Virginia Schedule Osc Instructions
Instructions for Virginia Schedule OSC
Credit for Tax Paid to Another State
Compute all credits for taxes paid to other states on Schedule OSC and enter the total credit claimed on Line 25 of Form 760.
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 that the income is taxed by Virginia as well as the other state.
If you are a resident of Virginia and the income is from Arizona, District of Columbia, California or Oregon, the credit will usually be allowed on the nonresident income tax return of the other state and should not be claimed on the Virginia resident return.
See Va. Code § 58.1-332 for more information on credits for taxes paid to other states.
Attach a complete copy of Schedule OSC and all other states' returns to Form 760. The credit must be computed separately for each state. Schedule OSC is available on the Department's website at www.tax.virginia.gov or by calling (804) 440-2541.
Border State Method You may qualify for a special computation if you are required to file a return with Virginia and only one other state provided that other state is Kentucky, Maryland, North Carolina or West Virginia. The income from the border state must consist solely of wages and salaries or business income from federal Schedule C, and your Virginia taxable income must be at least equal to the taxable income shown on the other state's return. If you meet all of these qualifications, fill in the border state oval and enter "100.0" in the Income Percentage field.
Line 1 Filing Status
Enter the number listed below to identify the filing status claimed on the other state's tax return.
- Married Filing Jointly
- Married Filing Separately
- Unified (Composite Nonresident Return)
Line 2 Claiming Credit
Enter the number listed below to identify the person claiming the credit.
- You and Spouse
Line 3 Qualifying Taxable Income
Enter the total taxable income from all of the following categories that apply to you to the extent that this income was taxed by the other state:
- Earned or business income derived from sources outside Virginia that is subject to tax by Virginia as well as another state;
- Gain from the sale of a principal residence outside Virginia that was included in your federal adjusted gross income;
- Gain from the sale of any capital asset not used in a trade or business; and
- Income on which corporation income tax was paid to another state (one that does not recognize the federal S Corporation election), by an individual shareholder of an S Corporation. Attach a statement from the S Corporation.
In some states, the tax is computed on total taxable income (from all sources) and then reduced by an allocation percentage. In these cases, you must multiply the total taxable income shown on the other state's return by the allocation percentage to determine the amount of income to enter on this line.
Line 4 Virginia Taxable Income
Enter the amount of Virginia taxable income from Line 16 of Virginia Form 760. If you filed separately in the other state, but are filing jointly in Virginia, enter only the Virginia taxable income attributable to the filer whose income was taxed by the other state.
Line 5 Qualifying Tax Liability
Enter the amount of tax liability reflected on the return you filed with the other state.
Line 6 Identify the State
Enter the 2 character postal abbreviation for the other state.
Line 7 Virginia Income Tax
Enter the amount of Virginia income tax from Line 19 of Virginia Form 760. If you filed separately in the other state, but are filing jointly in Virginia, enter the Virginia income tax due on the amount of Virginia Taxable Income reported on Line 16. Use the tax tables or the tax date schedule to determine the amount of tax.
Line 8 Income Percentage
Divide the amount of Qualifying Taxable Income by the Virginia Taxable Income. Round the number to one decimal place. The income percentage cannot exceed 100%.
Line 9 Virginia Ratio
Multiply the amount of Virginia income tax by the income percentage.
Line 10 Credit
Enter the lesser of qualifying tax liability or Virginia ratio. Enter the total credit claimed on Line 25 of Form 760.
If claiming more than one credit, continue to Line 11 of Schedule OSC and enter the total of all credits for taxes paid to other states on Line 25 of Form 760.
Note: The sum of all nonrefundable credits claimed cannot exceed your tax liability as shown on Line 19 of Form 760. Nonrefundable credits include the Tax Credit for Low-Income Individuals and Credit for Tax Paid to Another State.