Tax Type
Individual Income Tax
Description
Credit for the income tax paid to Connecticut.
Topic
Credits
Taxable Income
Date Issued
07-27-2004
July 27, 2004
Re: Request for Ruling: Individual Income Tax
Dear ***********:
This will reply to your letter in which you request a ruling on the credit for income tax paid to another state.
FACTS
An individual (the "Taxpayer") is domiciled in Connecticut but is also considered an actual resident of Virginia because he resides more than 183 days in the Commonwealth. The Taxpayer, who works in the Commonwealth, travels outside of Virginia 15 to 20 days per year for business purposes. Connecticut allows the Taxpayer a credit for income tax paid to Virginia for the days that the Taxpayer is present in Virginia, but does not allow a credit for the income tax paid to Virginia on the days that the Taxpayer travels outside the Commonwealth.
You request a ruling that Virginia will allow a credit for the income tax paid to Connecticut for the income earned on days the Taxpayer travels outside Virginia.
DETERMINATION
Virginia Code § 58.1-332(A) allows Virginia residents a credit on their Virginia income tax return for income taxes paid to another state provided the income is either earned or business income.
Connecticut allows residents and part-year residents a credit against Connecticut income taxes for income tax imposed by other states, their political subdivisions, or the District of Columbia. The credit may not exceed the income tax paid to the other taxing jurisdiction. In the case of a Connecticut resident, the credit is limited to the proportion of the tax resulting from the resident's Connecticut adjusted gross income derived from or connected with sources in the other jurisdiction.
Because of the length of time spent in Virginia, the Taxpayer is subject to tax as an actual resident of Virginia. At the same time, he maintains his Connecticut domicile and, therefore, is subject to Connecticut's income tax on income from sources within another state.
Connecticut law does not permit the Taxpayer to claim a credit on his individual income tax return for taxes paid to Virginia attributable to periods when he works outside of Virginia. Conversely, the Virginia statute does not prohibit the credit. Accordingly, in the situation presented, the Department will allow the Taxpayer to claim a credit for the income tax paid to Connecticut for income earned during periods when the Taxpayer works outside Virginia. The credit may not exceed the income tax paid to Connecticut for the relevant period when the Taxpayer works outside both Virginia and Connecticut, and may not exceed the Virginia income tax attributable to that same period.
This ruling is based on the facts presented as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections cited and other reference documents are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have any further questions or desire additional information, please contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/50378B
Rulings of the Tax Commissioner