February 4, 2026
Re: § 58.1-1821 Application: Individual Income Tax
Dear *****:
This will respond to your letter in which you seek correction of the individual income tax assessment issued to you (the “Taxpayer”) for the taxable year ended December 31, 2020.
FACTS
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 2020 taxable year. A review of the Department’s records showed that the Taxpayer had not filed a Virginia return. The Department requested additional information from the Taxpayer in order to determine if her income was taxable in Virginia. When a response was not received, the Department issued an assessment. The Taxpayer filed an application for correction, contending she was a resident of ***** (State A) until she moved to Virginia in October 2020 and that all of her income was subject to tax in State A.
DETERMINATION
Residency
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 that person and the place to which that person intends to return even though they may be residing elsewhere. An actual resident of Virginia means a person who, for an aggregate of more than 183 days of the taxable year, maintained their place of abode within Virginia. A Virginia domiciliary resident continues to be subject to Virginia taxation even if they work in another state or country. 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 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. See Cooper’s Adm’r v. Commonwealth, 121 Va. 338, 347 (1917). The burden of proof that an individual has abandoned or failed to establish domicile in Virginia rests with the individual. See Title 23 of the Virginia Administrative Code (VAC) 10-110-30 B 3.
The determination of whether a change of domicile has occurred is highly dependent on the facts and circumstances of the individual case, and no single factor is dispositive. Factors to be considered include, but are not limited to, the following:
sites of real and tangible property, location of savings and checking accounts, motor vehicle registration and licensing, motor vehicle operator’s license, voter registration, membership in clubs and civic groups, place of business, profession or employment, charitable contributions, location of schools attended by children, length of time of residence, place of birth and marriage, residence of family, reason for abandoning or acquiring domicile, and, in the case of a minor or married person, domicile of parents, husband, or wife and/or children. Id.
In this case, the Taxpayer was a domiciliary resident of State A before moving to Virginia in 2020. She purchased a Virginia residence and obtained a Virginia driver’s license in August 2020. According to the Taxpayer, however, she continued to live and work in State A until September 28, 2020, at which time she rented a moving van and began moving her belongings into her Virginia residence. She completed the move on October 2, 2020.
As we consider the fact that the Taxpayer obtained a Virginia driver’s license, it should be understood that 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 they retain 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 fact that an individual has a Virginia driver’s license is one factor to consider, among other possible factors, in any given domicile case. Nonresidents are not permitted to hold Virginia driver’s licenses. See Virginia Code § 46.2-323.1. They are, however, permitted to continue to use their licenses from their home states or countries. See Virginia Code § 46.2-307. For the purposes of Title 46.2 of the Code of Virginia, “nonresident” is generally defined as every person who is not domiciled in the Commonwealth. See Virginia Code § 46.2-100. Thus, in general, an individual must be a domiciliary resident of Virginia in order to hold a Virginia driver’s license.
That said, acquiring domicile in a new location requires both intent and personal presence. See Cooper’s Adm’r v. Commonwealth, 121 Va. 338, 347, in which the Virginia Supreme Court observed that neither physical presence alone nor expressed intention alone are sufficient to create a legal domicile for taxation purposes. The Department has determined that individuals cannot establish a domicile despite having some connections if they have not established a physical presence in the jurisdiction and the concurrent intention to remain there permanently or indefinitely. See P.D. 13-97 (6/11/2013), P.D. 15-4 (1/8/2015), and P.D. 23-110 (10/19/2023).
The Taxpayer’s acquisition of a Virginia driver’s license and residence in August 2020 indicates an intent to establish domicile in Virginia. The Taxpayer, however, did not live in the Virginia residence or abandon her State A residence until October 2020. Thus, while the Taxpayer may have had the requisite intent to change domiciles in August 2020, she did not establish her Virginia domiciliary residency until October 2020.
Part-Year Residency
Virginia Code § 58.1-303 provides that any individual who becomes a resident of Virginia during a taxable year shall be taxable as a Virginia resident for only that portion of the taxable year during which that person was a resident of the Commonwealth. Title 23 of VAC 10-110-40 further explains that the Virginia taxable income of a part-year resident shall be computed by determining income, deductions, subtractions, additions, and modifications attributable to the period of residence in Virginia. As such, any individual who is a part-year resident of Virginia during a taxable year must attribute their income between their periods of residence in and outside of Virginia on a schedule of income filed with their return (Form 760PY).
With her application for correction, the Taxpayer submitted a 2020 Virginia part-year individual income tax return claiming a Virginia residency start date of October 1, 2020. However, she did not provide a schedule of income allocating her income between her periods of State A and Virginia residency.
Credit for Taxes Paid to Another State
Generally
Virginia Code § 58.1-332 A allows Virginia residents a credit against their income tax liability when they pay income tax to another state on earned or business income, or any gain from the sale of a capital asset. The intent of the credit is to grant Virginia residents relief in situations when they are taxed by both Virginia and another state on these types of income.
In most circumstances, the credit for income tax paid to another state by a Virginia resident is limited to the lesser of: (1) the amount of tax actually paid to the other state; or (2) the amount of Virginia income tax actually imposed on the taxpayer on the income derived in the other state. 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. See P.D. 97-301 (7/7/1997).
Part-year Residency
Notwithstanding the provisions of Virginia Code § 58.1-332, part-year residents are prohibited from claiming any credit against their Virginia tax liability for tax paid to any other state or jurisdiction of residence or domicile for that portion of the taxable year during which they were a resident of such other state or jurisdiction. See Virginia Code § 58.1-303 and P.D. 13-28 (3/5/2013).
As a result of this part-year residency rule, the Taxpayer could not claim credit for income tax paid to State A on any income she received while she was solely a resident of State A in 2020. The Taxpayer would have been able to claim a credit for tax paid to State A on income received during the period she was a resident of Virginia, provided the income was from State A sources, to the extent permitted by Virginia Code § 58.1-332. See P.D. 18-36 (3/26/2018) and 24-112 (11/14/2024). The Virginia part-year return submitted with the Taxpayer’s application, however, claimed a credit for tax paid to State A for the full 2020 taxable year.
CONCLUSION
The Department acknowledges that a determination of a change in domicile is evidenced by a process in which no single factor is dispositive. After carefully considering the information presented, the Department finds that the Taxpayer was taxable as a part-year Virginia resident beginning on October 1, 2020, on any income received during her period of Virginia residence. The Taxpayer, however, may be able to claim a credit for a portion of the income tax she paid to State A.
The assessment at issue was made based on residency for the entire year. Because she was a part-year resident, the Taxpayer should file a complete 2020 Virginia part-year resident income tax return, including the required schedule of income, and claim credit for income tax paid to State A, to the extent permitted by Virginia Code § 58.1-322. The return should be submitted within 30 days from the date of this letter to: Virginia Department of Taxation, Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, P.O. Box 27203, Richmond, Virginia 23261-7203, Attention: *****. Upon receipt, the return will be reviewed and the assessment will be adjusted, as appropriate. If the return is not received within the allotted time, the assessment will be adjusted based on the available information.
The Code of Virginia sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
Kristin L. Collins
Tax Commissioner
Commonwealth of Virginia
AR 5094.Q