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Virginia Form 760PY - Virginia Part-Year Resident Income Tax Return Instructions
Advancement of Virginia's Fixed Date Conformity with the Internal Revenue Service: At the time these instructions went to print, Virginia’s fixed date of conformity with the Internal Revenue Code was December 31, 2008. If you anticipate being required to make adjustments to your Virginia return as a result of changes made by the United States Congress to the Internal Revenue Code for the 2009 taxable year, you may wish to delay the filing of your Virginia tax return until action has been taken by the General Assembly to adjust the date of conformity.
Voluntary Contributions: For 2009, there are two new voluntary contributions: Celebrating Special Children, Inc. and Public Library Foundations. See the Voluntary Contribution section in the instructions for additional information.
New Subtraction for 2009: Gains from Land Preservation – Allows a subtraction for the amount of federal gain or income recognized as a result of the sale of Land Preservation credits.
New Deduction for 2009: Income from Dealer Disposition of Property - Allows an adjustment for certain income from dealer dispositions of property made on or after January 1, 2009.
Land Preservation Tax Credit: The amount of Land Preservation Credits that may be claimed on income tax returns has been reduced from $100,000 per taxpayer to $50,000 per taxpayer effective for credits claimed for taxable years beginning on and after January 1, 2009, but before January 1, 2011. The carryover period has been extended by two years for those affected by this limitation. This reduction in the amount of credit that can be claimed on the return does not reduce the amount of credit that may be earned or held by the taxpayer.
New Federal Banking Regulations: New federal banking regulations have imposed additional reporting requirements on all electronic banking transactions that directly involve a financial institution outside of the territorial jurisdiction of the United States at any point in the process. These are called International ACH Transactions (IAT). At present, TAX does not support IAT. If an international transaction is processed by TAX as a domestic transaction, it may be rejected by your bank, subjecting you to late penalties. By instructing TAX to process your electronic banking transaction, you are certifying that your transaction does not directly involve a financial institution outside of the territorial jurisdiction of the United States at any point in the process. If your transaction is IAT, you will need to make payment using a paper check or by ACH Credit. For information about ACH Credit, please refer to TAX’s EFT Guide.
ESTIMATED INCOME TAX FILING
If you did not have enough income tax withheld, you may need to pay estimated income tax. Generally, you are required to make payments of estimated income tax if your estimated Virginia tax liability exceeds your Virginia withholding and other tax credits by more than $150.
To make estimated tax payments, File Form 760ES or visit our website: www.tax.virginia.gov.
If you owe a large amount of tax, you may need to increase the amount of tax withheld or make estimated tax payments during the year.
You may be penalized if you underpaid your estimated tax or did not have enough tax withheld.
CIVIL AND CRIMINAL PENALTIES
The civil penalty for filing a false or fraudulent return or for failing or refusing to file any return with intent to evade the tax, is an additional penalty of 100% of the correct tax. Any individual who willfully fails or refuses to file a return, at the time or times required by law, shall be guilty of a Class 1 misdemeanor. In addition, an individual who makes any false statements on a return, with intent to defraud the Commonwealth, shall be guilty of a Class 6 felony.
AMENDED RETURN FILING
When to File
If you file an amended federal return reflecting a change in your taxable income or any other amount that would affect the Virginia return, you must file an amended Virginia tax return within one year. In addition, if you file an amended return with any other state that results in a change that would affect your Virginia income tax, you must file an amended Virginia tax return within one year.
If the change reduces the tax, the Department of Taxation by law may issue a refund only if the amended return is filed within:
- three years from the due date of the original return, including valid filing extensions;
- one year from the final determination of the amended federal return or federal change, whichever is later, provided that the allowable refund is not more than the decrease in Virginia tax attributable to the federal change or correction;
- one year from the final determination of the amended return of any other state or change or correction in the income tax of the taxpayer for any other state, provided that the taxpayer previously claimed a credit for such tax on his Virginia tax return and that the refund does not exceed the amount of the decrease in Virginia tax attributable to such change or correction;
- two years from the filing of an amended Virginia return resulting in the payment of additional tax, provided that the current amended return raises issues relating solely to the prior amended return and that the refund does not exceed the amount of the tax payment made as a result of the prior amended return; or
- two years from the payment of an assessment, provided the amended return raises issues relating only to the prior assessment and the refund does not exceed the amount of tax paid on the prior assessment.
To amend Form 760PY, complete a new Form 760PY (for the tax year you are amending) using the corrected figures, as if it were the original return. Check the amended box on the top left of the return. Do not make any adjustments to the amended return to show that you received a refund or paid a balance due as a result of the original return.
If you filed an amended federal return, attach a copy of your federal Form 1040X or other claim form and supporting material to your amended Virginia return to substantiate the amendment. If amending your Virginia return for other reasons, attach a statement to explain why you are amending your return. Show any computations necessary to verify the adjustments you are making. Staple your check or money order to the bottom left corner of your return if you owe a balance due. Also, staple to your return any additional Forms W-2, 1099 or VK-1 if claiming more income tax withheld than what was claimed on your original return.
If your federal income tax return was adjusted by the Internal Revenue Service during the taxable year, and the adjustment was not reported to the Virginia Department of Taxation, an amended Virginia return must be filed with a copy of the federal adjustments attached within one year after the final determination of such federal change, correction or renegotiation. See “When to File” earlier in this section for additional information.
Net Operating Losses
Although there is no express statutory provision for a separate Virginia net operating loss available for carryback or carryover, the amount of federal net operating loss is the starting point in computing the amount of deduction to be allowed on the Virginia return. Check the amended return box located on the front of Form 763, indicating that this is an amended return. Also, check the box indicating the return is the result of a net operating loss (NOL) carryback.
General instructions for computing the NOL can be obtained from the website at http://www.policylibrary. tax.virginia.gov/OTP/policy.nsf. Select 23VAC10-110-80 and 23VAC10-110-81 located in Chapter 110, Individual Income Tax, Virginia Tax Administrative Code. Be sure to attach a complete copy of your federal amended return, if applicable.
Use the following instructions to properly file and ensure the refund is addressed to the surviving spouse or personal representative.
Single filers: You must list the filer’s name and Social Security Number and fill in the oval on page 2 for Primary Taxpayer Deceased. Include a copy of the federal Form 1310 and/or the appropriate court appointment papers.
Joint filers: If one filer is deceased, the names and Social Security Numbers of both filers must be listed. Fill in the oval on page 2 to indicate the deceased filer. Use the Primary Taxpayer Deceased oval if the filer in the Your name and Social Security Number fields is deceased. Use the Spouse Deceased oval if the filer in the Spouse name and Social Security Number fields is deceased.
If completing a return for joint filers with both filers deceased, the names and Social Security Numbers of both filers must be listed. Fill in both deceased ovals on page 2. Include a copy of the federal Form 1310 or the appropriate court appointment papers.
Keep your tax records for at least three years from the due date of the return or the date the return was filed, whichever is later. If the Internal Revenue Service requires you to keep your federal records for a longer period of time, keep your state records for the same period of time.
Filing requirements are based on your residency status and the amount of your income. Dependents and students are subject to the same filing requirements as anyone else.
- Nonresidents of Virginia with income at or above the filing threshold must file if any of their income is from Virginia sources.
- Residents of Virginia with income at or above the minimum filing threshold must file.
For information on Virginia residency requirements, please read the next section, “Residency Status.”
If your Virginia Adjusted Gross Income (VAGI) is at or above the threshold amount shown in the following table, you are required to file. VAGI is the Adjusted Gross Income on your federal return plus any Virginia additions, minus any Virginia subtractions. Information on Virginia additions and subtractions is included in the instructions for Lines 33 - 45 of Form 760PY, later in this book.
For a part-year resident, if your income is only from wages, salaries and interest from a savings or checking account, your VAGI is usually the same as the Adjusted Gross Income shown on your federal return less the wages, salaries and interest earned while a nonresident of Virginia. Once you have computed your VAGI, check the chart below to see if you need to file a Virginia income tax return.
|YOU DO NOT HAVE TO FILE IF YOU ARE:|
|Single and your VAGI is less than.....||$11,250|
|Married filing with your spouse on the same return and your combined VAGI is less than......||$22,500|
|Married filing separately (on separate forms) and your VAGI is less than .....||$11,250|
If you are not required to file, but you had Virginia income tax withheld, you are entitled to a refund of the amount withheld. You must file a return to get a refund. We periodically review and update our records to make sure that we have correct return information. Sometimes, we have to contact taxpayers to confirm that they did not need to file for a given year. As a result, even if you do not need to file a return for 2008, you may receive an inquiry at a later date to verify your VAGI.
Every Virginia resident whose VirginiaAdjusted Gross Income is at or above the minimum filing threshold must file. Any “federal area” such as a military or naval reservation, federal agency or federal administration that is inside the geographical boundaries of Virginia is considered a location in Virginia and non active duty residents of those areas are subject to Virginia income tax just like residents of any other location in the state.
You may be required to file as a resident in two states if you are an actual resident of one state and a domiciliary resident of another state. (See definitions below.) If you are in this situation, you may be able to take a credit on the return filed in the state of your legal domicile. Refer to the instructions for Line 19(f) of Form 763 for information on credit for tax paid to another state.
Anyone who maintains a legal domicile (residence) in Virginia, whether living in or out of Virginia, is a domiciliary resident. This includes members of the U.S. armed forces who have Virginia as their home of record. Domiciliary residents have their permanent place of residence in Virginia. Any person who has not abandoned his or her legal domicile in Virginia and established legal domicile in another state remains a domiciliary resident of Virginia, even if residing in another jurisdiction for a number of years. In determining domicile, we consider many factors. Some of the more common indicators of domicile are: voter registration; motor vehicle and personal property registration; business pursuits; expressed intent; conduct; leaseholds and sites of real property owned.
Anyone, other than a member of the U.S. armed forces or the U.S. Congress, who maintains a place of abode (i.e., home) in Virginia for a total of more than 183 days of the taxable year while having legal domicile (residence) in another state or country is an actual resident of Virginia. This category often includes students who are domiciliary residents of another state while attending college in Virginia or the spouses and dependents of members of the U.S. armed forces stationed in Virginia. Although this residency classification does not apply to members of the U.S. Congress, it does apply to members of their families and staffs.
You may be a part-year resident if your residency in Virginia began or ended during the taxable year. Residents who move into or out of Virginia during the taxable year and do not fall into either category below are generally considered full-year residents.
- Virginia residents who move out of Virginia during the taxable year and become domiciliary residents of another state are part- year residents, provided they do not move back to Virginia for at least six months.
- Those who move into Virginia during the taxable year and become either domiciliary or actual residents of Virginia are also considered part-year residents.
The distinction between full-year and part-year residents is important in deciding which form to file and what income is taxable in Virginia. To compute Virginia Adjusted Gross Income (VAGI) and determine if VAGI meets the minimum filing threshold, part- year residents who file Form 760PY are allowed a subtraction from federal adjusted gross income equal to the amount of income attributable to residence outside Virginia.
If you are a part-year resident and you do not file the correct form, you will not compute the correct amount of tax. See the next section, “WHICH FORM TO FILE”.
Nonresidents of Virginia with Virginia Adjusted Gross Income at or above the filing threshold must file if any of their income is from Virginia sources. Income from Virginia sources is income received from labor performed, business done, or property located in Virginia, including gains from sales, exchanges or other dispositions of real estate and intangible personal property having a situs in Virginia. Virginia source income includes income passed through from a partnership, S corporation or limited liability company that does business in Virginia. It also includes business income and proceeds from real estate transactions passed through by a Virginia trust. It generally does not include personal savings account interest or dividends from an individual’s stock market investments.
Those who maintain legal domicile in another state and live in Virginia less than 183 days of the taxable year (or do not live in Virginia at all) are nonresidents. Also, members of the U.S. armed forces who have another state as their home of record (legal domicile) are generally classified as nonresidents of Virginia, even though they may be stationed in Virginia for years.
Exceptions for Certain Nonresidents
If you are a nonresident of Virginia who commutes daily to work in Virginia from Kentucky or the District of Columbia, you do not have to file if:
- You have no actual place of abode in Virginia at any time during the year;
- Salaries and wages are your only Virginia source income; and
- Your salaries and wages are subject to income taxation by Kentucky or the District of Columbia.
If you are a nonresident of Virginia who is a resident of Maryland, Pennsylvania or West Virginia and you earn salaries and wages in Virginia, you are exempt from filing a Virginia income tax return and paying Virginia income tax if:
- Your only income from sources in Virginia is from salaries and wages; and
- Your salaries and wages are subject to income taxation by Maryland, Pennsylvania or West Virginia.
If you are a domiciliary resident of Kentucky, Maryland, Pennsylvania, West Virginia or the District of Columbia and have income from Virginia sources other than wages and salaries, (such as business income or gain from the sale of a residence), you must file a Virginia Nonresident Individual Income Tax Return, Form 763, and pay tax on income not specifically exempted above.
Members of the Armed Forces
Active duty pay for members of the armed forces is taxable only in the state of legal domicile, regardless of where stationed. You must file as a nonresident if you are in the military, domiciled in another state and have any other income that is from Virginia sources.
The residency status and filing requirements for a spouse or a dependent of an armed forces member are not connected to those of the armed forces member. If you are a spouse or a dependent of an armed forces member who is stationed in Virginia, you must determine your own residency status and filing obligations.
WHICH FORM TO FILE
Residents File Form 760
File Form 760 if you are a part-year resident and all of your income came from Virginia sources or was received while you were a Virginia resident. This will allow you to claim the full exemption and standard or itemized deduction instead of computing partial amounts as required for part-year residents filing Form 760PY.
Part-Year Residents File Form 760PY
As a general rule, part-year residents file Form 760PY. If one spouse is a full-year resident and the other is a part-year resident, the couple may file together on Form 760PY. The part-year resident spouse will compute a prorated exemption amount. The full-year resident spouse will claim the full exemption amount.
If you are a part-year resident who received Virginia source income, as well as other income, during the portion of the year you lived in another state, you need to file two Virginia returns for the taxable year. File Form 760PY to report the income attributable to your period of Virginia residency. File Form 763, the nonresident return, to report the Virginia source income received as a nonresident.
Nonresidents File Form 763
Generally, nonresidents with income from Virginia sources must file a Virginia return if their income is at or above the filing threshold. Nonresidents who earn salaries and wages in Virginia and pay tax on those salaries and wages to the District of Columbia, Kentucky, Maryland, Pennsylvania or West Virginia are not required to file if they meet the criteria described in the previous section under “Exceptions for Certain Nonresidents.” Residents of states other than those in “Exceptions for Certain Nonresidents” do not qualify for a filing exception.
Usually, when one spouse is a resident and the other spouse is a nonresident, each spouse whose income is at or above the filing threshold, must file separately. The resident must file on Form 760. The nonresident spouse must file Form 763. There are only two circumstances in which such a couple can file jointly on the same return. If both spouses have income and all of the nonresident’s income is Virginia source income, a joint resident return (Form 760 ) may be filed. Also, if the nonresident spouse has no income at all, a joint resident return may be filed.
Members of the Armed Forces
Use Form 763 if you are in the military, domiciled in another state and have any other income that is from Virginia sources. The filing requirements for a spouse or a dependent are not connected to those of the armed forces member. Examples follow.
If a married couple lives in Virginia the entire year, but is domiciled in Alabama, and has nonmilitary income from Virginia sources that is attributable to both spouses, the spouse on active duty will file Form 763, using Filing Status 4, while the nonmilitary spouse will file Form 760 using Filing Status 3. Generally, the state of domicile will allow credit for tax paid to Virginia on the earned income that is taxed in both states. If the nonmilitary spouse lived in Virginia less than 183 days of the taxable year, the couple will file Form 763 using Filing Status 2.
If the nonmilitary spouse’s domicile changed to Virginia during the year, Form 760PY will be filed, using Filing Status 3, to pay tax on income earned after becoming a Virginia resident. Any income received from Virginia sources before becoming a Virginia resident will be reported on Form 763.
WHEN TO FILE
Calendar Year Filers - May 3, 2010
File by May 3, 2010, if you are a calendar year filer.
Fiscal Year Filers
If your taxable year is not January 1 through December 31, your return must be postmarked by the 15th day of the fourth month following the close of your fiscal year.
When filing, you should write “Fiscal Year Filer ” across the top of Page 1 of Form 760PY and attach a statement indicating the beginning and ending months of your 12-month fiscal year. If you file after the due date or do not pay the full amount due by the due date, you may have to pay penalties and interest.
When filing by mail, the envelope must be postmarked by the due date. Put the correct postage on your envelope. If your return is sent back to you because of insufficient postage, you are liable for the penalties and interest if the postmark on the remailed return is after the due date.
If the due date falls on a Saturday, Sunday or legal holiday, you may file your return on the next day that is not a Saturday, Sunday or legal holiday.
If you are living or traveling outside the United States or Puerto Rico (including serving in the military or naval service), you must file your return by July 1, 2010. Be sure to check the appropriate box to the left of the name and address section.
Members of the Military - Members of the Armed Forces serving in a combat zone receive either the same individual income tax filing and payment extensions as those granted to them by the IRS, plus an additional fifteen days, or a one-year extension, whichever date is later. All extensions also apply to spouses of military personnel. Service families may wish, however, to file their individual income tax returns before the extended deadlines to receive refunds. Service members who claim this extension should write “Combat Zone” on the top of tax returns, as well as any notice issued by the Virginia Department of Taxation to combat zone personnel regarding tax collection or examination, and on the outside of the return envelopes used to mail the return. More information can be obtained from Tax Bulletin 05-5 on the website at www.policylibrary.tax.virginia. gov/OTP/policy.nsf. Go to the Tax Bulletin section and select VTB 05-5 (PD 05-67) from the list of 2005 tax bulletins.
In addition, every member of the armed services deployed outside of the United States is allowed an extension of his or her due date. The extension will expire 90 days following the completion of deployment. Service members who claim this extension should write “Overseas Noncombat” on the top of their tax returns.
Virginia law provides an automatic six-month filing extension for income tax returns. No application for extension is required. The extension is for filing the return, not for payment of the tax; therefore, you must pay at least 90 percent of your tax by the due date, May 3 for calendar year filers. To make a payment of tentative tax, use Form 760IP.
If you file your return within six months after the due date but do not meet the 90 percent payment requirement, an extension penalty of two percent per month will apply to the balance of tax due with your return from the due date through the date your return is filed, to a maximum of 12 percent of the tax due. Interest will also be accrued on any balance of tax due with a return filed within the extension period, regardless of whether the 90 percent payment requirement is met.
If you file your return within six months after the due date but do not pay the tax due at the time of filing, the unpaid balance will be subject to a late payment penalty of six percent per month from the date of filing through the date of payment, to a maximum of 30 percent. The late payment penalty will be assessed in addition to any extension penalty that may apply. The automatic extension provisions apply only to returns that are filed within six months from the due date. If you file your return more than six months after the due date, a late filing penalty of 30 percent will apply to the balance of tax due with your return.
You do not need to file Form 760IP if you cannot file by the due date and you are certain that your return will result in a refund. This is because the late filing penalty is not assessed on refund returns. To receive a refund, however, you must file within three years of the due date.
Foreign Income Exclusion
If you qualify for the federal foreign income exclusion and have requested an extension of time for filing your federal return, you may apply for an extension of time to file your state return. You will be granted an extension for thirty days after the date you expect to qualify for the exclusion. You must apply by letter on or before the first day of the seventh month following the close of your taxable year and attach a copy of the approved federal extension to your return when you file.
WHERE TO FILE
To file by mail, use the mailing address listed on the back cover of this book for the city or county where you live or last lived while a resident of Virginia. Local phone numbers are also provided. Most part-year returns can also be filed electronically.
BALANCE DUE RETURNS
You can pay by check or by credit card. Make your check payable to the Treasurer of the city or county in which you reside. Make sure your social security number is on your check and make a notation that it is your 2009 income tax payment.
To pay by credit card, call 1-800-272-9829 (1 800 2 PAY TAX), or visit www.officialpayments.com. The jurisdiction code for Virginia is 1080. If you choose this option, fill in the box on Line 26 of Form 760PY, indicating this type of payment. You will be assessed a fee by the company processing the transaction. If you have already filed your return with your Commissioner of the Revenue and did not indicate you were paying by credit card, call your Local Commissioner of the Revenue’s office for the correct jurisdiction code prior to initiating your credit card payment. Phone numbers are listed on the inside back cover.
DEBT COLLECTION ACT
Before issuing any refunds, Virginia law requires us to check for any outstanding debt with agencies of the Commonwealth of Virginia, Virginia local governments and the Virginia court system. If any such debt is found, regardless of the type of tax return filed, all or part of your refund may be withheld to help satisfy the debt and processing of your return will be delayed.
AVOID COMMON MISTAKES
- Sign your return.
- Make sure your name, address and social security number(s) are correct.
- Check all math.
- If you itemized deductions, make sure you complete Line 11(b) and Lines 47(a) - (c) on Form 760PY.
- Put the correct postage on your envelope. If your return is sent back to you because of insufficient postage, you are liable for the penalties and interest if the postmark on the remailed return is after the due date.
- File your original return. Do not file a photocopy.
HOW TO ASSEMBLE YOUR RETURN
If you completed any of the forms shown below, you must attach copies to your Virginia return. Place these forms behind your Virginia return in the following order and staple them together at the location labeled “STAPLE” on the top, left margin on the front of your Virginia return.
- If filing both Form 760PY and Form 763, attach Form 763 behind Form 760PY so that the title of Form 763 can be seen over the top of the title of Form 760PY. Attach a statement over the Form W-2 on Form 760PY stating that “Form 763 is attached behind Form 760PY.”
- Virginia Forms
- Schedule NPY
- Schedule CR
- Form 760C or Form 760F
- Form 760IP
- Forms 301, 304, 306 or 307
- Any additional documentation as required
- Federal Forms
- Complete copy of your federal income tax return
- If claiming credit for income tax paid to another state on Schedule NPY, attach a complete copy of the state tax return filed with the other state.
Be sure to include W-2, 1099 and VK-1 forms that indicate the same amount of Virginia income tax withheld as the amount you claim on your return. Staple these to the center of the left margin on front of your return. When attaching form VK-1, fold in half and attach to front of return.
Staple check to the lower left side of your return. If paying by credit card, please check the box on Line 26 of Form 760PY.
COMPUTE YOUR LOWEST TAX
(Tip for Married Taxpayers) Since Virginia’s individual income tax is imposed at graduated rates, a couple with income attributable to each spouse may find that by using Filing Status 2 (filing a joint return), their joint income is taxed at a higher rate than their separate taxable incomes would be. Filing Status 4 (married filing a combined return), is designed to adjust for this difference. When using Filing Status 4, tax is computed on each spouse’s separate taxable income and then the two amounts of tax are added together to arrive at their total tax. As a general rule, when both you and your spouse have income, Filing Status 4 will enable you to obtain the lowest combined tax provided you assign deductions and dependents to each spouse so that the taxable income in each column on Form 760PY is as close to equal as possible.
If only one spouse has income or if one spouse’s income would be reduced to zero (or less) after claiming personal exemptions and the subtractions on Lines 37 - 45, of Form 760PY, use Filing Status 2 instead.
FORM 760PY LINE INSTRUCTIONS PAGE 1
Name, Address And Social Security Number (SSN)
Name. Enter your complete name (including middle initial) and mailing address in the boxes provided. If filing a joint return, Filing Status 2 or 4, enter the complete name of your spouse. If you are married filing separate returns (Filing Status 3), DO NOT enter your spouse’s name in the spouse name boxes. Instead enter your spouse’s name on the Filing Status 3 line below the address box.
Deceased Taxpayers: Single filers: You must list the filer’s name and Social Security Number and check the box on Page 2 for Primary Taxpayer Deceased. Include a copy of the federal Form 1310, and/or the appropriate court appointment papers.
Joint filers: If one filer is deceased each filer’s name and Social Security Number must be listed. Check the box on Page 2 to indicate the deceased filer. Use the Primary Taxpayer Deceased box if the filer in the Your name and Social Security Number fields is deceased. Use the Spouse Deceased box if the filer in the Spouse name and Social Security Number fields is deceased.
If completing a return for joint filers with both filers deceased, list the name and Social Security Number of each filer. Check both deceased boxes on Page 2. Include a copy of the federal Form 1310 and/or the appropriate court appointment papers.
Address. Enter your street address. Do not enter a P. O. Box address unless mail is not delivered to your street address.
Social Security Number (SSN). Be sure your Social Security Number is entered correctly. The Social Security Number entered in the “B: Your Social Security Number” box must be the number of the person whose name is shown first on the return.
Earned Income Credit Claimed on Federal Return. If you claimed Earned Income Credit on your 2009 federal return, check here and enter the amount claimed.
City or County Where You Were a Resident. Enter the name of the city or county in Virginia where you lived on January 1, 2010, and check the city or county box, as appropriate. Also, enter the three digit Locality Code found on the back cover.
If you lived in more than one Virginia city or county or if you did not live in Virginia on January 1, 2010, enter the name of the city or county in Virginia in which you last lived. This is not always the same as the city or county of your mailing address.
Privacy Act: The Privacy Act of 1974 requires any federal, state or local government agency that requests individuals to disclose their Social Security Numbers to inform those individuals whether the disclosure is mandatory or voluntary, by what statutory or other authority the number is requested and how it will be used. The following information is provided to comply with these requirements.
Disclosure of the Social Security Number is mandatory pursuant to these instructions, which are promulgated under the authority of Section 58.1-209 of the Code of Virginia. The Social Security Number is used as a means of identification for the filing and retrieval of income tax returns and is also used to verify the identity of individuals for income tax refund purposes.
To the left of the name and address section, there are several check boxes. Please check all boxes that apply.
- Amended Return. Check this box if this is an amended return. For more information, please refer to the “Amended Return” section of these instructions. Also check the box if the reason for amending your return is the result of a net operating loss (NOL). For more information, please refer to the “Net Operating Loss” section of these instructions.
- Fixed Date Conformity Modifications. Check this box if your return has an addition or subtraction due to Fixed Date Conformity.
- Qualifying Farmer, Fisherman or Merchant Seaman. Check this box if you are a self-employed farmer, fisherman or merchant seaman and at least two-thirds of your gross income is from those employments. This information is used to identify farmers, fishermen and merchant seamen subject to special rules for paying estimated tax. See “Addition To Tax For Underpayment Of Tax” section of these instructions for details.
- Overseas on Due Date. Check this box if you were living or traveling outside the United States or Puerto Rico (including serving in the military or naval service), on May 3, 2010. You must file your return by July 1, 2010.
- Coalfield Employment Enhancement Tax. Check this box if you earned Coalfield Employment Enhancement Tax Credit.
- Pass-Through Withholding. Check this box if pass-through withholding is included on Line 18a or Line 18b. Attach Form(s) VK-1.
- Dates of Residence - Enter the dates you, and your spouse if filing a joint return, lived in Virginia during 2009.
Check the box beside your filing status
Line 1 - Single (Filing Status 1)
Use this filing status if you claimed one of the following federal filing statuses on your federal return: Single, Head of Household, or Qualifying Widow(er). If you claimed the Head of Household filing status on your federal return, check the “Single” filing status box and the “Head of Household” box on Line 1.
Line 2 - Married, Filing Joint Return (Filing Status 2)
You and your spouse may choose to file a joint return if (a) you computed your federal income tax liabilities together on a joint federal return, or (b) neither you nor your spouse was required to file a federal return. You may claim this filing status even if your spouse has no income. When filing a joint return, your spouse’s exemption is included in the “Yourself” column. Do not claim your spouse as a dependent.
TIP : If both spouses have income, filing a combined return (Filing Status 4) may result in a lower balance due or a greater refund than a joint return (Filing Status 2).
Line 3 - Married, Filing Separate Return (Filing Status 3)
If you and your spouse filed separate federal returns, you can file separate state tax returns or you can choose to file a combined return (Filing Status 4). Generally, if you filed a joint federal return and only one spouse is a Virginia resident, the Virginia resident must file a separate Virginia return. When you file separate returns in Virginia, you must report your federal adjusted gross income, exemptions and deductions on your Virginia return as if you had filed separate federal returns. Federal rules must be applied to determine the exemptions and itemized deductions allowed when filing separate returns. If one spouse claims itemized deductions, the other spouse must also.
If the number of dependent exemptions or the amount of itemized deductions cannot be accounted for separately, they must be proportionately allocated between each spouse based on each spouse’s income.
Also enter your spouse’s Social Security Number in the name and address section of the return and enter your spouse’s name on the line provided in the Filing Status section.
Line 4 - Married, Filing Separately on This Combined Return (Filing Status 4)
You can use this filing status if both you and your spouse had income, regardless of whether you filed jointly or separately for federal purposes. When both spouses have income, this filing status usually enables a couple to compute a lower tax than filing a joint return (Filing Status 2). If you choose Filing Status 4, you are jointly and severally liable for the amount of tax due and any refunds will be made jointly payable.
Since Virginia’s income tax is imposed at graduated rates, a couple with income attributable to each spouse may find that by using Filing Status 2, their joint income is taxed at a higher rate than their separate incomes would be. Filing Status 4 is designed to adjust for this difference. Filing Status 4 allows a couple to compute a combined tax by reporting income for each spouse separately and then allocating dependent exemptions and deductions as mutually agreed. Tax is computed on each spouse’s separate taxable income and then the two amounts of tax are added together to determine their total tax.
TIP:Use Filing Status 2 instead of Filing Status 4 if only one spouse had income or if one spouse’s income would be reduced to zero or less after claiming personal exemptions and the subtractions on Lines 37 - 44 of Form 760PY.
When using Filing Status 4, each spouse must claim his or her own income, personal exemptions and, if allowable, any additional exemption for age or blindness. The number of dependent exemptions may be allocated between spouses as you mutually agree. Each spouse has a separate exemption line.
Enter the number of exemptions you are allowed in the appropriate boxes next to your filing status. If filing a joint return (Filing Status 2), enter the number for both spouses combined. The first exemption box on the form has been completed for you.
Dependents. Generally, you may claim the same number of dependent exemptions allowed on your federal return. If using Filing Status 3 or 4, see the Filing Status instructions in the previous section for the rules on claiming dependents. You may never claim less than a whole exemption. The same dependent may not be claimed on separate returns.
Multiply the total exemptions claimed in Section 1 by $930 and enter the result in the “Total Section 1” box.
65 or Over To qualify for the additional personal exemption for age 65 or older, you must have been age 65 or over on or before January 1, 2010.
Blind To qualify for the additional personal exemption for the blind, you must have been considered blind for federal income tax purposes.
Multiply the total exemptions claimed in Section 2 by $800 and enter the result in the “Total Section 2” box.
Add the dollar amount from Section 1 to the dollar amount from Section 2. Use the sum when computing the prorated exemption amount on Line 12.
Line 5 - Dependent on Another’s Return
Check the box if you can be claimed as a dependent on someone else’s return. If you check this box and claim the Virginia standard deduction on Line 11(a), see “Exception: Dependent’s Limited Standard Deduction” following the Line 46(e) instructions. Your standard deduction may be limited.
HOW TO ENTER NUMBERS
Use the Correct Column: Enter numbers in Column B if you are using Filing Status 1, 2 or 3. Enter numbers in Columns A and B only if you are using Filing Status 4. When using Filing Status 4, make sure the information in Column B applies to the name and social security number listed first on the return. Column A is for your spouse.
Round to Whole Dollars: To improve accuracy of return preparation and speed the processing of your return, all amount entries on your return must be rounded to the nearest dollar. Amounts of 1 cent to 50 cents are to be rounded down while all amounts 51 cents to 99 cents are to be rounded up.
Negative Numbers: Enter negative numbers (numbers less than 0) in brackets. For example, if your federal adjusted gross income was negative 12,000, enter this as [12,000].
Line 6 - Adjusted Gross Income
Part I on back of Form 760PY must be completed before you make an entry on Line 6. Complete Lines 28 through 32, then enter the total amount of federal adjusted gross income on Line 6 as follows. The instructions for Part I are on Page 13.
Filing Status 1, 2 or 3 - Enter the amount from Line 32, Column B1, on Line 6, Column B.
Filing Status 4 - Enter the amount from Line 32, Column A1, on Line 6, Column A, and enter the amount from Line 32, Column B1, on Line 6, Column B. When using Filing Status 4, the total of Column A and Column B on Line 6 must equal the total federal adjusted gross income on your federal return.
Line 7 - Additions
Complete Part II on back of Form 760PY, Lines 33 through 36, and enter the amount from Line 36. The instructions for Part II begin on Page 13.
Line 9 - Subtractions
Complete Part III on back of Form 760PY, Lines 37 through 45, and enter the amount from Line 45. The instructions for Part III begin on Page 14.
Line 10 - Virginia Adjusted Gross Income
Deduct Line 9 from Line 8 and enter the result.
If the amount on Line 10 is less than the amount shown below for your filing status, your Virginia income tax is $0.00 and you are entitled to a refund of any withholding or estimated tax aid.
To claim a refund in these cases:
- Skip to Line 17 and enter “0.00” as your tax, then
- Complete Lines 18 - 27.
|Filing Status||Filing Threshold|
|2. Married, filing jointly........||$22,500|
|3. Married, filing separately........||$11,250|
|4. Married, filing combined return*.......||$22,500|
* When filing a combined return, compare the threshold to the total of Columns A and B, Line 10.
TIP :Claiming Deductions When Filing a Combined Return: If you are filing a combined return (Filing Status 4), you can allocate deductions and dependents between spouses as you choose. As a general rule, you can lower your combined tax by assigning deductions and dependents to each spouse so that the taxable incomes in Columns A and B are as close to equal as possible. The deductions and dependents which can be allocated are on Lines 11(a) or 11(b), 12 and 13.
Line 11 - Standard or Itemized Deductions
Complete Part IV or Part V on back of Form 760PY, whichever is appropriate. You must claim the same type of deductions (standard or itemized) on the Virginia return as claimed on your federal return.
TIP : If a joint federal return was filed and you are filing separate returns in Virginia (Filing Status 3) and claiming itemized deductions, itemized deductions that cannot be accounted for separately must be allocated proportionately between spouses based on each spouse’s share of the federal adjusted gross income.
Line 11(a) - Standard Deductions: Enter the allowable Virginia standard deductions computed on Part IV, Line 46(e);
Line 11(b) - Itemized Deductions: Enter the allowable Virginia itemized deductions amount from Part V, Line 47(c).
Line 12 - Exemption Amount
The total exemption amount is the number of exemptions claimed prorated based on the portion of the year you resided in Virginia (see Ratio Schedule on Page 30). Complete the Prorated Exemption Worksheet below to compute your allowable personal and dependent exemptions.
TIP : If using Filing Status 4, each spouse must compute his or her own prorated personal exemptions based on the number of exemptions claimed on Line 4. Use the separate exemption amounts for “yourself” and your “spouse” when completing Lines A, B and C of the following worksheet.
Prorated Exemptions Worksheet
Col. A Spouse
Col. B Yourself
|A. Enter the Exemption Amount for your filing status from Form 760PY, Lines 1 - 4||
|B. Enter the ratio amount from the Personal Exemption Ratio Schedule on Page 30 of these instructions||
|C. Multiply Line A by Line B and enter the result in the appropriate column on Form 760PY, Line 12||
The prorated exemptions worksheet above is used to reduce your personal and dependent exemptions to an amount which is proportional to the number of days you resided in Virginia during the taxable year. For example, if you are single, claim no dependents and moved to Virginia on July 1, your prorated Virginia personal exemption is computed as follows:
Prorated Virginia Personal Exemption
|(One personal exemption)|
|(Ratio Schedule factor for July 1 move to Virginia)|
|(Be sure to round to $469.00)|
Exception. If 100% of your federal adjusted gross income was earned while you were a Virginia resident, you do not have to prorate your personal exemptions. If you are married, each spouse’s personal exemption is prorated separately based on that spouse’s period of residence in Virginia. However, if 100% of either spouse’s income is from Virginia sources, that spouse’s personal exemption does not have to be prorated.
If you moved into and out of Virginia during the year (or vice versa), base the proration on the total number of days that you were a Virginia resident.
When using Filing Status 3, if the number of exemptions cannot be accounted for separately, they must be proportionately allocated between each spouse based upon each spouse’s income.
Line 13 - Deductions
If you reported any deductions on Virginia Schedule NPY, enter the total amount from Part II, Line 2 of Schedule NPY.
Line 16 - Income Tax
If Line 15 exceeds the amount listed in the tax table included in these instructions, compute the tax from the tax rate schedule.
Line 17 - Total Tax
Add Column A and Column B, Line 16, and enter the result.
Line 18(a) - YOUR Virginia Income Tax Withheld
Enter the amount of Virginia income tax withheld for the person whose Social Security Number is in the “B: Your Social Security Number” box in the name and address section on Form 760PY. If you are using Filing Status 4, this must be the person whose income is reported in Column B.
Line 18(b) - SPOUSE’S Virginia Income Tax Withheld
Enter the amount of Virginia income tax withheld for the person whose Social Security Number is in the “A: Spouse’s Social Security Number” box in the name and address section on Form 760PY. If you are using Filing Status 4, this must be the person whose income is reported in Column A. If filing a separate return (Filing Status 3), do not enter your spouse’s withholding.
Line 18(c) - Combined 2009 Estimated Tax Payments
Enter your total 2009 estimated Virginia income tax payments. If using Filing Status 2 or 4, enter the total payments made by you and your spouse, even if the payments were made using separate Form 760ES vouchers. Remember to include any estimated income tax carryover from your 2008 individual income tax return.
Line 18(d) - Combined Extension Payments
Enter the total tentative tax paid with Form 760IP, if applicable.
Line 18(e) - Credit For Low Income Individuals or Virginia Earned Income Credit
If your total family income does not exceed the federal poverty guidelines or you claimed the federal earned income credit, you may be eligible to claim this credit for low income individuals or the Virginia Earned Income Credit.
These credits may not be claimed if you, your spouse, or any dependent claims any of the following:
- Virginia National Guard Subtraction
- Military pay subtraction (first $15,000)
- Subtraction for first $15,000 for state and federal employees whose annual salary is $15,000 or less
- Exemption for blind taxpayers or taxpayers age 65 and over
- Age Deduction
If you are eligible, calculate these credits by completing Schedule NPY, Part III. After you have completed Part III, enter on Line 18(e) the credit amount from Schedule NPY, Part III, Line 10. See instructions for Schedule NPY starting on Page 19.
Line 18(f) - Credit for Tax Paid to Another State
Generally, Virginia will allow taxpayers filing resident individual income tax returns to claim credit for income tax paid as a nonresident to another state on earned or business income derived from sources outside Virginia or any gain (if included in federal adjusted gross income) on the sale of a capital asset outside Virginia, provided the income is taxed by Virginia as well as the other state.
If you are eligible, calculate the credit by completing Schedule NPY, Part IV. After you have completed Part IV, enter on Line 18(f) the credit amount from Schedule NPY, Part IV, Line 8. See instructions for Schedule NPY starting on Page 19.
Line 18(g) - Credits From Schedule CR
Complete Schedule CR and attach it to your return to claim the following tax credits. For some credits, other Virginia forms are also required. To order Schedule CR, Schedule CR Instructions and these other credit forms, see Page 3.
If you are only claiming a Political Contributions Credit, enter the amount of the credit and check the box. You do not need to attach Schedule CR. The Political Contributions Credit is available to individuals who make contributions to candidates for state or local political office. The credit is 50 percent of the amount of the contribution, subject to a $25 limit for individuals and a $50 limit for married taxpayers filing jointly and cannot exceed your tax liability.
TIP : For details on these credits and information on carryover and pass-through provisions, refer to Schedule CR, Schedule CR instructions and the organizations or forms specified.
The following table lists all the credits that can be claimed against individual income tax. For more information, call Tele-Tax at 804367- 2486 or visit www.tax.virginia.gov.
- Trust Beneficiary Accumulation Distribution
- Enterprise Zone Act
- Neighborhood Assistance Act
- Recyclable Materials Processing Equipment
- Conservation Tillage Equipment
- Fertilizer and Pesticide Application Equipment
- Rent Reduction Program
- Vehicle Emissions Testing Equipment
- Major Business Facility
- Foreign Source Retirement Income
- Historic Rehabilitation
- Day-Care Facility Investment
- Low-Income Housing
- Agricultural Best Management Practices
- Qualified Equity and Subordinated Debt Investments
- Worker Retraining
- Waste Motor Oil Burning Equipment
- Purchase of Long-Term Care Insurance
- Biodiesel Fuels
- Livable Home (formerly Home Accessibility Features for the Disabled)
- Riparian Waterway Buffer
- Land Preservation
- Political Contributions
- Coalfield Employment Enhancement
- Virginia Coal Employment and Production Incentive
Line 20 - Income Tax You Owe
If Line 17 is larger than Line 19, enter the difference and skip to Line 22.
Line 21 - Overpayment Amount
If Line 19 is larger than Line 17, enter the difference.
Line 22 - Addition to Tax, Penalty and Interest
If you owe penalty and/or interest in addition to your tax, you can either calculate it using Schedule NPY, Part V, or leave Line 22 blank.
If you complete Schedule NPY, enter on Line 22 the amount from Schedule NPY, Part V, Line 4.
TIP : If you leave Line 22 blank, the Department will compute the addition to tax, penalty and interest for you and then send you a bill. If your income varied during the year, however, you may be entitled to a lower addition to tax than what the Department would automatically compute. In such cases, you should complete Form 760C to show when the income was received and what the addition to tax should be.
Attach Form 760C or Form 760F (for Farmers, Fishermen or Merchant Seamen) if you computed the addition to tax and/or if you are claiming one of the exceptions that voids the addition to tax.
Line 23 - Credit to Estimated Tax
Enter the amount of net overpayment from Line 21 to be credited to 2010 estimated tax in the respective columns. Designate overpayment credit to Column A, spouse, if using Filing Status 2 or 4 or Column B, you (as you mutually agree). NOTE: If you are filing a joint or combined return with a deceased spouse AND you are entitled to claim the overpayment, enter the overpayment in your column. The total amount of overpayment on Line 23 may not exceed your overpayment (Line 21) minus any addition to tax, penalty and interest (Line 22).
Line 24 - Contributions and Consumer’s Use Tax
Enter the amount from Schedule NPY, Part VI, Line 7.
Line 26 - Amount You Owe
If You Owe Tax on Line 20, add Line 20 and Line 25.
If Line 21 is an OVERPAYMENT and Line 25 is LARGER THAN Line 21, deduct Line 21 from Line 25.
This is the amount you owe. The amount you owe must be paid in full at the time of filing your return.
Check. Make your check payable to the Treasurer or Director of Finance of the city or county in which all or the principal part of income from Virginia sources was derived. See the inside back cover for a listing of localities. Make sure your social security number is on your check and make a notation that it is your 2009 Virginia income tax payment. Staple your check to the return.
Credit Card. Call 1-800-272-9829 or visit www.officialpayments.com to pay by credit card. If you choose this option, check the box on Line 27 indicating this type of payment.
The company processing the transaction will assess an additional fee. Prior to payment, you will be informed of the fee and will have the option to cancel the transaction at that time with no charge.
If you have already filed your return with your Commissioner of the Revenue and did not indicate you were paying by credit card, call your Local Commissioner of the Revenue’s office for the correct even though exempt for federal purposes. Unless the taxpayer is jurisdiction code prior to initiating your credit card payment. Phone able to substantiate the amount attributable to the Virginia bonds, numbers are listed on the inside back cover. the total amount of dividends exempt from federal taxation will be an addition on the Virginia return.
Line 28 - Amount to Be Refunded to You
If Line 21 is larger than Line 25, deduct Line 25 from Line 21 and enter the amount to be refunded.
Sign Your Return - The signature block on Form 763 is on the bottom of Page 2. Be sure to sign and date your return. If filing jointly, both spouses must sign the return. In so doing, you agree that filing jointly on this return makes you jointly and severally liable for the tax due and any refunds will be paid jointly.
Telephone Numbers - Include your daytime and evening phone numbers in the spaces provided. The telephone number blocks on Form 760PY are to the right of the signature Lines on the back of the form. Phone numbers are requested so we can call you if we have a question about your return.
Tax Preparer Information - If you paid someone to prepare your return, the preparer should provide contact information in the spaces provided.
FORM 760PY LINE INSTRUCTIONS PAGE 2
Part I - Schedule Of Income And Adjustments
Your return will not be accepted as complete unless this schedule is completed. The purpose of the Schedule of Income and Adjustments is to allocate the items that constitute federal adjusted gross income between Virginia and another state. Column 1, Lines 28 - 32, is an abridged version of federal Form 1040, 1040A or 1040EZ. Use Lines 28(a) - 28(c) to report all income. Use Line 30 to report all moving expenses included as adjustments to total income on the federal return. Use Line 31 to report all other adjustments to total income on the federal return. The sum of Line 32, Columns A1 and B1 must equal the federal adjusted gross income on your federal Form 1040, 1040A or 1040EZ. Base the allocation on where you were a resident when you received the income or paid the expense. NOTE: If claiming Filing Status 4, complete both the “A” and “B” sections of the schedule. For all other filing statuses, complete only the “B” section. References to Column 1, 2 or 3 mean Column A1, A2 or A3 (or B1, B2 or B3), as appropriate.
Line 28 - Income
(a) Enter in Column 1 the total amount of wages as shown on federal Form 1040, 1040A or 1040EZ. In Column 2, enter the portion of wages attributable to your period of residence in Virginia. Enter the balance in Column 3.
(b) Enter in Column 1 the total amount of interest and dividends as shown on federal Form 1040, 1040A or 1040EZ. In Column 2, enter the portion of interest and dividends attributable to your period of residence in Virginia. Enter the balance in Column 3.
(c) Enter in Column 1 the net amount of other income as shown on federal Form 1040 or 1040A. This includes, but is not limited to, refunds of state and local income taxes, alimony received, business income, taxable pensions and capital or other gains and losses. In Column 2, enter the portion of other income attributable to your period of residence in Virginia. Enter the balance in Column 3.
Line 29 - Gross Income
Add Lines 28(a), 28(b) and 28(c) and enter the total here.
Line 30 - Adjustments to Income: Moving Expenses
Enter in Column 1 the total moving expenses claimed as an adjustment to income on federal Form 1040. If you moved to Virginia, claim the moving expenses in Column A2 and/or B2 as an expense to Virginia income. If you moved outside of Virginia, claim the moving expenses in Column A3 and/or B3. Moving expenses are considered an expense to the income from the state to which you move.
Line 31 - Other Adjustments to Income
Enter in Column 1 all adjustments to income as shown on federal Form 1040 or 1040A other than the moving expenses included on Line 30. This includes, but is not limited to, reimbursed employee business expenses, payments to an IRA and alimony paid. In Column 2, enter the portion of these adjustments that is attributable to your period of residence in Virginia. Enter in Column 3 the balance of these adjustments.
Line 32 - Adjusted Gross Income
Deduct the total of Line 30 and Line 31 from Line 29 and enter the balance here. The total of Column 1 must equal your federal adjusted gross income on your federal return. If using Filing Status 4, the total of Columns A1 and B1 must equal your federal adjusted gross income on federal Form 1040, 1040A or 1040EZ.
Enter the totals of Columns A1 and B1 on Line 6, Form 760PY (front). If the Schedule of Income and Adjustments is properly completed, the sum of Columns 2 and 3 will equal your federal adjusted gross income as shown in Column 1.
Enter the total of Line 32(b), Column 3, on Line 40. If you are using Filing Status 4, enter the amounts from both Columns A3 and B3 in the respective Columns on Line 40.
Line 32(a) - Net Fixed Date Conformity Modifications
Complete Form 760PY, Lines 33 and 37, enter the net amount on Line 32(a), Column 1. In Column 2, enter the portion attributable to your period of residence in Virginia. Enter the balance in Column 3.
Line 32(b) - Fixed Date Conformity FAGI
Combine Line 32 and Line 32(a) and enter the result. Enter the total of Line 32(b), Column 3, on Line 40.
Note: If you are claiming the standard deductions on your return, the total of Line 32(b), Columns A2 and B2, must be entered on Line 46(b), Part IV.
Fixed Date Conformity Update
Virginia’s date of conformity with the Internal Revenue Code was advanced from December 31, 2007, to December 31, 2008. The 30% and 50% bonus depreciation allowance for certain assets under the IRC and the 5-year net operating loss (NOL) carry back allowed for net operating losses generated in taxable year 2001 or 2002 are still not allowed.
At the time these instructions went to print, the only required adjustments for “fixed date conformity” were the two mentioned above. However, if federal legislation is enacted that results in changes to the Internal Revenue Code for the 2009 taxable year, taxpayers will be required to make adjustments to their Virginia returns that are not described in the instruction booklet. Information about any such adjustments will be posted on the Department’s website at www.tax.virginia.gov.
PART II - ADDITIONS TO FEDERAL ADJUSTED GROSS INCOME
Line 33 - Fixed Date Conformity
Check the box on the top left of Page 1 of Form 760PY if your return has an addition or subtraction due to Fixed Date Conformity.
|A. Bonus Depreciation - For an explanation, please see the section titled, Fixed Date Conformity Update. Enter the amount that should be added to Federal Adjusted Gross Income based upon the recomputation of allowable depreciation. ......||________|
|B. Other Changes Not Listed Above - Add any other amounts not covered above that should be adjusted because of Virginia’s conformity to the Internal Revenue Code as it existed on December 31, 2008. Check our website, www.tax.virginia.gov, for other Fixed Date Conformity adjustments that may have passed after these instructions were printed.....||________|
|C. Total of Lines A and B - Enter the total of Lines A and B here and on 760PY, Line 33 ...||________|
If you received income from a regulated investment company (mutual fund) that invested in obligations both taxable and exempt for Virginia purposes, the entire income must be considered taxable by Virginia unless you attach a statement provided by the fund that:
- details the amount of income you earned; and
- summarizes the prorations between exempt and taxable income (monthly breakdown is preferred).
A typical situation would involve a mutual fund that invests in bonds of several states, including Virginia. The interest on the bonds issued by the other state is taxable for Virginia purposes even though exempt for federal purposes. Unless the taxpayer is able to substantiate the amount attributable to the Virginia bonds, the total amount of dividends exempt from federal taxation will be an addition on the Virginia return.
If you provide this information, enter the exempt portion of income on Line 35 or Line 39 as appropriate.
Line 34 - Interest on Obligations of Other States
Enter the interest earned while a Virginia resident that was not included in federal adjusted gross income, less related expenses to the extent not deducted in determining federal taxable income, on obligations of any state other than Virginia, or of a political subdivision of any such state unless created by compact or agreement to which this state is a party.
Line 35 - Other Additions
Enter the interest earned while a Virginia resident that was not included in federal adjusted gross income, less related expenses to the extent not deducted in determining federal taxable income, on obligations of any state other than Virginia, or of a political subdivision of any such state unless created by compact or agreement to which this state is a party.
A. Interest On Federally Tax-Exempt US Obligations - Enter the interest or dividends earned, less related expenses to the extent not deducted in determining federal taxable income, on obligations or securities of any authority, commission or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state tax.
B. Transitional Modifications - Enter the amount necessary to prevent the deduction of any item properly deductible in determining a tax under prior Virginia state law.
C. Accumulation Distribution Income - Enter the taxable income used to compute the partial tax on an accumulation distribution as reported on federal Form 4970.
D. Lump-Sum Distribution Income - If you received a lump-sum distribution from a qualified retirement plan and elected to use the 20% capital gain election, the ten-year averaging option, or both on federal Form 4972, complete the worksheet below to determine what portion, if any, must be included as an addition on the Virginia return.
|1. Enter the total amount of the distribution subject to federal tax (ordinary income and capital gain) .......||________|
|2. Enter the total federal minimum distribution allowance, federal death benefit exclusion and federal estate tax exclusion ......||________|
|3. Subtract Line 2 from Line 1. Include this amount on Form 760PY, Line 35.......||________|
E. Other - Attach an explanation for other additions.
PART III - SUBTRACTIONS FROM FEDERAL ADJUSTED GROSS INCOME
If you received income from a regulated investment company (mutual fund) that invested in obligations both taxable and exempt for Virginia purposes, the entire income must be considered taxable by Virginia unless you attach a statement provided by the fund that:
- details the amount of income you earned; and
- summarizes the prorations between exempt and taxable income (monthly breakdown is preferred).
If you provide this information, enter the exempt portion of income on Line 41or Line 44 as appropriate.
Line 37 - Fixed Date Conformity Subtractions
Check the box on the top left of Page 1 of Form 760PY if your return has a subtraction due to Fixed Date Conformity.
|A. Bonus Depreciation - For an explanation, please see the section titled, Fixed Date Conformity Update. Enter the amount that should be subtracted from Federal Adjusted Gross Income based upon the recomputation of allowable depreciation.......||_______|
|B. Other Fixed Date Conformity Subtractions from Supplemental Instructions - If federal tax legislation passed after the printing deadline for these instructions, please refer to the Supplemental Fixed Date Conformity Instructions to determine if you are required to make any additional subtractions due to federal tax legislation. The Supplemental Fixed Date Conformity Instructions are available on the department’s website, www.tax.virginia.gov. Enter total Supplemental Fixed Date Conformity subtractions here......||_______|
|C. Total of Lines A and B Enter the total of Lines A and B here and on 760PY, Line 37......||_______|
Line 38 - Age Deduction
Taxpayers born on or before January 1, 1945, may be eligible to claim the Age Deduction. Eligible taxpayers must calculate the deduction by completing Schedule NPY, Part I. After completing Part I, enter on Line 38 the deduction amount from Schedule NPY, Part I, Line 4. See instructions starting on Page 19.
Line 39 - State Tax Refund or Overpayment Credit Reported as Income on Your Federal Return
Enter the amount of any state income tax refund or overpayment credit reported as income on your federal income tax return and received while a resident of Virginia (claim in the same column as the income was reported on Line 6 on the front of the Virginia return).
State, local or foreign income taxes withheld from your salary, estimated tax payments or payments made on tax for a prior year to such taxing authority may be deducted on your federal return for the year withheld or paid. The federal deduction is for the amount paid rather than the tax liability, so a refund or credit is generally treated as taxable income (a recovery of an excessive deduction) on the federal return. Since Virginia does not allow the state and local income tax deduction, a federally taxable refund or overpayment credit is to be deducted from federal adjusted gross income on the Virginia return.
Line 41 - Income from U.S. Obligations
Enter the amount of income (interest, dividends and gain) derived from obligations or the sale or exchange of obligations of the United States and on obligations or securities of any authority, commission or instrumentality of the United States to the extent included in federal adjusted gross income but exempt from state income taxes under the laws of the United States. This includes, but is not limited to, stocks, bonds, treasury bills and treasury notes. It does not include interest on refunds of federal taxes, equipment purchase contracts or normal business transactions.
The following is a partial list of taxable and exempt income. This list is based on the department’s analysis of federal and state law as applicable to selected organizations. For organizations not listed below, additional information must be attached showing that the income is exempt from Virginia income tax.
|Issuing Organization||VA Tax Status|
|Export-Import Bank of the United States (Export-Import Bank of Washington)||Exempt|
|Farm Credit Bank||Exempt|
|Federal Deposit Insurance Corporation||Exempt|
|Federal Home Loan Bank||Exempt|
|Federal Intermediate Credit Bank||Exempt|
|Federal Land Bank||Exempt|
|Federal Reserve Stock||Exempt|
|Governments of Guam, Puerto Rico and Virgin Islands||Exempt|
|Resolution Trust Corporation||Exempt|
|Student Loan Marketing Association (Sallie Mae)||Exempt|
|Tennessee Valley Authority||Exempt|
|US Postal Service||Exempt|
|US Treasury bills, notes, bonds & savings bonds (such as Series E, EE, H, HH, etc.)||Exempt|
|Fed. Home Loan Mortgage Corp. (Freddie Mac)||Taxable|
|Fed. National Mortgage Assoc. (Fannie Mae)||Taxable|
|Government National Mortgage Association (Ginnie Mae)||Taxable|
|Inter-American Development Bank||Taxable|
|International Bank for Reconstruction and Development||Taxable|
Line 42 - Title II Social Security and Tier 1 Railroad Retirement Act Benefits
Enter the amount of Title II Social Security Act benefits and equivalent Tier 1 Railroad Retirement Act benefits included in adjusted gross income on your federal income tax return due to Section 86 of the Internal Revenue Code and received while a resident of Virginia. This is the amount reported as taxable social security benefits on your federal return.
Line 43 - Disability Income
Enter the amount of disability income reported as wages (or payments in lieu of wages) on your federal return for permanent and total disability. On joint returns, each spouse can qualify for the deduction. Individuals can deduct up to $20,000 of disability income as defined under Internal Revenue Code Section 22(c)(2)(b)(iii).
NOTE: Eligible taxpayers may claim EITHER this disability income subtraction OR the age deduction on Line 38. If you are married filing a joint return, each spouse may claim, if eligible, either an age deduction or disability subtraction. Use the one that benefits you the most.
Line 44 - Other Subtractions
Enter the code and subtraction amount on Lines 44a - 44c. If you have more than 3 subtractions, enter Code “00” and the total amount of Other Subtractions on Line 44a you are claiming and attach to your return a list showing each of the subtractions along with its subtraction code and amount.
|20||Income from Virginia Obligations - Enter the amount of income from Virginia obligations that you included in your federal adjusted gross income.|
|21||Federal work opportunity tax credit wages - Enter the amount of wages or salaries eligible for the federal work opportunity tax credit that you included in your federal adjusted gross income. Do not enter the federal credit amount.|
|22||Tier 2 and Other Railroad Retirement and Railroad Unemployment Benefits - Enter the amount of Tier 2 vested dual benefits and other Railroad Retirement Act Benefits and Railroad Unemployment Insurance Act Benefits included in federal adjusted gross income and reported on your federal return as a taxable pension or annuity.|
|24||Virginia Lottery prizes - Enter the sum of all prizes under $600 awarded to you by the Virginia Lottery Department to the extent that you included them in your federal adjusted gross income.|
|28||Virginia National Guard income - Enter the amount of wages or salaries for active and inactive service in the National Guard of the Commonwealth of Virginia for persons of rank O3 and below included in federal adjusted gross income. This amount may not exceed the amount of income received for 39 days or $3,000, whichever is less. Reminder: This subtraction does not apply to members of the active or reserve units of the Army, Navy, Air Force or Marines, or the National Guard of other states or the District of Columbia. If you claim this subtraction, you cannot claim a credit for Low Income Individuals.|
|29||Operation Joint Endeavor combat pay - Enter the amount of combat pay for service in support of Operation Joint Endeavor which was included in federal adjusted gross income.|
|30||Military Pay and Allowances Attributable to Active Duty Service in a Combat Zone or a Qualified Hazardous Duty Area - Enter any military pay and allowances earned while serving by the order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area treated as a combat zone for federal tax purposes pursuant to section 112 of the Internal Revenue Code that has not been otherwise subtracted, deducted or exempted from federal adjusted gross income.|
|31||Retirement plan income previously taxed by another state - Enter the amount of retirement income received during the taxable year on which the contributions were taxed in another state, but were deductible from federal adjusted gross income during the same period. The total amount of this subtraction cannot exceed the amount of the contributions previously taxed by another state, usually in a previous year.|
|34||Virginia College Savings Plan Income Distribution or Refund - Enter the amount of any income included in federal adjusted gross income that is attributable to a distribution of benefits or a refund from the Virginia College Savings Plan (previously called the Virginia Higher Education Tuition Trust Fund), in the event of a beneficiary’s death, disability or receipt of scholarship.|
|37||Unemployment Benefits - Enter the amount of unemployment compensation benefits received during the taxable year reported as income on your federal income tax return.|
|38||Military Basic Pay - Some taxpayers who qualify as military personnel stationed inside or outside Virginia and who are on extended active duty for more than 90 days can subtract up to $15,000 of military basic pay received during the taxable year. If the military basic pay does not exceed $15,000, then the entire amount may be subtracted. If the basic military pay is over $15,000, then the subtraction is reduced by the amount exceeding $15,000. For every $1.00 of income over $15,000, the maximum subtraction is reduced by $1.00. If your basic military pay is $30,000 or more, you are not entitled to a subtraction. On joint returns, each spouse can qualify for the subtraction. If you claim this subtraction, you cannot claim a credit for Low Income Individuals.|
|39||Federal and State Employees - Any individual who qualifies as a federal or state employee earning $15,000 or less in annual salary from all employment can subtract up to $15,000 of the salary from that state or federal job. If both spouses on a joint return qualify, each spouse may claim the subtraction. The subtraction cannot exceed the actual salary received. If you claim this subtraction, you cannot claim a credit for Low Income Individuals.|
|40||Income Received by Holocaust Victims - To the extent included in your federal adjusted gross income, subtract any income resulting from the return or replacement of assets stolen during the Holocaust and throughout the time period leading up to, during, and directly after World War II as a result of: Nazi persecution, individual being forced into labor against his or her will, transactions with or actions of the Nazi regime, treatment of refugees fleeing Nazi persecution, or holding of such assets by entities or persons in the Swiss Confederation.|
|41||Tobacco Settlement Fund Income - Enter the amount of payments received under the Tobacco Master Settlement Agreement, the National Tobacco Grower Settlement Trust, and the Tobacco Loss Assistance Program, provided they have not been deducted for federal tax purposes.|
|42||Gain on The Sale of Land for Open-Space Use - Enter the amount of any gain on the sale or exchange of real property or easement to real property which results in the property or easement being devoted to open-space use as defined in Section 58.1-3230 for a period not less than 30 years.|
|44||Medal of Honor Recipients - Enter the amount of military retirement income you received as an individual awarded the Medal of Honor.|
|45||Avian Influenza - An individual income tax subtraction is available for indemnification payments received by qualified contract poultry growers and table egg producers as a result of the depopulation of poultry flocks because of avian influenza in 2002. Indemnification payments made to owners of poultry who contract with poultry growers do not qualify for this subtraction.|
|46||Military Death Gratuity Payments - Enter the amount of military death gratuity payments made after September 11, 2001, to survivors of military personnel killed in the line of duty. This subtraction must be reduced by the amount that is allowed as an exclusion from federal gross income on the survivor’s federal income tax return.|
|49||Certain Death Benefit Payments - Allows a beneficiary taxpayer to subtract the death benefit payments received from an annuity contract that are subject to federal income taxation, for the taxable years beginning on or after January 1, 2008.|
|50||Pass Through Entity Income - Enter the amount of Pass Through Entity (PTE) income that was included on a unified return. Do not include the PTE income in the nonresident allocation percentage schedule.|
|51||Gains from Land Preservation - This is a subtraction for federal gain or federal income recognized by a taxpayer on the application of a land preservation tax. The transfer of the credit and its application against a tax liability shall not create gain or loss for the transferor or the transferee of such credit.|
|99||Other - Attach a schedule of explanation for other subtractions.|
PART IV - STANDARD DEDUCTION
If you did not claim itemized deductions on your federal income tax return, you must claim the standard deduction on your Virginia income tax return. Your allowable standard deduction on Form 760PY will be prorated based on the portion of your federal adjusted gross income that was received while a resident of Virginia.
Line 46 - Standard Deductions
46(a) Enter the federal adjusted gross income (Total of Line 32(b), Columns A1 and B1 from Part I).
46(b) Enter the income attributable to your period of Virginia residence (Total of Line 32(b), Columns A2 and B2 from Part I).
46(c) Divide the amount on Line 46(b) by the amount on Line 46(a) and report as a percentage, not to exceed 100%. Example: 0.3163 becomes 31.6%.
46(d) If using Filing Status 1, enter $3,000. If using Filing Status 2 or 4, enter $6,000. If using Filing Status 3, enter $3,000.
46(e) Multiply Line 46(c) by Line 46(d). Enter here and on Line 11(a), Form 760PY, Page 1.
When using Filing Status 4, the standard deduction may be allocated between each spouse as you mutually agree. As a general rule, you can lower your combined tax by assigning deductions (Lines 11 and 13) and dependents (Line 12) to each spouse so that the taxable incomes in Columns A and B are as close to equal as possible.
Exception: Dependent’s Limited Standard Deduction
If you could be claimed as a dependent on the federal income tax return of another taxpayer, your allowable standard deduction may not exceed the amount of your earned income. This rule applies to dependents of all ages, including children under age 19 and fulltime students under 24 years old who are eligible to be claimed as a dependent on their parent’s return.
Remember to check the box (on Line 5) on the front of Form 760PY if you can be claimed as a dependent on another’s return. Your maximum standard deduction for Line 46(d) is the lesser of EARNED INCOME; or
- $3,000 if you are single (Filing Status 1)
- $6,000 if you are married and file a joint or combined return (Filing Status 2 or 4)
- $3,000 if you are filing a separate return from your spouse (Filing Status 3).
EXAMPLE: (Standard Deduction Limited): A person (claimed as a dependent on another’s return) moved to Virginia on June 25, 2009. Before moving to Virginia he had unearned income of $5,000 in another state. While in Virginia he has interest income from a bank account (unearned income) of $4,200 and income from a summer job of $1,200 (earned income). This person’s limited standard deduction to be entered on Line 46(e) is $622.80 which should be rounded to $623.
The limited standard deduction is computed by multiplying the maximum limited standard deduction on Line 46(d), which is $1,200 of earned income, by the percentage on Line 46(c), which would be 51.9%. Line 46(d) is $1,200 because the $1,200 of earned income is less than the $3,000 standard deduction for a single taxpayer.
NOTE: The return of a taxpayer claiming a child (or other person) as a dependent is not affected if the child is required to claim a limited standard deduction.
PART V - ITEMIZED DEDUCTION
Line 47 - Virginia Itemized Deduction
If you claimed itemized deductions on your federal income tax return, you must claim itemized deductions on your Virginia income tax return. Your allowable itemized deductions on Form 760PY are expenses claimed on Schedule A for which payment was made while you were a Virginia resident. State and local income tax claimed as an itemized deduction on your federal return is not allowed as a Virginia deduction. If you have an addition or subtraction due to Fixed Date Conformity, you must complete the FDC Worksheet to compute your Virginia itemized deductions.
|47(a)||Total Federal Itemized Deductions Paid While A Resident Of Virginia Enter the total itemized deductions claimed on federal Schedule A (or the FDC Worksheet if you have an addition or subtraction due to Fixed Date Conformity) paid while a resident of Virginia.|
|47(b)||State And Local Income Tax Enter the amount of state and local income tax allowed on your federal Schedule A that was paid while you were a resident of Virginia. Before making an entry on this Line, check to see if your total itemized deductions were limited on your federal return. If your federal adjusted gross income is more than $166,800 or $83,400 if married and filing a separate federal return, your deduction may be limited. The amount of state and local income tax reported on Schedule A must be reduced proportionately to reflect any reduction in total itemized deductions. Complete the ITEMIZED DEDUCTIONS Worksheet if you are subject to the limitation. If you did not claim any state and local income tax on federal Schedule A, enter “0.00” on this line; you do not need to complete the worksheet.|
|47(c)||Virginia Itemized Deductions Deduct Line 47(b) from Line 47(a). Enter here and on Line 11(b) on the front of your return. The copy of your federal income tax return attached to Form 760PY must include the Schedule A.|
FDC Worksheet Fixed Date Conformity Modification To Itemized Deductions
Enter the information requested on each line. In most cases, the deduction allowed on federal Schedule A will be allowed on the FDC Worksheet. The exceptions are Gifts to Charity (Sch. A, Line 19) and Casualty and Theft Loss (Sch. A, Line 20). These amounts should be recomputed by substituting the amount on Line 5 for the FAGI you used to compute your federal limitations.
Computation of Fixed Date Conformity FAGI
|1. Federal Adjusted Gross Income (FAGI) from federal return .....||________|
|2. Fixed date conformity additions to FAGI ....||________|
|3. Subtotal. Add Line 1 and Line 2 ......||________|
|4. Fixed date conformity subtractions from FAGI........||________|
|5. Fixed date conformity FAGI. Subtract Line 4 from Line 3 ........||________|
Modifications to Itemized Deduction Due to Fixed Date Conformity
All references are to the same line and amount claimed on the federal Schedule A unless otherwise specified.
|6. Medical and dental expenses claimed on federal Schedule A, Line 1....||________|
|7. Enter amount from Line 5 above ..........||________|
|8. Multiply Line 7 above by 7.5% (.075).....||________|
|9. Subtract Line 8 from Line 6. If Line 8 is more than Line 6, enter -0-......||________|
|10. Enter the amount from federal Schedule A, Line 9..........||________|
|11. Enter the amount from federal Schedule A, Line 15......||________|
|12. Enter the amount from federal Schedule A, Line 19........||________|
|13. Enter the amount from federal Schedule A, Line 20.......||________|
|14. Unreimbursed employee expenses from federal Schedule A, Line 21 .......||________|
|15. Tax preparation fees from federal Schedule A, Line 22.....||________|
|16. Other expenses claimed on federal Schedule A, Line 23......||________|
|17. Add Lines 14 through 16 ......||________|
|18. Enter amount from Line 5 above .....||________|
|19. Multiply Line 18 above by 2% (.02)........||________|
|20. If Line 19 is more than Line 17, enter ‘0’. Otherwise, subtract Line 19 from Line 17......||________|
|21. Enter the amount from federal Schedule A, Line 28||________|
22. Add Lines 9, 10, 11, 12, 13, 20 and 21. ...
Is Line 5 above over $166,800 ($83,400 if married filing separately)?
NO -Your deduction is not limited. Enter the amount from Line 22 here and Form 760PY, Line 42
YES -Your deduction may be limited. Complete the Virginia Itemized Deduction Worksheet.
Itemized Deduction Worksheet
State and Local Income Tax Modification for Federal Adjusted Gross Incomes Over $166,800 ($83,400 If Filing Separately)
Part I - Total Federal Itemized Deductions
|1. Federal Sch. A, total Lines 4, 9, 15, 19, 20, 27 & 28 or Line 22 of the FDC Worksheet above....||________|
|2. Add the amounts on Schedule A, Lines 4 (or FDC Worksheet Line 9), 14 and 20, plus any gambling losses included on Line 28........||________|
|3. Subtract Line 2 from Line 1. If the result is zero, stop here. Enter the amount from Line 1 above on Form 760PY, Line 47(a)......||________|
|4. Multiply Line 3 above by 80% (.80)......||________|
|5. Enter the total from Form 763, Line 6, or the FDC Worksheet, Line 5.....||________|
|6. Enter $166,800 ($83,400) if married filing a separate federal return) ......||________|
|7. Subtract Line 6 from Line 5. If the result is zero or less, stop here. Enter the amount from Line 1 above on Form 760PY, Line 47(a) .......||________|
|8. Multiply Line 7 above by 3% (.03)......||________|
|9. Enter the smaller of Line 4 or Line 8.....||________|
|10. Divide Line 9 by 1.5 ......||________|
|11. Subtract Line 10 from Line 9.....||________|
|12. Total itemized deductions. Subtract Line 11 from Line 1; enter result here and on Form 760PY, Line 47(a), and then continue to Part II....||________|
Part II - State and Local Income Tax Modification
|13.Enter the amount from Line 11 above ......||________|
|14. Enter the amount from Line 3 above ......||________|
|15. Divide Line 13 by Line 14. Enter the result to 3 decimal places (e.g., .053) ......||________|
Total Sch. A
|16 a. Total taxes
|b. Non-investment interest||
|c. Charitable contributions||
|d. Job expenses and most other misc. expenses.||
|e. Other misc.||
|f. Subtotal (add Lines 16a through 16e)||
|17. Reduced Amount: Multiply Line 16f by Line 15||
|18 a. Medical and dental expenses
|b. Investment interest||
|c. Casualty and theft losses||
|d. Subtotal (add Lines 18a, b and c)||
|19. Federal itemized deductions. Deduct Line 17 from the total of Lines 16f and 18d. (The amount in
Column 1 may be slightly larger or smaller than your total itemized deductions on Schedule A due to rounding on Line 15)
|20. Modified Itemized Deductions Paid While A Virginia Resident: Enter amount from Line 19, Column 2, here and on Form 760PY, Line 47(a)||
|21. Itemized Deductions Modification State & Local Taxes Claimed On Schedule A:
|a. State and local income taxes included on Line 16a, Column 2 ........||
|b. Multiply Line 21a by Line 15.....||
|c. Deduct Line 21b from Line 21a. Enter here and on Form 760PY, Line 47(b)......||
Virginia Tax Help Links
- » Virginia Form 760
- » Virginia Form 760C
- » Virginia Form 760ES
- » Virginia Form 760F
- » Virginia Form 760-PMT
- » Virginia Form VA-8453
- » Virginia Schedule ADJ
- » Virginia Schedule CR
- » Virginia Schedule OSC
- » Additional Virginia forms
- » Additional Virginia State Income Tax Return Form, e-File, and Government Information
- » Access tax help for additional states