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Deductions

Standard Deduction

If you claimed the standard deduction on your federal income tax return, you must also claim the standard deduction on your Virginia return. The Virginia standard deduction amounts are:

Filing Status Description Standard Deduction
1 All Returns - Single $3,000
2 All Returns - Married, Filing Jointly $6,000
3 Form 760 (resident) - Married, filing separate returns $3,000
3 Form 760PY (part-year resident) - Married, filing separate returns $3,000*
3 Form 763 (nonresident) - Married, spouse has no income from any source $3,000
4 Form 760 (resident) - N/A  
4 Form 760-PY (part-year resident) - Married, filing separately on a combined return $6,000*
4 Form 763 (nonresident) - Married, filing separate returns $3,000

* Part-year residents must prorate the standard deduction based on their period of residency. For details, see the instructions for Form 760-PY.

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Virginia Itemized Deductions

If you claim itemized deductions on your federal income tax return, you must also itemize your deductions on your Virginia return. This requirement applies even if using the standard deduction would result in a greater tax benefit on your Virginia return.

You can generally claim the same deductions for Virginia purposes that you claimed on your federal Schedule A, except for the deduction for state and local income taxes. The computation is provided in the appropriate line instructions for each Virginia income tax return. You do not need to file a copy of your federal Schedule A or complete a separate Virginia Schedule A.

Before computing the itemized deductions on your return, answer the following questions:

Do you have an addition or subtraction for Fixed Date Conformity (FDC)?

  • YES       Complete the FDC Worksheet and Itemized Deduction Worksheet in the instruction booklet.
  • NO         Are your itemized deductions on your federal return limited?
  • YES          Complete the Itemized Deduction Worksheet in the Instruction booklet.

  • NO            Enter the total from federal Schedule A on Line 10a of Form 760, Line 11 of Form 760PY or Line 10 of Form 763.

Part-Year Residents

Part-year residents should complete the computation using only the deductions for which the underlying expense payments were made during their period of residency in Virginia.

Married Couples Filing Separate Returns

If you use Filing Status 3 on Form 760 or Form 760PY, or Filing Status 4 on Form 763, and you filed a joint federal income tax return, you must compute your Virginia itemized deductions as if you had filed a separate federal return. As a general rule, the spouse claiming a deduction on the federal return must be able to prove that he or she actually paid the underlying expense. In cases where the reporting spouse cannot separately account for underlying expenses, the itemized deductions may be allocated between the spouses based on percentage of income. For example, if the federal adjusted gross income (FAGI) attributable to the reporting spouse represents 25% of the couple's joint FAGI, then the reporting spouse may claim 25% of the total itemized deductions from Schedule A.

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Other Deductions

101 Child and Dependent Care Expenses - You may claim this deduction on your Virginia return only if you were eligible to claim a credit for child and dependent care expenses on your federal return. Enter the amount on which the federal credit for child and dependent care is based. (This is the amount on federal Form 2441 or Schedule 2 of Form 1040A that is multiplied by the decimal amount - up to $3,000 for one dependent and $6,000 for 2 or more.). DO NOT ENTER THE FEDERAL CREDIT AMOUNT.

Example

Jon and Mary have three children in day care. Both their incomes exceed the maximum federal child care expense amount of $6,000. Their actual child care expenses were $4,000. Therefore, on their federal return, their child care credit was based on $4,000 (from line 6 of Form 2441).

Based on the information from Form 2441, Jon and Mary will subtract $4,000 on their Virginia return - the expenses on which they based their credit.

Tip: The amount of employment-related expenses that may be subtracted is limited to the amount actually used in computing the federal credit for child and dependent care expenses. As a general rule, you are limited to a maximum of $3,000 for one child and $6,000 if you are claiming the expenses for two or more dependents, or the earned income of the spouse having the lowest income, whichever is less.

Caution: Filers often deduct their federal credit amount by mistake, which results in a much lower deduction. Be sure to use the qualified expense amount for your Virginia deduction.

102 Foster Care Deduction - Foster parents may claim a deduction of $1,000 for each child residing in their home under permanent foster care, as defined in the Code of Virginia, provided that they claim the foster child as a dependent on their federal and Virginia income tax returns.

103 Bone Marrow Screening Fee - Enter the amount of the fee paid for an initial screening to become a possible bone marrow donor, provided you were not reimbursed for the fee and did not claim a deduction for the fee on your federal return.

104 Virginia College Savings Plan Prepaid Tuition Contract Payments and Savings Account Contributions - If you are under age 70 on or before December 31 of the taxable year, enter the lesser of $4,000 or the amount paid during the taxable year for each prepaid tuition contract or a savings trust account entered into with the Virginia College Savings Plan (previously called the Virginia Higher Education Tuition Trust Fund). If you paid more than $4,000 per contract or account during the year, you may carry forward any undeducted amounts until the purchase price has been fully deducted. If you are age 70 or older on or before December 31 of the taxable year, you may deduct the entire amount paid to the Virginia College Savings Plan during the year.

105 Continuing Teacher Education - A licensed primary or secondary school teacher may enter a deduction equal to 20% of unreimbursed tuition costs incurred to attend continuing teacher education courses that are required as a condition of employment, provided these expenses were not deducted from federal adjusted gross income.

106 Long-Term Health Care Premiums - Enter the amount of premiums paid for long-term health care insurance, provided that they were not actually included as a deduction on Schedule A of your federal income tax return. In addition, the premiums may not have been used as the basis of the Virginia Long-Term Care Insurance Credit, although the taxpayer may be able to claim both the Credit and the Virginia deduction in the same year. For example, if an individual purchased a policy on July 1 and made payments on a monthly basis, he would claim a credit in the current taxable year for 6 months of premiums and a credit in the second year for the next six months of premiums in order to reach the allowed total of 12 months. In that case, the individual could also claim a deduction in the second year for the 6 months of premiums that were not used as a basis for the credit. See the Schedule CR instructions for more information.

107 Virginia Public School Construction Grants Program and Fund - Enter the amount of total contributions to the Virginia Public School Construction Grants Program and Fund, provided that you have not claimed a deduction for this amount on your federal income tax return.

108 Tobacco Quota Buyout - Allows a deduction from taxable income for payments received in the preceding year in accordance with the Tobacco Quota Buyout Program of the American Jobs Creation Act of 2004 to the extent that such payments are included in federal adjusted gross income.  For example, on your 2013 Virginia return you may deduct the portion of such payments received in 2012 that is included in your 2012 federal adjusted gross income; while payments received in 2013 may generate a deduction on your 2014 Virginia return.  Individuals cannot claim a deduction for a payment that has been, or will be, subtracted by a corporation unless the subtraction is shown on a Virginia Schedule VK-1 you received from an S Corporation.  If you chose to accept payment in installments, the gain from the installment received in the preceding year may be deducted. If, however, you opted to receive a single payment, 10% of the gain recognized for federal purposes in the year that the payment was received may be deducted in the following year and in each of the 9 succeeding taxable years.

109 Sales Tax Paid on Certain Energy Efficient Equipment or Appliances - Allows an income tax deduction for 20% of the sales tax paid on certain energy efficient equipment or appliances, up to $500 per year. If filing a joint return, you may deduct up to $1,000.

110 Organ and Tissue Donor Expenses - Allows a deduction for unreimbursed expenses that are paid by a living organ and tissue donor that have not been taken as a medical deduction on the taxpayer’s federal income tax return. The amount of the deduction is the lesser of $5,000 or the actual amount paid by the taxpayer. If filing a joint return, the deduction is limited to $10,000 or the actual amount paid.

111 Charitable Mileage - Enter the difference between 18 cents per mile and the charitable mileage deduction per mile allowed on federal Schedule A. If you used actual expenses for the charitable mileage deduction, and those expenses were less than 18 cents per mile, then you may use the difference between actual expenses and 18 cents per mile.

112 Bank Franchise Subchapter S Corporation - Certain shareholders of small businesses may be able to deduct the gain or add the loss of the S Corporation. Complete the worksheet below to determine the amount of your adjustment.

113 Income from Dealer Disposition of Property - Allows an adjustment for certain income from dealer dispositions of property made on or after January 1, 2009. In the year of disposition the adjustment will be a subtraction for gain attributable to installment payments to be made in future taxable years provided that (i) the gain arises from an installment sale for which federal law does not permit the dealer to elect installment reporting of income, and (ii) the dealer elects installment treatment of the income for Virginia purposes on or before the due date prescribed by law for filing the taxpayer’s income tax return. In subsequent taxable years the adjustment will be an addition for gain attributable to any payments made during the taxable year with respect to the disposition. In the years following the year of disposition, the taxpayer would be 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.

114 Prepaid Funeral, Medical, and Dental Insurance Premiums - You may be allowed a deduction of payments for (i) a prepaid funeral insurance policy that covers you or (ii) medical or dental insurance premiums for any person for whom you may claim a deduction for such premiums under federal income tax laws. To qualify for this deduction, you must be age 66 or older with earned income of at least $20,000 for the taxable year and federal adjusted gross income not in excess of $30,000 for the taxable year. The deduction is not allowed for any portion of premiums for which you have been reimbursed, have claimed a deduction for federal income tax purposes, have claimed another Virginia income tax deduction or subtraction, or have claimed a federal income tax credit or any Virginia income tax credit.

199 Other - Attach an explanation for other deductions. 

Computation of Deduction for S Corporation Subject to Bank Franchise Tax

Certain shareholders of small business corporations subject to bank franchise tax may deduct the gain or add back the loss of the S Corporation. Complete the worksheet below to determine the amount of your adjustment.

a. If your allocable share of the income or gain of the S corporation was included in
federal adjusted gross income, enter the amount here                                                     _____________________

b. If your allocable share of the losses or deductions of the S corporation was
included in federal adjusted gross income, enter the amount here.                                _____________________

c. Enter the value of any distributions paid or distributed to you by the S
corporation to the extent that such distributions were excluded from federal
adjusted gross income.                                                                                                        _____________________

d. Add Line b and Line c.                                                                                                     _____________________

e. Subtract line d from line a. This is your net deduction amount. If this amount
is negative you must enter the amount on Schedule ADJ, line 8a and fill in the box
marked “LOSS”.                                                                                                                    _____________________

 

Last Updated 11/21/2013 12:1

 

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