New Information released in Tax Bulletin 10-1, January 29, 2010! Federal legislation signed into law on November 11, 2009, the Military Spouses Residency Relief Act, affects Virginia income tax filing requirements for certain spouses of military personnel. Effective for taxable year 2009, spouses of military service members do not automatically become Virginia residents for purposes of income and personal property taxation in cases where the individual is present in Virginia solely to be with a spouse who is a member of the military serving in Virginia in compliance with military orders. This means that affected individuals may be eligible for refunds of income tax withheld by their employers in 2009. For details, see Tax Bulletin 09-10, the revised Form VA-4, and Frequently Asked Questions. Check back for updates, or sign up for e-Subscriptions to receive e-mail notifications of new information.
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VATAX offers new "Live Chat” service to allow taxpayers to communicate on-line in real time with the department’s Tax representatives. Taxpayers can ask general tax questions or specific questions about their accounts. Live Chat is available from 7 a.m. to 9 p.m. week days, and from 8 a.m. to 1 p.m. on Saturdays. Transcripts of on-line conversations are available to print out.
May 25-31, 2010: -- Hurricane Preparedness Equipment. During this seven-day period, purchases of items designated by the Department of Taxation as hurricane preparedness equipment, including portable generators, will be exempt from the Virginia sales tax. Portable generators must be priced at $1,000 or less, and other eligible items must be priced at $60 or less for each item.
August 6-8, 2010: -- School Supplies and Clothing. During this three-day period, purchases of certain school supplies, clothing and footwear will be exempt from the Virginia sales tax. Each eligible school supply item must be priced at $20 or less, and each eligible article of clothing and footwear must be priced at $100 or less.
October 8-11, 2010: -- Energy Star and WaterSense Qualified Products. During this four-day holiday, purchases of products meeting the Energy Star and WaterSense qualifications, such as certain energy-efficient appliances, will be exempt from the Virginia sales tax. Eligible products must be priced at $2,500 or less for each item, and be purchased for noncommercial home or personal use.
In addition, dealers may choose to absorb the sales and use tax on nonqualifying items sold during any of the holiday periods described above.
For additional information, visit our Sales Tax Holiday Information Center.
Since 1972, Virginia has conformed to federal income tax law. Whenever federal income tax law changed, the changes automatically affected Virginia income taxes, unless otherwise exempt. Beginning with the 2002 session of the Virginia General Assembly, Virginia's conformity to federal tax laws has been frozen as of a date specified by legislation enacted in each year's session. Under emergency legislation passed by the 2009 General Assembly and signed by the Governor, Virginia's fixed date of conformity has been advanced to December 31, 2008. The special 30% bonus depreciation and the 5-year net operating loss carryback enacted by the Job Creation and Worker Assistance Act of 2002 are not included in this change. Please see the fixed date conformity Tax Bulletin 09-1 for further information.
For 2008 and 2009, the filing threshold for single filers and married individuals filing separate returns is $11,250. The filing threshold for married individuals filing a joint return is $22,500. Beginning in 2010, the filing thresholds will increase as follows:
|
Filing Status |
2010 & 2011 | 2012 & Beyond |
| Single, or Married, filing separately | $11,650 | $11,950 |
| Joint | $23,300 | $23,900 |
Effective for taxable year 2009, the allowable deduction for contributions made to a prepaid tuition plan or savings trust account increases to $4,000 per plan or account. No restriction applies to the deduction amount for an individual who is 70 or older.
Effective for taxable year 2009, Senate Bill 978 allows qualifying Virginia individuals and corporations to defer payment of a portion of the Virginia income tax incurred from the sale of real property provided:
In effect, the new provision allows the taxpayer to treat certain sales as installment sales, even though the entire gain is taxable for federal purposes at the time the sales takes place. Qualifying taxpayers can initially claim a deduction for a significant percentage of the gain reported as income on for federal purposes for the taxable year in which the disposition occurs. The taxpayer will then be required to report an addition for a percentage of the Virginia deduction over a period of years as illustrated in the example below.
Example: If a developer sells real estate (treated as a dealer disposition for federal purposes) for $500 that has a basis of $350, the sale would generate $150 of taxable income. If the purchase price is to be paid in equal payments over 5 years, then the taxpayer could elect to pay the Virginia tax on the sale as installments are paid. Because all of the gain would be reported in the year of sale for federal purposes, the Virginia return would be adjusted as follows:
| Return | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Federal | $150 gain | $0 | $0 | $0 | $0 |
| Virginia | $120 deduction | $30 addition | $30 addition | $30 addition | $30 addition |
The impact of these adjustments is that the taxpayer pays Virginia tax on $30 in each of the five years that $100 installments are paid. The Department of Taxation plans to publish guidelines for the subtraction before the end of 2009.
Effective January 1, 2010, House Bill 1938 (Chapter 15) and Senate Bill 845 (Chapter 496) increase the maximum amount of the Livable Home Tax Credit. The amount of the credit will be $2,000 for a new residence designed to improve accessibility, or 50% of the costs for retrofitting an existing residence, not to exceed $2,000. The previous maximum credit was $1,000.
The amount of Land Preservation Credits that may be claimed on income tax returns has been reduced from $100,000 per taxpayer to $50,000 per taxpayer effective for credits claimed for taxable years beginning on and after January 1, 2009, but before January 1, 2011. The carryover period for unused credits has been extended by two years for filers affected by the limitation. The reduction in the amount of credit that can be claimed on the return does not reduce the amount of credit that may be earned or held by the taxpayer. For details on the credit, see the LPC Application and Transfer Procedures (PDF 30Kb).
Effective for taxable year 2009, the Neighborhood Assistance Act Credit provisions for qualifying professional services have been expanded to include the value of services donated by veterinarians.
Last Updated 2/9/2010 11:29
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