Tax Type
Individual Income Tax
Description
Documentation sufficient all mortgage expenses were accounted for separately.
Topic
Computation of Income
Domicile
Filing Status
Records/Returns/Payments
Date Issued
03-31-2010
March 31, 2010
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will reply to your letter in which you seek correction of the individual income tax assessment issued to ***** (the "Taxpayer") for the taxable year ended December 31, 2006. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer, a resident of Virginia married to a nonresident of Virginia, filed a joint federal individual income tax return and a separate resident individual income tax return for the 2006 taxable year claiming itemized deductions. The Taxpayer's spouse, an active duty member of the armed forces domiciled outside Virginia, did not file a Virginia return as he had no income from Virginia sources.
Under review, the Department adjusted the Taxpayer's allocation of itemized deductions proportionally according to income when the Taxpayer failed to adequately account separately for the itemized deductions claimed. The Department issued an assessment for additional tax and interest.
The Taxpayer paid the assessment but has filed an appeal, asserting that she separately paid all of the expenses for which itemized deductions were claimed. Accordingly, the Taxpayer requests a refund for the overpayment of tax.
DETERMINATION
Virginia Code § 58.1-326 states, "if husband or wife is a resident and the other is a nonresident, separate taxes shall be determined on their separate Virginia taxable incomes on such single or separate forms as may be required by the Department, unless both elect to determine their joint Virginia taxable income as if both were residents." (Emphasis added.)
When a resident/nonresident married couple does not elect to determine their Virginia taxable income as if both were residents, Title 23 of the Virginia Administrative Code (VAC) 10-110-190 B provides:
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- In the case of a married couple, one of whom is a nonresident of Virginia filing separately, each spouse must account separately for items of income deductions, and exemptions. Where such items cannot be accounted for separately, deductions and personal exemptions must be proportionally allocated between each spouse based upon income attributable to each. (Emphasis added.)
A review of the bank statements provided by the Taxpayer confirms that the couple's wages were deposited into separate bank accounts. The Taxpayer's income was deposited into a joint bank account. All of the mortgage expenses claimed as itemized deductions on the joint federal return and claimed on the Taxpayer's separate Virginia return were paid solely from this bank account. I find that the documentation provided is sufficient to show that all of the mortgage expenses were accounted for separately.
Based on the foregoing, the Taxpayer correctly allocated the itemized deductions on her 2006 Virginia individual income tax return. Accordingly, the assessment has been abated and a refund with applicable interest will be issued shortly.
The Code of Virginia and regulation sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department of Taxation's web site. If you have any questions about this determination, please contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-3330853334.E
Rulings of the Tax Commissioner