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Virginia Income Tax Treatment of Same-Sex Marriage

On October 6, 2014, the United States Supreme Court denied certiorari in the Bostic case, thereby upholding the Fourth Circuit Court of Appeals decision that overturned Virginia's ban on same-sex marriage.  Accordingly, same-sex marriages that are valid under the law of any state will now be recognized for Virginia income tax purposes.  For details, see Tax Bulletin 14-7 and the Same-Sex Marriage FAQs.

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New Cap for 2014 Qualified Equity and Subordinated Debt Investment Tax Credit

Under the amended budget bill for the 2012-2014 biennium (2014 House Bill 5001) and the budget bill for the 2014-2016 biennium (2014 House Bill 5002), the Qualified Equity and Subordinated Debt Investment Tax Credit cap will increase to $5 million for taxable year 2014.  For taxable years after 2014, the tax credit cap will remain at the statutory cap of $5 million, unless the General Assembly takes future action to change it.  For complete information, see Tax Bulletin 14-5.

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2013 Cap for Land Preservation Credit Announced - Updated

Previously, it was announced that the indexed tax credit cap for the Land Preservation Tax Credit for calendar year 2013 was $113,909,000.  However, legislation passed by the 2013 General Assembly (House Bill 1398) removed the credit's adjustment for inflation.  Therefore, the cap for calendar year 2013 and years to come has been reduced to $100 million.  Please see Tax Bulletin 13-6 for more information.

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Income Tax Changes for 2014

Virginia College Savings PlanSM  (Virginia529SM) Contributions
Beginning with taxable year 2014, individuals may contribute all or part of their income tax refunds to one or more Virginia529SM accounts by completing Schedule VAC. Virginia529SM is a college savings plan that offers flexible, affordable, tax-advantaged savings for qualified higher education expenses. Programs include Virginia529 prePAIDSM, Virginia529 inVESTSM, CollegeAmerica®, and CollegeWealth®.  For information on establishing accounts, visit Virginia529.com. To make a contribution, see the instructions for the Schedule VAC.

First-Time Home Buyer Savings Accounts
Individuals may designate an account with a financial institution as a first-time home buyer savings account. Distributions from the account must be used solely for paying or reimbursing the down payment and allowable closing costs for the purchase of a single-family residence in Virginia.  An individual may subtract any income attributable to the account that was taxed as interest, capital gains, or other income for federal income tax purposes to the extent it was included in the individual’s federal adjusted gross income. If funds are withdrawn from the account for purposes other than to pay eligible costs, any subtractions previously taken would be recaptured. For more information, go to First-Time Buyer Savings Account Guidelines

Education Improvement Scholarships Tax Credits
For taxable years beginning on or after January 1, 2014, an income tax credit may be claimed for monetary or marketable securities donations made to scholarship foundations included on an approved list published by the Virginia Department of Education. The credit is equal to 65 percent of the monetary or marketable securities donation made to the scholarship foundation. Tax credits will be awarded to taxpayers on a first-come, first-served basis in accordance with procedures established by the Virginia Department of Education. For information on how to qualify, call the Department of Education at (804) 225-3375 or go to Education Improvement Scholarships Tax Credit Program.

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Advancement of Virginia's Conformity to Federal EITC

Under emergency legislation (House Bill 1085; Chapter 1 of the 2014 Acts of Assembly and Senate Bill 288, Chapter 2 of the 2014 Acts of Assembly) passed by the 2014 General Assembly and signed by Governor McAuliffe, Virginia's conformity to the federal enhanced Earned Income Tax Credit (“EITC”) was extended to taxable years ending before January 1, 2018.

The General Assembly did not advance Virginia’s date of conformity to the Internal Revenue Code.  Therefore, Virginia’s date of conformity remains January 2, 2013.  However, Congress did not enact any federal tax legislation that would impact Virginia after January 2, 2013.  Taxpayers may still use their federal adjusted gross income (or federal taxable income, for corporations) as the starting point for calculating their Virginia taxable income for Taxable Year 2013, except as provided in Tax Bulletin 13-3 (Public Document 13-19 (2/15/2013)) and Tax Bulletin 13-13 (Public Document 13-209 (11/08/2013)).

Tax Bulletin 14-1 provides taxpayers with directions on how to reconcile this legislation and Virginia’s January 2, 2013 date of conformity to the Internal Revenue Code with their 2013 Virginia income tax returns.

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Last Updated 12/12/2014 15:43

 

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