VIRGINIA BOND

[TAXMAN]

For my Virginia cohorts. If tp sales a Virginia muni bond and has a gain, is it taxable to Virginia? I see code 20 will let me exclude that gain but where do I put it on Virginia form in ATX? Many thanks.

[Possi]

I googled it. So, I would say no.

https://www.municipalbonds.com/tax-education/tax-exemption-from-state-income-taxes/

 

One of the advantages of municipal bonds is that they are free of state income taxes. As a general rule in most states, if the bonds are issued in a particular state, they are exempt from that state’s income taxes.

For instance, a bond issued by a municipality in New York will be exempt from New York state income tax. Since there are 50 states plus D.C. and territories such as Puerto Rico, the U.S. Virgin Islands, and Guam, it is not possible for us to go over examples involving each state. As such, we’ll go over some basic concepts and cover only certain states in this article.

First, having the benefit of not paying state income taxes on top of not having to pay federal income taxes increases the taxable-equivalent yield. The higher a state’s income tax, the greater the likelihood of in-state buyers buying their state’s bonds. Conversely, states without an income tax have to offer slightly higher yields to attract both in-state and out-of-state buyers.

[TAXMAN]

I looked at Virginia site. Code 20 excludes these from tax. I can't figure out how to get it ATX program for Virginia.

[Lee B]

Just because the interest is tax free, does that mean a capital gain is also tax free ?

[Lee B]

On 2/22/2019 at 9:54 PM, TAXMAN said:

For my Virginia cohorts. If tp sales a Virginia muni bond and has a gain, is it taxable to Virginia? 

I looked it up, capital gains from the sale of a muni bond is taxable federally and quit likely at the state level also.

[Gail in Virginia]

According to the instructions on VA,

20 Income from Virginia Obligations - Enter the amount of income from Virginia obligations that you included in your federal adjusted gross income. Income from Virginia obligations would include interest on Virginia state bonds or municipal obligations and gains from sales of those obligations that are included in your federal adjusted gross income.

Italics are mine.