VA PREPARERS - HELP ON NON-RESIDENT RETURN

[LSmith33]

Are there any VA preparers here who could help me on a non-resident return?

My clients are a married couple living in Massachusetts. The wife has income from a VA source of $3,682 with $146 withheld on the VA wages. Per the VA website instructions for Form 763, she should file a MFS VA return since both are non-residents and only one spouse has VA source income. I also read that even though they are filing a joint federal return, a separate federal return should be completed for the spouse that has the VA source income allocating all of her income to the separate federal return. On page 2 of the 763, I also allocated the VA source income.

I have done all of that and I'm confused. I assumed that she would receive all of the withholding back but the return says she has a $60 tax due. Is this right? Am I missing something? Her VA income is less than the threshold required for filing, but the return seems to be taking all of her income into consideration. I just need someone to verify all of this with me.

Thank you!

~Laura Smith

[jainen]

>>Per the VA website instructions.... Her VA income is less than the threshold required for filing, but the return seems to be taking all of her income into consideration<<

The website, http://www.tax.virginia.gov/site.cfm?alias=WhoMustFile , says "the filing threshold for a nonresident is determined by Virginia adjusted gross income computed as a resident... which includes income from all sources. The filing threshold for a nonresident cannot be based solely on income from Virginia sources."

Like most states, Virginia calculates the tax on total income and assesses whatever percentage the in state income represents. If her world wide income is more than $17000, she is in the 5.75% tax bracket. Based on $3682, she should expect a VA tax of approximately $212, which is $66 more than her withholding.

[LSmith33]

>>Per the VA website instructions.... Her VA income is less than the threshold required for filing, but the return seems to be taking all of her income into consideration<<

The website, http://www.tax.virginia.gov/site.cfm?alias=WhoMustFile , says "the filing threshold for a nonresident is determined by Virginia adjusted gross income computed as a resident... which includes income from all sources. The filing threshold for a nonresident cannot be based solely on income from Virginia sources."

Like most states, Virginia calculates the tax on total income and assesses whatever percentage the in state income represents. If her world wide income is more than $17000, she is in the 5.75% tax bracket. Based on $3682, she should expect a VA tax of approximately $212, which is $66 more than her withholding.

The tax was coming in lower due to the federal deductions she has as well. In computing the MFS federal return, she would have to itemize if her spouse itemizes, so she was entitled to some deductions. I would assume that even though they are filing a joint return, that in creating this mock separate return I would be able to use itemized deductions for her portion of state taxes paid, etc and force it as itemized?

~Laura

[Burke]

The tax was coming in lower due to the federal deductions she has as well. In computing the MFS federal return, she would have to itemize if her spouse itemizes, so she was entitled to some deductions. I would assume that even though they are filing a joint return, that in creating this mock separate return I would be able to use itemized deductions for her portion of state taxes paid, etc and force it as itemized?

~Laura

In Virginia, if you itemize on federal, you must itemize on state. So yes, you should.

[LSmith33]

In Virginia, if you itemize on federal, you must itemize on state. So yes, you should.

Thank you both for responding to my inquiry. I appreciate your input.

~Laura