Tax Type
Individual Income Tax
Description
Subsidy payments; Conformity to FAGI
Topic
Taxable Income
Date Issued
08-04-2000
August 4, 2000
Dear ****
This will reply to your letter in which your request a ruling on whether subsidy payments under $5,000 to federal employees under the (the "Program") are subject to Virginia income taxation.
FACTS
The Program, created under Public Law 106-58, Section 643, is a dependent care assistance program under 129 of the Internal Revenue Code ("IRC"). Pursuant to 129, payments up to $5,000 to employees by their employer for dependent care assistance provided to such an employee is excluded from federal adjusted gross income.
RULING
Virginia's conformity to federal law is set forth in Code of Virginia §58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meaning as used in the IRC ("IRC"). Therefore, federal adjusted gross income ("FAGI"), the starting point for determining Virginia adjusted gross income ("VAGI"), is identical to that as defined by the IRC.
Based on Virginia's definition of conformity, any amounts excluded from FAGI will be similarly excluded from VAGI. As such, the payments under the Program that are not included in FAGI for federal income tax purposes will not be included in Virginia taxable income for Virginia income tax purposes. ,
I hope that the foregoing answers your question. If you have any other questions, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/29064B
Dear ****
This will reply to your letter in which your request a ruling on whether subsidy payments under $5,000 to federal employees under the (the "Program") are subject to Virginia income taxation.
FACTS
The Program, created under Public Law 106-58, Section 643, is a dependent care assistance program under 129 of the Internal Revenue Code ("IRC"). Pursuant to 129, payments up to $5,000 to employees by their employer for dependent care assistance provided to such an employee is excluded from federal adjusted gross income.
RULING
Virginia's conformity to federal law is set forth in Code of Virginia §58.1-301, which provides that the terms used in the Virginia income tax statutes will have the same meaning as used in the IRC ("IRC"). Therefore, federal adjusted gross income ("FAGI"), the starting point for determining Virginia adjusted gross income ("VAGI"), is identical to that as defined by the IRC.
Based on Virginia's definition of conformity, any amounts excluded from FAGI will be similarly excluded from VAGI. As such, the payments under the Program that are not included in FAGI for federal income tax purposes will not be included in Virginia taxable income for Virginia income tax purposes. ,
I hope that the foregoing answers your question. If you have any other questions, you may contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/29064B
Rulings of the Tax Commissioner