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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I filed my Virginia return more than three years late because of personal issues, and I thought I automatically had until November to file -- can I still get my overpayment refunded?
No -- because these taxpayers never actually filed their return within Virginia's automatic six-month extension period either, the extension was negated entirely and the three-year refund clock ran fr…
The IRS accepted our Schedule C and Form 2106 deductions across three tax years with no questions -- can Virginia still audit and disallow them for all three years if we can't produce documentation when asked?
Yes -- Virginia's independent authority to demand documentation for a federal-form deduction applies year after year, and this ruling shows it enforced across three full tax years at once. These taxpa…
The IRS adjusted my 2013 return back in 2016, but I never reported it to Virginia because I believe (and am still contesting with the IRS) that their adjustment itself was made after their own deadline had passed -- can Virginia still assess me years later?
Yes -- once a taxpayer fails to file an amended Virginia return reporting a federal change, Virginia can assess the resulting tax at any time, with no statute-of-limitations shield, and the Department…
I moved out of Virginia for work years ago but kept my old house as a rental, a car co-registered with my mother, my Virginia driver's license until recently, and an old inactive voter registration -- did I still manage to change my domicile out of Virginia?
Yes -- this taxpayer successfully changed his domicile away from Virginia, even though he kept several Virginia connections, because the Department found credible, non-domicile-driven explanations for…
I'm a Virginia resident who owns a stake in a partnership or LLC that elected Maryland's entity-level 'PTE SALT cap workaround' tax -- can I claim a Virginia credit for the tax Maryland collected from the entity?
It depends entirely on what kind of pass-through entity you own. If you're a Virginia resident shareholder of an S-corporation that elects Maryland's entity-level PTE tax, Virginia law specifically tr…
The auditor disallowed my student loan interest adjustment, my employee business expenses, and almost all my itemized deductions -- I sent copies of my tax bills and medical invoices, so why wasn't that enough?
Because invoices and bills only show what you OWED, not that you actually PAID it -- and Virginia requires proof of payment (receipts, cancelled checks, or similar) to substantiate deductions like pro…
I paid DC's Unincorporated Business Franchise Tax on my business income -- can I claim Virginia's credit for taxes paid to another state to avoid being taxed twice on the same income?
No -- the District of Columbia's Unincorporated Business Franchise Tax (UBFT) is specifically excluded from Virginia's credit for taxes paid to another state, and that's true even though denying the c…
We got a refund of the Virginia tax withheld from my wife's wages when we filed our part-year-resident return, but Virginia later assessed us on those same wages -- can we still use that withholding to pay the new bill?
No -- once withholding has already been refunded, it can't be used a second time to offset a later assessment on the same wages. A married couple filed a joint part-year Virginia return for 2018 repor…
My Form W-2 lists 100% of my wages as Virginia state wages because I asked my employer to withhold Virginia tax as a convenience, but I only actually worked a small fraction of my days in Virginia -- can I still allocate my wages based on actual days worked instead?
Yes -- this taxpayer won. A nonresident's Virginia wages should be allocated using the ratio of actual days worked in Virginia to total days worked everywhere, and the state-wages box on a Form W-2 is…
I moved back to Virginia partway through the year and filed a part-year return -- can I exclude the income I earned before my move when computing Virginia's low-income credit?
No -- a part-year resident's income earned before moving to Virginia still counts toward the income threshold for Virginia's low-income credit, even though only the post-move income is actually taxed …
I work and live abroad most of the year for my job, but my family has been steadily building up Virginia ties -- a condo, driver's licenses, voter registration, a business -- while I mostly just visit in summers. Am I a Virginia resident for tax purposes?
Based on the specific facts presented, probably not yet a Virginia domiciliary resident -- but this is an unusually cautious ruling in which the Department expressly declined to give a firm, final ans…
I took a temporary federal job requiring me to live near Virginia for years and even registered a vehicle there -- does that mean I became domiciled in Virginia for tax purposes?
Not automatically -- living somewhere for work, even for years, isn't domicile unless you actually abandon your old home state with no intent to return. A federal employee took a temporary position re…
A federal Civil Service Retirement System (CSRS) retiree sued Virginia a second time over its tax treatment of his pension -- what happened, and does it help anyone else make the same argument?
It was dismissed at trial before the court ever reached the merits. This is the bare Circuit Court of the City of Richmond Order in a federal Civil Service Retirement System (CSRS) retiree's second la…
I already claimed Virginia's historic rehabilitation tax credit on my building -- can I still claim the separate land preservation tax credit within five years if my conservation easement includes façade restrictions, as long as an appraisal shows those restrictions don't add any value to the easement?
Yes -- if a qualified appraisal actually shows the building-façade portion of the easement adds no value, the building doesn't count as part of the land preservation credit's basis, so the five-year e…
I think a circuit court improperly assessed fines and costs against me for a traffic conviction -- can I appeal that to the Virginia Department of Taxation?
No -- the Department has no jurisdiction over court fines and costs, even though it sometimes collects them. A taxpayer convicted of a traffic infraction in circuit court tried to appeal the resulting…
An erroneous W-2 -- possibly from identity theft -- inflated my Virginia income tax assessment, and correcting it means I actually overpaid; can I get that overpayment refunded even though I never filed a return for that year?
The Department fixed the underlying error and abated the assessment -- but the resulting refund was time-barred because no return was ever filed within the three-year window. Virginia learned from the…
I'm appealing a Virginia tax assessment and claiming I was a resident of another state, but I never actually filled out Virginia's domicile questionnaire -- what happens now?
The taxpayer gets one final chance to actually provide the information -- but simply claiming residency elsewhere, without responding to the Department's request for proof, doesn't work. Virginia lear…
I'm a Virginia domiciliary who went to college out of state and earned summer internship wages in a different state -- do I still owe Virginia income tax on those wages?
Yes, unless he can show he actually abandoned his Virginia domicile -- and the facts here pointed the other way. A Virginia resident who enrolled in college out of state (a different state than his su…
I mailed my Qualified Equity and Subordinated Debt Investments Tax Credit application before the deadline, but the Department says it never arrived -- can I still get the credit?
No -- without proof the application was actually filed by the deadline, a hard statutory cutoff can't be waived. A taxpayer claimed he mailed his Qualified Equity and Subordinated Debt Investments Tax…
Virginia won't give me a credit for the LOCAL county income tax I paid to Maryland (only the state tax) -- doesn't that amount to unconstitutional double taxation under the Commerce Clause?
No -- denying the credit for Maryland's local (county) income tax doesn't violate the Commerce Clause, even though it results in some double taxation. A Virginia domiciliary resident who also lived in…
My spouse and I filed a joint Virginia return, then my spouse separately filed a part-year return, and now the Department reclassified my return as married filing separately -- can we fix this back to joint?
Yes -- submitting an actual joint return for the year fixed the problem. A married couple originally filed a joint 2017 Virginia return; the wife then separately filed her own part-year return. Becaus…
I couldn't file my Virginia return on time because of serious health problems, and now I'm past the three-year refund deadline -- can the Department waive it?
No -- Virginia's three-year refund deadline is strict and leaves the Department no discretion to waive it, even for serious health conditions. A taxpayer filed her 2016 Virginia individual income tax …
The Department denied our FDC subtraction because we didn't take a matching FDC addition in an earlier year -- but we only bought into these S corporations in 2015. Do we still qualify?
Yes -- the subtraction was allowed, and the assessment abated. A couple properly claimed fixed date conformity (FDC) subtractions passed through to them from two S corporations the husband owned an in…
My pass-through entity applied for the R&D tax credit and told me my share, but the Department cut my claimed credit down -- can I still claim the full amount I was told to expect?
No -- you can only claim the prorated amount the Department actually grants, not the larger amount your pass-through entity originally requested. Virginia's Research and Development Expenses Tax Credi…
I moved to another state for a new job and lived there all year, but I kept my Virginia driver's license and car registration -- am I still a Virginia resident for income tax purposes?
No -- physically living and working in another state for a full year doesn't by itself establish that you've abandoned your Virginia domicile; you must prove BOTH an intent to abandon Virginia permane…
We filed our 2016 Virginia return late because of serious medical problems, asking to apply the overpayment to 2017 -- does a severe illness extend the three-year deadline to claim a refund or credit?
No -- Virginia's three-year statute of limitations for claiming a tax refund (or, as here, applying an overpayment as a credit to a later year) is applied strictly with no exception for a taxpayer's s…
The Department disallowed our itemized deductions and Schedule E expenses when we didn't respond to a documentation request in time -- can we still get the medical expense deduction back by showing we already sent proof?
Not automatically -- when the Department has no record of receiving documentation a taxpayer claims to have already submitted, the taxpayer must resubmit it (here, by a firm deadline) or the disallowa…
My wife held an F visa and was a nonresident alien for federal tax purposes -- does that mean her wages earned while we lived in Virginia are exempt from Virginia income tax?
No -- a spouse's status as a nonresident alien under federal tax law (including on an F visa) has no bearing on whether her wages are taxable as Virginia income, once Virginia's own residency rules --…
The IRS flagged that I never filed a Virginia return, but I was living and working in another state that year with employer-provided housing -- am I still on the hook as a Virginia resident?
No -- working and living in another state under employer-provided housing doesn't establish that you've abandoned your Virginia domicile if the arrangement's permanence is unclear and you kept strong …
I graduated college in another state, got a job and leased apartments there, and filed that state's tax return -- but I kept voting in Virginia elections -- does that mean I never actually left Virginia for tax purposes?
No, the domicile change failed -- continuing to register and actually vote in Virginia elections is treated as VERY strong evidence a person still considered Virginia their permanent home, and that al…
I claimed unreimbursed employee expenses plus business expenses for my rideshare driving and refereeing side jobs, using bank statement notations and oil-change mileage receipts as proof -- why did the auditor disallow almost everything?
No, generally not -- vague documentation like a bank statement with 'business consultant' scribbled next to a charge, or mileage recorded only between oil changes (with no breakdown of business versus…
Can a taxpayer get a Virginia income tax refund by amending her return more than three years later, based on a correction made to her other state's return?
No -- the refund was denied as time-barred, because the one-year exception for changes made by another state only applies when that change actually decreases Virginia tax, and here the State A rate co…
When a pass-through entity files a unified (composite) return for its nonresident partners, must the tax be computed at the highest individual rate instead of each partner's own bracket, and does that income include guaranteed payments for services performed outside Virginia?
The Department's rate adjustment was correct -- a unified/composite return must be taxed at the single highest Virginia individual income tax rate under § 58.1-320, not at each partner's own lower bra…
Can a Virginia taxpayer get an income tax refund after the statute of limitations has run because their tax preparer made a filing error?
No -- the refund was denied as time-barred because the return was not filed until October 2019, more than three years after the May 2, 2016 deadline, and the Taxpayers could not prove their preparer h…
Did this taxpayer succeed in proving he had changed his domicile from Virginia to Maryland, and could he still get credit for the Maryland tax he paid?
NO, the taxpayer did not establish a change of domicile to Maryland -- he failed to provide the Department with documentation supporting his claimed Maryland domicile, so the Virginia resident assessm…
Can a Virginia resident claim a credit for tax paid to Pennsylvania on fees earned as trustee and power of attorney for a family member, even though the Pennsylvania-Virginia reciprocity agreement doesn't apply and the income was reported as 'other income' on the federal return?
YES, the Taxpayer was entitled to the credit -- although the Pennsylvania-Virginia reciprocity agreement did not apply because the Taxpayer was not an employee earning 'compensation,' the fees she ear…
Was a Virginia individual income tax refund claim for the 2015 tax year timely when the amended Virginia return was filed more than three years after the original return but within one year of a related amended federal return?
YES, the refund was allowed -- although the Department initially denied it as filed too late, the amended Virginia return was actually timely because it was filed within one year of the taxpayer's ame…
Can a taxpayer still get a refund of a 2014 Virginia income tax overpayment if the return claiming it wasn't filed until December 2019?
No -- the refund was time-barred. The Taxpayers had three years from the original May 1, 2015 due date (since they never validly elected the extension by filing or paying on time) to claim a refund, s…
What does Virginia Ruling of the Tax Commissioner P.D. 21-15 conclude about Residency : Part year - Income Allocation; Administration: Interest - Accrual; Administration : Reliance on Tax Preparer - Tax Preparation Software?
Both parts of the assessment were upheld: the Taxpayers had to allocate the retirement income they received on or after their self-reported February 1 move date to their period of Virginia residency (…
Can a Virginia resident claim a credit for income tax paid to California if the spouse is also an actual resident of California?
Possibly yes -- Virginia normally denies the credit for tax paid to California because California lets a Virginia resident claim the credit instead, but if the husband was truly an actual (dual) resid…
Did a taxpayer who moved abroad in 2018 successfully change his domicile away from Virginia, entitling him to a refund of Virginia income tax withheld from a 2019 retirement distribution?
Yes -- the Tax Commissioner found the Taxpayer changed his domicile to Country A when he moved there in November 2018, and directed that his Form 763-S nonresident withholding refund claim be processe…
State Tax Ruling
No. In P.D. 20-193, Virginia's Tax Commissioner upheld the denial of a Qualified Equity and Subordinated Debt Investments Tax Credit application because it was filed after the April 1 deadline, reject…
What does Virginia Ruling of the Tax Commissioner P.D. 20-187 conclude about Residency : Domicile - No Virginia Domicile Established?
The Tax Commissioner abated the assessment: the taxpayer proved he did not become a Virginia domiciliary or actual resident until 2018, so he owed no Virginia individual income tax for 2017.
What does Virginia Ruling of the Tax Commissioner P.D. 20-181 conclude about Residency : Domicile - Change, Part-year?
The Tax Commissioner found that the taxpayer had abandoned Virginia domicile in 2015 but re-established it in October 2017 by leasing a Virginia residence and registering a vehicle there, making him a…
What does Virginia Ruling of the Tax Commissioner P.D. 20-180 conclude about Residency : Domicile - Change Requires Both Abandoning One Domicile and Obtaining A New One.?
The Tax Commissioner abated the Virginia resident income tax assessments because the taxpayer had not yet completed a change of domicile to Virginia for 2016-2017 -- he still lived and worked mostly i…
State Tax Ruling
No relief: the Tax Commissioner ruled the taxpayer's appeal of a 2010 individual income tax assessment was barred because it was filed more than six years after the 90-day deadline in Va. Code § 58.1-…
What does Virginia Ruling of the Tax Commissioner P.D. 20-175 conclude about Virginia Taxable Income: No Deduction for Out-of-State Income Credit : Taxes Paid to Another State - North Carolina?
The Virginia Tax Commissioner held there is no deduction or subtraction from Virginia taxable income for income earned in another state (here, North Carolina); the correct remedy is the credit for tax…
If I temporarily moved to California for work and paid California tax, do I still owe Virginia income tax as a domiciliary resident, and can I claim a credit for the California tax?
Yes to both. The Tax Commissioner ruled the taxpayer remained a Virginia domiciliary resident despite living in California for nine months in 2016 (he never abandoned Virginia and returned to his Virg…
If I move abroad and Virginia later says I was still a full-year resident, how do I show I changed my domicile and become a part-year filer instead?
Partly granted: the Tax Commissioner found the taxpayer did abandon his Virginia domicile, but only as of late September 2015 (not earlier as claimed), so the original full-year-resident assessment wa…
How is the basis of inherited Virginia real estate determined for a capital gain/loss on the state income tax return when the taxpayer's appraisal and the locality's tax appraisal disagree?
Neither side fully won: the Tax Commissioner rejected both the taxpayers' March 2007 appraisal (too remote in time and unsupported by the actual appraisal report or estate tax return) and the Departme…
Did keeping a Virginia driver's license and two registered vehicles make this taxpayer a taxable Virginia domiciliary resident for 2016 and 2017, despite living out of state?
No — the Department abated the assessments. The taxpayer kept some Virginia ties (a driver's license obtained in June 2016 and two vehicles registered in 2014), but he had not physically resided in Vi…
If a taxpayer timely files a Virginia amended return but waits years to send the Department the IRS's acceptance letter, is the refund still barred by the statute of limitations?
No. The Tax Commissioner ruled that because the taxpayer's amended Virginia return was filed in October 2016 -- well within the three-year limitations period for refund claims under § 58.1-1823 -- and…
If Virginia denies a 529 college savings deduction for lack of proof of contributions, what documentation is enough to get the deduction restored on appeal?
The Tax Commissioner ruled the Taxpayers' documentation was sufficient after all: the husband and wife showed contributions to Virginia 529 prepaid tuition/savings trust accounts, so the disallowed de…
If the IRS audits me and increases my federal income, what must I do in Virginia, and what happens if I don't report the change?
You lose. When the IRS audits and increases your federal taxable income, Virginia law (Va. Code § 58.1-311) requires you to report that change by filing an amended Virginia return within one year of t…
Does getting a Virginia driver's license and vehicle registration make me a Virginia resident for income tax before I actually move here?
No -- the assessment was abated. Establishing a Virginia domicile requires both physical presence in Virginia and the intent to remain permanently or indefinitely; neither one alone is enough. This ta…
How does Virginia's Major Research and Development Expenses Tax Credit work -- who can claim it, how is it calculated, and how do you apply?
Virginia's Major Research and Development Expenses Tax Credit is an individual and corporate income tax credit for a taxpayer that incurs more than $5 million of Virginia qualified research and develo…
How does Virginia's refundable Research and Development Expenses Tax Credit work -- who qualifies, how is it calculated, and how do you apply?
Virginia's Research and Development Expenses Tax Credit is a refundable individual and corporate income tax credit for conducting qualified R&D in Virginia. It has a base credit plus a possible supple…
As the spouse of a service member stationed in Virginia, do I owe Virginia income tax if I've started putting down roots here but haven't fully cut ties with my home state?
No -- the assessment was abated. A military spouse stationed in Virginia with his service-member wife was assessed Virginia income tax as a resident, but the Commissioner found he remained domiciled i…
Did a retiree living in another country abandon his Virginia domicile when he kept a Virginia home, driver's license, and voter registration and spent months a year in Virginia?
No -- he remained a Virginia domiciliary resident and stayed taxable for 2015 and 2016. A retiree moved to Country A for his spouse's health but kept a Virginia home, a Virginia driver's license, a Vi…
Could a nonresident recover Virginia income tax withheld from 2014 wages when the first refund claim was filed after the three-year deadline?
No. The 2014 return was due May 1, 2015, so a Form 763-S or other refund claim had to be filed by May 1, 2018. The taxpayer did not claim the withholding until 2019, after the limitation period expire…
Browse Virginia rulings by topic
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.