Tax Type
Individual Income Tax
Description
itemized deductions and personal exemptions; One spouse is a nonresident.
Topic
Federal Conformity
Filing Status
Taxpayers' Remedies
Date Issued
09-29-2011
September 29, 2011
Dear *****:
This is in response to your inquiry regarding the Department of Taxation's (the "Department") policy regarding a husband and wife who file separate Virginia income tax returns. Specifically, you ask whether the Department requires a nonresident spouse to allocate itemized deductions based on all income or on federal adjusted gross income.
When one spouse is a nonresident, Virginia law (Va. Code § 58.1-326) provides that the Department is to determine, how the resident spouse is to compute Virginia taxable income. The Department has set forth is requirements in its regulations and forms. Virginia Regulation 23 VAC 10-110-190 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 the income attributable to each.
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- The Virginia Individual Income Tax Instructions specify that:
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- If a joint federal return was filed and you are filing separate returns in Virginia (Filing Status 3) itemized deductions that cannot be accounted for separately must be allocated proportionately between spouses based on each spouse's share of the income (e.g., federal adjusted gross income).
Recently, however, you point out that you believe that some auditors have required that itemized deductions be proportionally allocated based on all income of each spouse, not his or her federal adjusted gross income. If any of your clients have received an assessment based upon this incorrect interpretation of the Department's policy, they should send a letter to the Department at the following address: Virginia Department of Taxation, Office of Customer Services, P.O. Box 1115, Richmond, VA 23218-1115. Incorrect assessments will be abated and any taxpayer who has already paid such an assessment may apply for a refund at the same address.
I appreciate you bringing this to my attention and if you have any further questions, you may direct them to the above address.
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- Sincerely,
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Craig M. Burns
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- Tax Commissioner
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Rulings of the Tax Commissioner