Tax Type
Individual Income Tax
Description
One spouse is a domiciliary resident of a different state
Topic
Returns/Payments/Records
Taxable Income
Date Issued
03-20-2003
March 20, 2003
Re: Request for Ruling: Individual Income Tax
Dear *********************:
This will reply to your letter in which you request clarification of a ruling regarding the allocation of exemptions and deductions between spouses domiciled in different states. I apologize for the delay in the Department's response.
FACTS
The Taxpayer is a domiciliary resident of Virginia. The Taxpayer's spouse is a domiciliary resident of State A, a state that does not assess an individual income tax. The Taxpayers filed a joint federal individual income tax return, claiming their two children as dependents. The Taxpayer will file a separate return in Virginia. The spouse's income is not from Virginia sources and a Virginia nonresident individual income tax return will not be filed. You request guidance with respect to determining the number of dependent exemptions the Taxpayer may claim.
RULING
Va. Code § 58.1-322(D) permits Virginia residents to deduct $800 from federal adjusted gross income (FAGI) for each personal exemption allowed on their federal income tax returns.
In a case where a joint federal income tax return was filed and each spouse is a domiciliary or actual resident of a different state, the couple will not file a joint or combined Virginia individual income tax return. Therefore, income tax deductions and personal exemptions must be accounted for separately by each spouse. Title 23 of the Virginia Administrative Code ("VAC") 10-110-190(B), provides that if the couple is unable to separately account for these deductions and exemptions, they must be allocated proportionally between each spouse based on income attributable to each.
See also Public Document ("P.D.") 99-82 (4/21/99). The fact that allocation of the dependent exemptions may result in one or more exemptions not being claimed on any state's tax return does not affect this allocation.
It is important to note that whenever possible, determination of which spouse may claim a child as a dependent on a separate Virginia individual income tax return should be determined in accordance with the dependency tests developed by the Internal Revenue Service ("IRS") for this purpose. In addition, the proportional allocation only applies to dependent exemptions. Va. Code § 58.1-324(C)(5) specifies that personal exemptions for the taxpayer and spouse or any additional exemption allowed on account of age or blindness must be allocated to the spouse to whom they relate.
As an example, H and W are a married couple with two children. W is a resident of Virginia and H is a resident of State X. H and W elect to file separate returns and may claim a total of 4 exemptions. Income attributable to W is $58,000 and income to H is $40,000. Nonbusiness deductions total $15,000. W will file a Virginia individual income tax return using the "separate" filing status.
In accordance with 23 VAC 10-110-190(B), the number of dependents and nonbusiness deductions claimed by W, the Virginia resident spouse, would be proportional to her share of income. Basing the computation on the example in 23 VAC 10-110-190(B), W's share of income is 59% [58,000/98,000 = .59]. Therefore, W may claim one of the couple's two children as a dependent [59% X 2 = 1.18, which is rounded to the nearest whole number, 1]. Likewise, W may claim $8,850 in nonbusiness deductions [59% X 15,000 = 8,850].
The Code of Virginia sections, regulation and public document cited are available online in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have any questions concerning this ruling, please contact ************* in the Department's Office of Policy and Administration, Appeals and Rulings, at ***************.
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- Sincerely,
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- Kenneth W. Thorson
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- Tax Commissioner
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- Kenneth W. Thorson
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AR/43564E
Rulings of the Tax Commissioner