Virginia Additions to Income
The starting point for computing Virginia taxable income is federal adjusted gross income. Certain items of income that are either not taxable for federal purposes or are not reported in federal adjusted gross income are taxable on the Virginia return. These items, which are listed below, must be reported as additions to federal adjusted gross income on the Virginia return.
- Interest on Obligations of Other States
- Fixed Date Conformity Additions
- Other Additions
Federal law generally exempts interest on state and local government bonds and securities from income tax. Since Virginia law exempts only income from Virginia state and local obligations, an addition is required to bring interest income from obligations of other states into Virginia taxable income. The amount to be added back on the Virginia return is the income less related expenses.
If you claimed a federal depreciation deduction and one or more of the depreciable assets received the special 30% or 50% bonus depreciation deduction under IRC § 168(k) in any taxable year from 2001 through 2016, or the bonus depreciation under IRC §§ 168(l), 168(m), 1400L, or 1400N, then depreciation must be recomputed for Virginia purposes as if such assets did not receive such bonus depreciation. If your total 2016 Virginia depreciation calculation is less than your 2016 federal depreciation calculation, then the difference must be recognized as an addition.
Other Fixed Date Conformity Additions
12 Lump-sum distribution income - If you received a lump-sum distribution from a qualified retirement plan and used the 20% capital gain election, the ten-year averaging option, or both on federal Form 4972, complete the table below:
Enter the total amount of distribution subject to federal tax.
(ordinary income and capital gain) 1. _______________
Enter the total federal minimum distribution allowance,
federal death benefit exclusion and federal estate
tax exclusion. 2. _______________
Subtract Line 2 from Line 1. Enter this amount
on Line 2b or 2c of your Virginia Schedule ADJ. 3. _______________
14 Income from Dealer Disposition of Property - Enter the amount that would be reported under the installment method from certain dispositions of property. If, in a prior year, the taxpayer was allowed a subtraction for certain income from dealer dispositions of property made on or after January 1, 2009, in the years following the year of disposition, the taxpayer is required to add back the amount that would have been reported under the installment method. Each disposition must be tracked separately for purposes of this adjustment.
16 Telework Expenses - Individuals who claim the Virginia Telework Expenses Tax Credit are not allowed to exclude those expenses from Virginia Income. To the extent excluded from federal adjusted gross income, any expenses incurred by a taxpayer in connection with the Telework Expenses Tax Credit must be added to the Virginia return.
17 First-Time Home Buyer Savings Accounts - To the extent excluded from federal adjusted gross income, an account holder must add any loss attributable to his or her first-time home buyer savings account that was deducted as a capital loss for federal income tax purposes. For more information, see the First-Time Home Buyer Savings Account Guidelines, available in the Laws, Rules & Decisions section of the Department’s website.
18 Food Crop Donation - To the extent a credit is allowed for growing food crops in the Commonwealth and donating such crops to a nonprofit food bank, an addition to the taxpayer’s federal adjusted gross income is required for any amount claimed by the taxpayer as a federal income tax deduction for such donation.