.1-322 C 24 allows a subtraction for “. . . the first $15,000 of salary for each federal and state employee whose total annual salary from all employment for the taxable year is $15,000 or less.” [Emphasis added.]

Virginia follows the federal classification of employees for purposes of the subtraction allowed by Va. Code § 58.1-322 C 24. See Public Document (P.D.) 09-17 (2/4/2009). According to the statutory language of the subtraction, each individual federal or state employee whose entire annual salary is less than $15,000 is entitled to claim the subtraction. Married individuals who are federal and/or state employees are not required to combine their salaries for purposes of Va. Code § 58.1-322 C 24.

The wife was a federal employee under Title 5 U.S.C. § 2105(a). Because she earned less than $15,000 per year, the Taxpayers were entitled to claim a subtraction for her salary. Accordingly, the assessment for the 2015 taxable year will be abated.

The Code of Virginia section and public document 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/1006.B