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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Could a retiree subtract the full amount of pension contributions attributed to years worked in other states without records of their state tax treatment?
No. Virginia's subtraction covered only federally deductible employee contributions that another state had actually taxed, not employer contributions or investment earnings. The retiree's basic-annuit…
What Virginia returns did a temporarily assigned employee owe when she worked and kept housing in Virginia but moved among several states?
She had to file a 2012 nonresident return for Virginia-source work and a 2013 resident return because the evidence indicated Virginia domicile. If she could prove she moved and changed domicile to Sta…
Did an exemption from federal self-employment tax prevent Virginia from taxing income included in federal adjusted gross income after an IRS audit?
No. Federal self-employment tax is separate from income tax, and Virginia taxed the income because it was included in federal adjusted gross income. Virginia accepted the current IRS audit result, but…
Could Virginia consider an administrative tax appeal filed more than 90 days after the assessment notice was mailed?
No. Virginia mailed the assessment on March 29, 2016, making the 90-day administrative appeal deadline June 27. Because the taxpayer did not file until August 4, the Tax Commissioner could not reach t…
Was a Pennsylvania-domiciled college student a full-year Virginia resident when he kept Virginia housing and moved here permanently after graduation?
Yes on the available evidence. Even if Pennsylvania domicile continued until July, the taxpayer likely maintained a Virginia place of abode from college in January through May and again after moving p…
Did filing both part-year and nonresident returns prove that a couple abandoned Virginia domicile during a brief 2015 absence?
No. The couple's filing history showed Virginia residence before and after an absence of less than six months, creating prima facie evidence that they never abandoned Virginia domicile. Because they d…
Could a retiree obtain Virginia's previously taxed contribution subtraction without records supporting the retirement-income claim?
Not without documentation. Virginia taxes retirement income included in federal adjusted gross income unless a specific subtraction applies, and federal tax paid on that income does not itself create …
Did federally taxable lump-sum death benefits from annuity contracts qualify for Virginia's death-benefit subtraction without being life-insurance proceeds?
Yes. The statute required payments from an annuity contract with an insurance company, received by a beneficiary in a lump sum, and subject to federal income tax. The payments met all three conditions…
Does a later acquisition disqualify Virginia's long-term capital-gain subtraction when the original company qualified at the time of investment, and what proof must the investor provide?
A later merger or acquisition does not by itself defeat Virginia's long-term capital-gain subtraction if the original company was a qualified business when the investment was made. But this taxpayer h…
Could insurance-company disability pension income qualify for Virginia's disability subtraction even when reported on Form W-2?
Yes. Form W-2 reporting did not control when the insurer confirmed the payments had changed from salary continuation to disability pension income and the husband remained disabled under Social Securit…
Did the Servicemembers Civil Relief Act preserve a military couple's claimed Florida domicile after they moved to Virginia under the wife's orders, bought a home, registered and voted in Virginia, and obtained Virginia licenses?
No. Military orders alone do not change domicile, but the Servicemembers Civil Relief Act also does not prevent a servicemember or spouse from acquiring a new domicile. The couple failed to show that …
Did a military contractor employee's documented combat-zone service extend the Virginia refund period for 2011 and 2012 returns filed in July 2016?
Yes. IRS documentation showed that the military contractor employee qualified for the federal combat-zone postponement. Virginia extended both return due dates to June 15, 2015, so the July 29, 2016 f…
Was a December 2014 amended return timely to recover a 2007 Virginia assessment paid through a tax lien in February 2012?
No. The taxpayers missed both the general May 1, 2011 amended-return deadline and the special two-year period after the February 2012 lien payment. Their December 2014 filing was late, so Virginia had…
How does Virginia calculate the retirement-income subtraction when pension contributions were deductible federally but taxed by another state before later distributions?
Virginia uses a pro-rata formula, not a dollar-for-dollar recovery of contributions. The taxpayers proved that the wife's 1984-1986 pension contributions were excluded federally and taxed by State A, …
Could a Virginia taxpayer's otherwise late amended refund return remain timely if it was filed within one year after another state's final determination changed the taxpayer's resident status?
Potentially. The taxpayer's second amended return was outside Virginia's ordinary three-year period, but Va. Code § 58.1-1823 A (v) allowed a refund claim within one year after another state's final d…
Did working and renting a home in another state establish a new domicile when the taxpayer kept a Virginia home for family, Virginia vehicles, and a Virginia driver's license?
No. The taxpayer's State A job, rental, and resident returns showed ties there, but he retained a Virginia home for his former wife and children, three Virginia-registered vehicles, and renewed his Vi…
Could taxpayers overturn a Virginia assessment based on an IRS audit while their later federal amendment was still pending, and would a payment plan admit liability?
No immediate abatement was available. Virginia properly used the IRS's final 2010 audit adjustments after the taxpayers failed to file a Virginia amended return, and the IRS's write-off of its balance…
Are a Virginia resident's wages and salaries exempt from Virginia income tax, and can that theory defeat assessments or filing duties?
No. Virginia begins with federal adjusted gross income, so a resident's wages included federally are taxable unless a specific Virginia modification applies. The taxpayer's cited cases did not support…
Could married taxpayers use a lower federal adjusted gross income than the IRS reported and claim an unreduced Virginia age deduction for 2013?
No. Virginia used the federal adjusted gross income reported by the IRS because the couple's return showed a lower amount, and any discrepancy had to be resolved federally. Only the husband qualified …
Could a taxpayer obtain abatement of a 2013 Virginia income-tax assessment with incomplete and conflicting evidence that she had moved to another state?
Not yet. The taxpayer's rental, address-change, and information-return records did not establish when she moved or whether she intended to remain in the other state, and some evidence conflicted. Beca…
Did foreign work assignments and purchasing property in another state establish a new domicile when the taxpayer returned to Virginia within six months?
No. The taxpayer's overseas work was temporary, his Virginia driver's-license record contradicted his claim that it had lapsed, Virginia tax continued to be withheld, and the property he bought in Sta…
How should former New Jersey residents calculate Virginia's subtraction for pension distributions attributable to contributions previously taxed by New Jersey?
They could not subtract the entire unrecovered contribution balance at once. Because the pension lacked an individual year-end account value, Virginia used the federal simplified annuity method. The s…
Could Virginia assess 2012 tax more than three years after the return due date when taxpayers had not reported an IRS increase in federal income?
Yes. The ordinary three-year limit did not apply because the taxpayers failed to file a Virginia amended return within one year of the IRS change. Va. Code § 58.1-312 A 3 then allowed Virginia to asse…
Was an IRA distribution received before a taxpayer became a Virginia resident included in her Virginia part-year resident income?
No. After reviewing new documentation, Virginia found that one taxable IRA distribution was received in May 2013, before the taxpayer became a Virginia resident in June. That distribution was excluded…
Could a Virginia resident claim an out-of-state tax credit for income tax a partnership paid on his behalf through another state's unified return?
Yes. The partnership statement showed both the taxpayer's pro rata share of income attributable to the other state and his pro rata share of the tax paid there on his behalf. That satisfied Virginia's…
Could a taxpayer claim Virginia's Livable Home Tax Credit without a certificate of approval from the Department of Housing and Community Development?
No. A taxpayer first had to apply to the Department of Housing and Community Development and obtain a certificate proving that the accessible new home or retrofit qualified. Without that certificate, …
Could a local school-board member claim Virginia's subtraction for federal or state employees earning no more than $15,000?
No. Virginia treated local school boards as political subdivisions and distinguished their members from state employees, so the husband's compensation did not qualify for the subtraction in Va. Code §…
Could a Virginia resident who moved during the year claim a credit for tax paid to the new state on income earned before the move?
Yes, for qualifying income earned in the other state while the taxpayer was still a Virginia resident and taxed by both states, subject to Virginia's statutory limits. But income earned while working …
Did working and leasing homes in Maryland establish Maryland domicile for 2011-2013 when the taxpayer filed Maryland nonresident returns naming Virginia as home?
No. The taxpayer worked and leased residences in Maryland but kept a Virginia license and vehicles and filed Maryland nonresident returns identifying Virginia as his residence. He did not prove a perm…
Did federal gain from a deemed sale of Virginia land-preservation tax credits remain taxable for Virginia income tax?
No. Although the IRS treated the transaction as a disguised sale producing federal adjusted gross income, Va. Code § 58.1-513 E barred Virginia gain or loss from transferring the land-preservation cre…
Could a Virginia resident overturn income-tax assessments by claiming no duty to pay, tendering a hand-drawn Treasury check, and objecting to wage garnishment?
No. Most older appeals and refund claims were time-barred, and Virginia upheld the 2012 assessment because its information showed the taxpayer was a Virginia resident with taxable income. A hand-drawn…
Did a former service member who lived abroad prove that he had abandoned Virginia domicile for 2012?
No. The taxpayer did not establish a permanent domicile in another state or country and retained Virginia ties, including a driver's license for much of the period and use of a Virginia family address…
Did stock acquired in 2006 qualify for Virginia's long-term-capital-gain subtraction because it did not vest until 2011?
No. Virginia treated the stock as an investment when the taxpayer acquired it in 2006, even though it was then nontransferable and did not vest until 2011. Because the statute required the investment …
Did living abroad and filing a prior part-year return prove that this taxpayer was no longer domiciled in Virginia in 2013?
Not on the evidence provided. Living abroad and filing a prior part-year return did not by themselves prove abandonment of Virginia domicile, especially with a Virginia address and driver's license st…
Must married federal or state employees combine their salaries when testing Virginia's $15,000 employee-salary subtraction?
No. Virginia applied the salary limit separately to each employee-spouse. Because the wife was a federal employee whose total annual salary was below $15,000, the couple could subtract her qualifying …
Did temporary work in two other states end this taxpayer's Virginia domicile for 2012 income-tax purposes?
No. The taxpayer did not show a permanent home or intent to remain in either other state, while continuing to use a Virginia family address and driver's license. Virginia treated him as a domiciliary …
Does an employer's failure to withhold Virginia income tax relieve the employee from paying tax on the wages?
No. Even if the employer should have classified the worker as an employee and withheld Virginia tax, the worker remained responsible for reporting the income and paying the full tax. Without withholdi…
Can an employee claim Virginia withholding credit when the employer's reported payment cannot be verified?
Yes, if the employee proves the employer actually deducted Virginia tax from wages. Va. Code § 58.1-468 protects an employee when withheld tax was not remitted, but the taxpayer had not supplied verif…
Did moving to New Jersey for work establish a new domicile when the taxpayer kept Virginia licenses and described the move as temporary?
No. The taxpayer's New Jersey home, job, and resident return favored a move, but she kept Virginia driver's, vehicle, and voter registrations and described New Jersey as temporary while pursuing New Y…
Did a married couple abandon Virginia domicile by living and working in a U.S. territory for several years?
No. Although the couple leased a home and the husband worked in the territory, they retained their Virginia house, obtained Virginia driver's licenses and vehicle registration before returning, and th…
Could Virginia refund 2011 and 2012 overpayments when the original returns were filed after the three-year deadline?
No. Both returns were filed after the three-year refund period expired, and Va. Code § 58.1-499 D gave the Department no discretion to extend it. Disability did not suspend the deadline, and caring fo…
Did disability suspend Virginia's three-year deadline for claiming a 2012 income-tax refund?
No. The 2012 return had to be filed by May 2, 2016 to obtain a refund, but it was not filed until October 2016. Virginia law required a fiduciary or authorized agent to file for a disabled taxpayer an…
Did gain from Fortune 500 insurance-company stock qualify for Virginia's small technology-business capital-gain subtraction?
No. The stock was purchased in 2004 and issued by a large insurance company, not a qualifying small Virginia technology business within the statutory investment period. Oral advice later written down …
Did a husband's move to another state make the couple eligible to file a joint Virginia nonresident return for 2012?
No. The husband worked and lived in another state, but kept his Virginia home, license, vehicle registrations, and voter registration and returned in 2013. Virginia found no domicile change, treated h…
Could California residents amend a Virginia nonresident return for a reciprocal tax credit after California changed their 2011 liability?
Yes. California's September 2015 adjustment made the taxpayers eligible to claim Virginia's reciprocal nonresident credit, and their May 2016 amended Virginia return was within the special one-year pe…
Did the Servicemembers Civil Relief Act keep this active-duty member's basic pay outside Virginia income tax?
No. Military orders alone do not change domicile, but a servicemember can voluntarily establish a new one. The taxpayer provided no proof of continued ties to the claimed home state and instead owned …
Was saying that he neither worked nor lived in Virginia enough to overturn this nonfiler's 2012 assessment?
No. The taxpayer supplied no objective evidence despite two Department requests, so he did not prove abandonment of Virginia domicile or overcome the assessment's presumption of correctness. He receiv…
Could Virginia assess a nonfiler from an IRS audit adjustment and give notice at the taxpayer's last known address?
Yes. Virginia used the IRS's final income adjustment after the taxpayer failed to file a state return or respond to an information request. The Department had mailed proposed-assessment notice to the …
Could a Virginia resident defeat a 2012 assessment merely because the Department could not provide the employer's actual Form W-2?
No. Federal exchange data showed wages from a California employer and interest from a Virginia institution, and the taxpayer did not deny Virginia residency or receiving income. The assessment remaine…
Did a room lease and work aboard a vessel prove that this taxpayer abandoned Virginia domicile for 2012?
Not on the evidence provided. The taxpayer had a month-to-month room lease elsewhere and worked aboard a vessel most of each month, but renewed his Virginia driver's license in 2011 and ignored two re…
Did repeated requests that an employer start Virginia withholding relieve the employee from paying the tax due?
No. The employee reported Virginia wages and a tax liability but no corresponding withholding. Even if the employer should have withheld and ignored his requests, no tax was actually deducted from his…
Did a Public Health Service commissioned officer qualify for Virginia's military-pay subtraction when fewer than 90 active-duty days fell in 2012?
Yes. The Public Health Service Commissioned Corps counted as a uniformed service, and the 90-day test applied to the continuous extended-active-duty period rather than days within one tax year. Becaus…
Could insurer-paid long-term disability benefits reported on Form W-2 qualify for Virginia's disability-income subtraction?
Potentially. Virginia modified its prior position and said Form W-2 reporting alone does not disqualify benefits proven to arise from long-term disability insurance. But the taxpayers documented perma…
Did a federally taxable lump-sum annuity death benefit qualify for Virginia's income subtraction even though it was not life-insurance proceeds?
Yes. The payment came from an annuity contract with an insurance company, was paid to the beneficiary in a lump sum, and was federally taxable. Those facts met Va. Code § 58.1-322 C 32; the payment di…
Did claiming residence in another state overturn this nonfiler's best-information Virginia assessment for 2012?
No. The taxpayer did not answer the Department's request for evidence showing abandonment of Virginia domicile, so the best-information assessment remained presumed correct. He received one final 30 d…
Could an employee claim a Virginia withholding credit for tax his employer allegedly should have withheld after March 2014?
No. An employee may receive credit when an employer actually deducts Virginia tax but fails to remit it, but this taxpayer did not prove any deduction after March 2014. Unemployment eligibility, a sub…
Did an asserted post-divorce move outside Virginia overturn this taxpayer's estimated 2012 resident income-tax assessment?
No. Virginia unemployment records covered all four quarters of 2012, the taxpayer retained Virginia DMV ties, and she supplied no evidence of living elsewhere that year. Because she did not complete t…
Did work in another state and later hotel stays in Pennsylvania end this taxpayer's Virginia domicile for 2011 through 2013?
No. An out-of-state employment letter did not prove a permanent new domicile, and temporary Pennsylvania hotel stays were not a permanent abode. Virginia treated the taxpayer as a domiciliary resident…
Did employment, a driver's license, and living in a camper in another state end the husband's Virginia domicile in 2013?
No. The husband worked and obtained a license in another state, but lived in a Virginia-registered camper, became a student, and retained a Virginia home, spouse, voter registration, vehicles, family,…
Did long-term work, housing, licensing, and marriage abroad establish that this taxpayer had left Virginia domicile by 2012?
Yes. Nearly two decades of employment abroad, leased homes, a foreign driver's license and vehicle registration, and marriage to a citizen of that country outweighed the taxpayer's retained Virginia l…
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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.