Document Number
Tax Type
Individual Income Tax
Residency: Domicile - Different States; Credit: Tax Paid to Another State - California
Date Issued

March 18, 2020

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, 2015. I apologize for the delay in responding to your appeal.


The Department received information from the Internal Revenue Service (IRS) indicating that the Taxpayer may have been required to file a Virginia income tax return for the 2015 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a return. The Department requested additional information from the Taxpayer in order to determine if her income was taxable by Virginia. Upon review of the information provided, the Department determined the Taxpayer was a domiciliary resident of Virginia and issued an assessment. The Taxpayer appeals, contending she was a resident of California.



Two classes of residents, a domiciliary resident and an actual resident, are set forth in Virginia Code § 58.1-302. The domiciliary residence of a person means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may reside elsewhere. For a person to change domiciliary residency to another state or country, that person must intend to abandon his Virginia domicile with no intention of returning to Virginia. Concurrently, that person must acquire a new domicile where that person is physically present with the intention to remain there permanently or indefinitely. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia. A Virginia domiciliary resident, therefore, working in other parts of the country or in another country who has not abandoned his Virginia residency continues to be subject to Virginia taxation. Additionally, a person who is not a domiciliary resident of Virginia, but who stays in Virginia for an aggregate of more than 183 days is also subject to Virginia taxation.

In order to change from one legal domicile to another legal domicile, there must be (1) actual abandonment of the old domicile, coupled with an intent not to return to it, and (2) an acquisition of a new domicile at another place, which must be formed by personal presence and an intent to remain there permanently or indefinitely. The burden of proving that the domicile has been changed lies with the person alleging the change.

In determining domicile, consideration may be given to the individual’s expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, profession or employment, income sources, residence of spouse, marital status, situs of real or tangible property, motor vehicle registration and licensing, and such other factors as may be reasonably deemed necessary to determine the person’s domicile. A person’s true intention must be determined with reference to all the facts and circumstances of the particular case. A simple declaration is not sufficient to establish residency.

The Department determines a taxpayer’s intent through the information provided. A taxpayer has the burden of proving that he or she has abandoned his or her Virginia domicile. If the information is inadequate to meet this burden, the Department must conclude that he or she intended to remain indefinitely in Virginia.

The Taxpayer moved to California for a temporary employment opportunity in August 2014. When her employment contract was extended, she began leasing a personal residence there. The Taxpayer lived and worked in California throughout 2015. The Taxpayer also filed a California resident individual income tax return for the 2015 taxable year. It appears the Taxpayer did not return to Virginia until sometime in 2016.

The Taxpayer also maintained significant connections with Virginia. The Taxpayer purchased real property in Virginia in October 2015 and began residing there when she returned. She also maintained a Virginia voter’s registration, motor vehicle registration and driver’s license. 

Virginia Code § 46.2-323.1 states, “No driver’s license ... shall be issued to any person who is not a Virginia resident.”  In fact, this section states that every person applying for a driver’s license must execute and furnish to the Commissioner of the Department of Motor Vehicles (DMV) a statement that certifies that the applicant is a Virginia resident. The Department has found that an individual may successfully establish a domicile outside Virginia even if he retains a Virginia driver’s license. See Public Document (P.D.) 00-151 (8/18/2000). However, obtaining or renewing a Virginia driver’s license is considered to be a strong indicator of intent to retain domiciliary residency in Virginia. See P.D. 02-149 (12/9/2002).

The Taxpayer moved to California for temporary employment. Temporary job assignments, regardless of their duration, do not demonstrate an intent to acquire a permanent residence outside Virginia. See P.D. 18-54 (4/19/2018). As indicated above, in order for the Taxpayer to have established domicile in California, there must have been personal presence with the intent to remain there permanently or indefinitely. Although the Taxpayer was physically present in California in 2015, she did not obtain the kinds of permanent connections to California that would evidence an intent to establish domicile there. Such connections may include, but not be limited to, a driver’s license, motor vehicle registration and voter’s registration. Even if she had established domicile in California, retaining such connections with Virginia indicates she did not intend to abandon her Virginia domicile. Based on the evidence provided, I find that the Taxpayer failed to prove she either established domicile in California or abandoned her domicile in Virginia and remained taxable as a domiciliary resident of Virginia. 

Credit for Taxes Paid to another State 

Virginia Code §58.1-332 A allows Virginia residents a credit on their Virginia return for income taxes paid to another state provided the income is either earned or business income or gain from the sale of a capital asset. Further, this code section states: 

The credit… shall not be granted to a resident individual when the laws of another state, under which the income in question is subject to tax assessment, provide a credit to such resident individual substantially similar to that granted by… this section.” 

As a general rule, Virginia law does not allow a resident to claim a credit on her Virginia return for taxes paid to California because California law allows a Virginia resident to claim the credit on her California nonresident return. (Similarly, a California resident would claim the credit for tax paid to California on her Virginia nonresident return.) 

In this particular case, the Taxpayer was considered a resident of both states. Because of the length of time spent in California and the continuity of employment, she was subject to tax as an actual resident of California. At the same time, however, she maintained her Virginia domicile. At issue here is which state should allow the out-of-state credit when a taxpayer possesses dual residency. 

The Department has previously issued a ruling that is relevant to the case at hand. See P.D. 94-355 (11/23/94). In this ruling, the Department determined that when a reciprocity state does not allow a credit on a nonresident return, the taxpayer would claim the credit on their individual Virginia returns. 

In the instant case, California law does not permit the Taxpayer to claim a credit for taxes paid to Virginia because of her actual residency status. Conversely, Virginia law does not prohibit the credit. The credit, therefore, would be allowed on the Taxpayer’s Virginia return. 

Virginia law does not necessarily allow a taxpayer to claim a credit for the total amount of tax paid to another state. Rather, the credit is limited to the lesser of the amount of tax actually paid to the other state or the amount of Virginia income tax actually imposed on the taxpayer on the income earned or derived in the other state. See P.D. 97-301 (7/7/1997). The limitation is computed by multiplying the individual’s Virginia tax liability by a fraction, the numerator of which is the income upon which the other state’s tax is imposed, and the denominator of which is Virginia taxable income. As an actual resident of California and a domiciliary resident of Virginia, the Taxpayer would be allowed a credit against her Virginia income tax liability for income tax paid to California to the extent permitted by Virginia Code § 58.1-332.


After carefully considering all of the evidence presented, I find that the Taxpayer has failed to prove she either established domicile in California or abandoned her domicile in Virginia. Therefore, she remained taxable as a domiciliary resident of Virginia. However, because the Taxpayer was an actual resident of California as well as a domiciliary resident of Virginia, she would be allowed a credit against her Virginia income tax liability for income tax paid to California to the extent permitted by Virginia Code § 58.1-332. 

The assessment at issue was made based on the best information available to the Department pursuant to Virginia Code § 58.1-111. Because the Taxpayer was required to file a Virginia income tax return, the Department was correct in issuing the assessment. The Taxpayer, however, may have information that better represents her Virginia income tax liability for the taxable year at issue. As explained above, the Taxpayer would be entitled to a credit for income tax paid to California to the extent her income was from California sources. The return should be submitted within 30 days of the date of this letter to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, P.O. Box 27203, Richmond Virginia 23261-7203, Attention: *****. A schedule should be attached to the return indicating how much income was not from Virginia sources. Only that amount of income would be considered qualifying taxable income for purposes of computing the out-of-state credit. Once the return is received, it will be processed and the assessment adjusted accordingly. If the return is not filed within the allotted time, the Department’s assessment will be considered to be correct as issued and collection action will resume.

The Code of Virginia sections and public documents cited are available on-line at in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.



Craig M. Burns
Tax Commissioner


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Last Updated 07/28/2020 12:12