Tax Type
Individual Income Tax
Description
VIRGINIA DECLARATION OF ESTIMATED INCOME TAX BY INDIVIDUALS
REGULATIONS
REGULATIONS
Topic
Reports
Date Issued
09-19-1984
see date
VIRGINIA DECLARATION OF ESTIMATED
INCOME TAX BY INDIVIDUALS
REGULATIONS
INTRODUCTION
These regulations for the Virginia. Declaration of Estimated Income Tax by Individuals are-published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions sad updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation section is numbered to reference the section of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify, these regulations, for. purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the section number 630-2-491 identifies the agency (630), the individual estimated tax (2), and the section of Title 58.1, Code of Virginia, which is interpreted (491).
W. H. Forst
State Tax Commissioner,
Virginia Department of Taxation
P. O. Box 6-L
Richmond, Virginia. 23282
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to § 38-48.6 of the Code of Virginia (recodified as § 58.1-203)
EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith.
REFERENCES: Code of Virginia §§ 58.1-321, 58.1-322, and 58.1-490
through 58.1-498 are regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on
and after January 1, 1985.
SCOPE: Applicable to all individuals subject to declaration of estimated income tax.
SUMMARY: These are initial regulations interpreting the Virginia declaration of estimated income tax by individuals, consisting of §§ 630-2-490.1 through 630-2-498. These regulations set forth the requirements and procedures for declaring and paying estimated income tax by individuals and the consequences of failing to comply. They also serve to bring together in one document the applicable statutory provisions and explanation and illustration thereof.
ADOPTION DATE: September 19, 1984.
Regulation
Section Subject Page
630-2-4.90.1 DEFINITIONS
630-2-490.2 DECLARATIONS OF ESTIMATED TAX
630-2-491 PAYMENTS OF ESTIMATED TAX
630-2-492 FAILURE BY INDIVIDUAL TO PAY ESTIMATED TAX
630-2-493 DECLARATIONS OF ESTIMATED TAX TO BE
FILED WITH COMMISSIONER OF REVENUE
OF COUNTY OR CITY
630-2-495 PAYMENT OF ESTIMATED TAX; NOTICE OF
INSTALLMENT DUE
630-2-496 WILLFUL FAILURE OR REFUSAL TO FILE
DECLARATION OF ESTIMATED TAX, OR
MAKING FALSE AND FRAUDULENT
STATEMENT, A MISDEMEANOR
430-2-497 VIRGINIA CODE § 58.1-306
APPLICABLE TO DECLARATION OF
ESTIMATED TAX
630-2-498 OATHS OR AFFIRMATIONS UNNECESSARY ON
RETURNS, DECLARATIONS AND REPORTS;
MISDEMEANOR TO SUBSCRIBE FALSE
RETURN, DECLARATION OR REPORT
§ 630-2-490.1. DEFINITIONS. -- For the purpose of these regulations and unless otherwise required by the context:
"Taxable dear" means an individual's taxable year for federal income tax purposes-.
"Taxable income" means an individual's federal adjusted gross income for the taxable year with the additions, subtractions, deductions and other modifications. and adjustments set forth in Va. Code § 58.1-322 and regulations promulgated thereunder.
"Virginia adjusted gross income" means federal adjusted gross income (FAGI) for the taxable year plus the addition set forth in Va. Code § 58.1-3228, and less the subtractions set forth in Va. Code § 58.1-322C and the additional $400 deduction for taxpayers over 65 years of age..
"Estimated tax" means the amount which an individual estimates to be the individual income tax due for the taxable year, less the amount estimated to be the sum of any credits allowable against the tax.
"Commissioner" means the State Tax Commissioner.
§ 630-2-490.2. DECLARATIONS OF ESTIMATED TAX.
A. Requirement of declaration. 1. Every resident and nonresident individual shall make a declaration of his estimated tax for every taxable year, if his Virginia adjusted gross income, other than from wages on which tax is withheld under Va. Code § 58.1-460 et seq. and Virginia Withholding. Income Tax Regulations, § 630-6-460 et seq. (the "Withholding Requirements"), can reasonably be expected to exceed $400 plus the sum of the personal exemptions to which he is entitled. In other words, a declaration is required if (i) the amount of Virginia adjusted gross income from which no tax is withheld is greater than (ii) the sum of $400 and the personal exemptions to which the taxpayer is entitled. This requirement of declaration is in effect throughout the entire taxable year.
2. A taxpayer is not required to file a declaration if
Example 1:
B. Contents of declaration. - In the declaration required under sub-section A the individual shall state:
1. The amount which he estimates as the amount of individual income tax for which he will be liable for the taxable year;
2. The amount, if any, which he estimates will be withheld from wages for the taxable year under the Withholding Requirements;
3. The excess of the amount estimated under paragraph 1 of this sub-section over the amount estimated under paragraph 2 of this subsection shall be considered the estimated tax for the taxable year to be paid by the individual as hereinafter provided; and
-4. Such other information as may be required by the Commissioner. Form 760-ES is currently in use for this purpose.
C. Joint declaration by husband and wife. - A husband and wife may file a joint declaration, in which case the liability with respect to the estimated tax shall be joint and several. A joint declaration may not be made: (i) if either the husband or the wife is a nonresident of Virginia unless both are required to file an individual income tax return, (ii) if they are separated under a decree of divorce or of separate maintenance, or (iii) if they have different taxable years. If a joint declaration is made but a joint return is not made for the taxable year, the estimated tax for such year may be treated as the estimated tax of either the husband or the wife, or may be divided between them as they mutually agree.
D. Time for filing declaration. - A declaration of estimated tax of an individual other than a farmer-or fisherperson shall be filed on or before Play 1 of the taxable year, except that if the requirements of subsection A are met for the first time:
E. Declaration of estimated tax by a farmer or fisherperson. - If at least two-thirds of a self-employed individual’s total estimated gross income for the taxable year is from farming (including oyster farming) or fishing, the declaration of estimated tax may be filed at any time on or before January 15 of the succeeding year, instead of the time other-wise prescribed. However, if the income tax return for the taxable year is filed on or before March 1 of the succeeding year and the total tax is paid at. that time, the return will be considered a timely declaration and payment of the January 15 installment under the provisions of subsection A below.
A person farming or fishing for a living whose services are legally subject to the will and control of an employer, whether paid by salary or commission, or in cash, fish or produce, is an employee and not a self-employed person. If there is no withholding the employee is subject to the same estimated tax requirements as any other employee.
F. Declaration of estimated tax of forty dollars or less. - A declaration of estimated tax of an individual having a total estimated tax for the taxable year of $40 or less may, be filed at any time on or before January 15 of the succeeding year, but the entire amount of estimated tax must be paid at the time of filing. However, if the income tax return for such taxable year is filed on or before March 1 of the succeeding year and the total tax is paid at that time, the return will be considered a timely declaration and payment of the January 15 installment under the provisions of subsection H below.
G. Amendments of declaration. - An individual may amend a declaration at any time throughout the year by increasing or decreasing the amount of installment-payment noted on the payment-voucher form accompanying the payment.
H. Return as declaration or payment. - If on or before March I of the succeeding taxable year as individual files his return for the taxable year for which the declaration is required, and pays therewith the full amount of the tax shown to be due on the return:
Filing a return on or before March 1 of the succeeding taxable year or filing a declaration or payment of the last installment on January 15 will not relieve a taxpayer of liability for additions to tax for underpayment of any of the installments of estimated tax that were due on May 1, June 15 or September 15 of the taxable year.
Example 1: Taxpayer A discovers on September 15, 1983 that his expected. Virginia adjusted gross income for calendar year 1983, other than from his salary on which his Virginia employer withholds taxes, will exceed $400 plus his personal exemptions. Taxpayer is required to file his declaration by January 15, 1984, but by filing his 1983
income tax return on or before March 1, 1984 and paying in full his tax liability shown on the return, Taxpayer is deemed to have timely filed the declaration required by Va. Regs. § 630-2-490D(3).
Example 2: Taxpayer A makes the same discovery but on September 1, 1983. He must file his declaration on or before September 15, 1983 accompanied by the first installment of estimated tax payment. His second installment would be due January 15, 1984. (See Va. Regs. § 630-2-491A.3.) However, because he files his 1983 return on February 28, 1984 accompanied by payment in full of his 1983 liability, he is deemed to have timely made the filing/payment of his second installment.
I. Fiscal. year. - This section shall apply to a taxable year other than a calendar year by substituting the corresponding fiscal year months.
J. Short taxable year. - A separate declaration must be filed where a return is required for a period of less than 12 months, unless the short period is less than four months or the requirements to file are first met after the first day of the last month in the short taxable year. In the case of a decedent, no declaration need be filed after the date of death.
For the purpose of determining whether a declaration must be filed for a short taxable period which results from a change in annual accounting period, taxable income for the short period shall be placed on an annual basis by multiplying the amount thereof by 12 and dividing the result by the number of months in the short period.
K. Declaration far individual under a disability. - The declaration of estimated tax for as individual who is unable to make a declaration by reason of any disability shall be made and filed by his guardian, committee, fiduciary or other person charged with the care of his person or property (other than a receiver in possession of only a part of his property), or by his duly authorized agent.
§ 630-2-491. PAYMENTS OF ESTIMATED TAX.
A. General. - The estimated tax relating to the filed declaration shall be paid as follows:
B. Farmers and fisherpersons. - If a self-employed farmer or fisher-person referred to in Va. Regs. § 630-2-490E makes a declaration of estimated tax after September 15 of the taxable year and on or, before the following January 15, the estimated tax shall be paid in full at the time the declaration is filed.
C. Amendments of declaration. - If any amendment of a declaration is filed, the remaining installments, if any, shall be ratably increased or decreased (as the case may be) to reflect any increase or decrease in the estimated tax by reason of such amendment. If any amendment is made after September 15 of the taxable year, any increase in the estimated tax by reason thereof shall be paid at the time of making such amendment.
Example: Taxpayer Z estimated his tax liability for taxable year 1982 to be $1,600, and timely filed his declaration and paid $400 on May 1, 1982. On June 1, 1982 he won a grocery store sweepstakes, which increased his 1982 estimated tax liability by $300 to $1,900. To absorb the estimated increase in tax liability, each of his three subsequent estimated tax installments on June 15 and September 15, 1982 and January 15, 1983 was increased to $500.
D. Application to short taxable year. - In the case of a short taxable year of an individual for which a declaration is required to be filed the estimated tax shall be paid in equal installments, one at the time of filing the declaration, one on the 15th day of the sixth month of the taxable year and another on the 15th day of the ninth month of such year unless the short taxable year closed during or prior to such sixth or math month, and one on the 15th day of the first month of the succeeding taxable year. For example, if the short taxable year is the period of 10 months from January 1, 1982 to October 31, 1982, and the declaration is required to be filed on or before May 1, 1982, the estimated tax is payable in four equal installments, one on the date of filing the declaration, and one each on June 15, September 15, and November 15, 1982. If in such case the declaration is required to be filed after May 1 but on or before June 15, the tax will be payable in three equal installments, one on the date of filing the declaration, and one each on September 15, and November 15, 1982. The provisions of Va. Regs. § 630-2-491A.5., relating to payment of estimated tax in any case in which the declaration is filed after the due date, are equally applicable to the payment of the estimated tax for short taxable years.
In the case of a decedent, no payment of estimated tax need be filed after the date of death.
E. Fiscal year. - This section shall apply to a taxable year other than a calendar year by substituting the corresponding fiscal year months. For example, for a fiscal year of July 1 through June 30, if the declaration is filed on or before November 1, the estimated tax shall be paid in four equal installments, the first when the declaration is filed and the second., third and fourth installments on the following, December 15, March 15 and July 15, respectively.
F. Installments or entire estimated tax paid in advance. - An individual may elect to pay any installment of his estimated tax before the date prescribed for its payment. An individual may also elect to file a declaration of estimated tax in the closing days of a calendar year for his taxable year about to begin, and may pay in full the amount of his estimated tax for such taxable year at the time he files the declaration.
G. Payment is on account of tax for taxable year. - Payment of the estimated tax, or any installment-thereof, shall be considered payment on account of the tax for the taxable year. For example, a payment made on May 1, 1984 will be applied to income tax for taxable year 1984 and may not subsequently be applied to any additional tax assessed for any taxable year other than 1984.
H. Credit against estimated tax liability. - See Va. Code § 58.1-499 and regulations thereunder with respect to crediting income tax overpayment against estimated tax for the ensuing year.
§ 630-2-492. FAILURE BY INDIVIDUAL TO PAY ESTIMATED TAX.
A. Additions to the tax. - In the case of any underpayment of estimated tax by an individual, except as provided in subsection D, there shall be added to the individual income tax for the taxable year an amount determined at the rate established for interest., under Va. Code § 58.1-15, upon the amount of the underpayment (determined under subsection B), for the period of the underpayment (determined under subsection C). The amount of such addition to the tax shall be reported and paid at the time of filing the individual income tax return for the taxable year.
B. Amount. of underpayment. - For purposes of subsection A, the amount of the underpayment shall be the excess of:
C. Period of underpayment. - The period of the underpayment shall run from the date the installment was required to be paid to the earlier of the following dates:
D. Exception. - Notwithstanding the provisions of the preceding sub-section A, B and C, the addition to the tax with respect to any under-payment of any installment shall not be imposed if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment of such installment equals or exceeds whichever of the following is the lesser:
2. An amount equal to 90% of the tax computed, at the rates applicable to the taxable year, on the basis of the actual taxable income for the months in the taxable year ending before the month in which the installment is required to be paid.
The periods involved, for a calendar year taxpayer, are January 1 to April 30 January 1. to May 31, and January 1 to August 31. Virginia taxable income for the applicable period is computed as follows: there is subtracted from the federal adjusted gross income for the 4-, 5- or 8-month period, as applicable, (i) the Virginia subtractions specified in Va. Code § 58.1-322, (ii) the greater of itemized deductions or standard deduction, (iii) child and dependent care deduction, and (iv) the dollar amount of exemptions claimed on the return; and there is added to federal adjusted gross income the Virginia additions specified in Va. Code § 58.1-322. Virginia income tax is calculated on the resulting Virginia taxable income. If the estimated tax installment relating to the period is at least 90% of such tax, no addition to tax is required.
3. Examples. a. Taxpayer E filed a return for calendar year 1982 showing a tax liability of $4,750. For calendar year 1983 E made timely estimated tax payments which, together with withholding payments, totalled $4,750. E's return for calendar year 1983 revealed a total tax liability of $6,000, which was underpaid by $1,250 or more than 20%. However, because E's withholding and timely estimated tax payments for calendar year 1983 at least equalled the tax shown on his 1982 return, the exception in Va. Regs. § 630-2-492D.1.a applies and no addition to the tax will be imposed.
b. Assume the same facts as in Example a except that Taxpayer E adopted a daughter and son on January 1, 1983 and made estimated tax payments in calendar year 1983 totalling $4,700. The exception of Va. Regs. § 630-2-492D.1.a does not apply because the 1983 estimated tax payments are less than the tax shown on his 1982 return. However, Va. Regs. § 630-2-492D.1.b permits E to recalculate his 1982 tax liability using his two additional $600 exemptions. Assuming that E has reached the 5.75% tax bracket, the $1,200 would yield tax savings of $69 (5.75% of $1,200). The $69 tax savings would reduce his recomputed 1982 tax liability to $4,681. Because the total amount of estimated tax paid by each installment date exceeds the amount which would have had to be paid on or before each of such dates if the estimated tax were $4,681, no addition to the tax will be imposed.
c. Taxpayer F's 1982 return revealed a total tax liability of $830, but she qualified for an age credit in the amount of $830 so that no tax was due for 1982. She had one exemption for both 1982 and 1983, and $100 in withholding and estimated tax payments were made for calendar year 1983. Her 1983 tax liability was $1,000. The exception of Va. Regs. § 630-2-492D.1.a does not apply because the 1983 payments are less than the $830 tax liability shown on her 1982 return. However, Va. Regs. § 630-2-492D.1.b provides an exception because the 1983 payments of $100 at least equal the tax (figured using the applicable non-refundable credits) which would have been due on her 1982 income, using 1983 rates and personal exemptions.
d. Taxpayer G, who claims one exemption and itemizes deductions, made four timely installment payments of estimated tax totalling $3,900 for calendar year 1984. His calendar year 1984 tax liability was $5,000 and his receipt of Virginia adjusted gross income accelerated as the year progressed, as the following worksheet illustrates:
Virginia adjusted gross
income $15,500 $27,000 $64,000
1) Annualized Va. adjusted
gross income for periods)
shown $46,500 $64,800 $96,000
2) Annualized itemized
deductions for periods)
shown, or Standard
Deduction if not itemized 6,000 12,000 9,000
3) Total dollar amount of
exemptions 600 600 600
4) Taxable income - subtract
lines 2 and 3 from 1 39,900 52,200 86,400
5) Virginia tax on the amount
shown on line 4 2,074 2,782 4,748
25%) of 50%) of 75%) of
Installments due through line 5: line 5: line 5:
the-applicable period $414.80 $1,112.80 $2,848.80
Installments paid through
the applicable period $975 $1,950 $2,925
Because the total of estimated payments through each of the three periods is at least (and, in fact, exceeds) 80% of the tax on the annualized taxable income for the applicable period(s), no addition to tax applies because of the exception is Va. Regs. § 630-2-492D.1.c.
e. Taxpayer H, who claims one exemption and itemizes deductions, had $100,000 of federal adjusted gross income for calendar year 1983 and a tax liability of $5,000. H expected her income to be $70,000 and had paid estimated tax in four $975 installments. Her calendar 1982 tax liability was $4,000. As the following worksheet illustrates, her estimated tax payment for each of the 4-, 5- and 8-month periods is at least (and, in fact, exceeds) 90% of the tax liability for the applicable period and no addition to tax applies because of the exception in Va. Regs. § 630-2-492D.2.
1) Federal AEI for periods)
shown. $17,500 $29,000 $69,000
2) (a) Add Virginia Additions
and/or
(b) Subtract Virginia
Subtractions for period(s)
shown -2,000 -2,000 -3,000
3) Subtract
(a) Itemized deductions for
period(s) shown, or (if
greater)
(b) Standard Deduction on the
income shown -2,000 -5,000 -6,000
4) Subtract Child and Dependent
Care. Deduction for the period(s)
shown -0- -0- -0-
5) Subtract dollar amount of
exemptions -600 -600 -600
6) Virginia taxable income for
period(s) shown 12,900 21,400 59,400
7) Virginia tax on amounts shown
on line 6 522 1,010 3,196
8) 90% of line 7 470 909 2,876
9) Installments paid through
the applicable period 975 1,950 2,925
E. Application of section in case of tax withheld on wages. – For purposes of applying this section -
2. The amount of the credit allowed under Va. Code § 58.1-480 and its regulations (dealing with withheld amounts credited to individual taxpayer) for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each installment date (determined under Va. Code § 58.1-491 and its regulations) for such taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld.
F. Short taxable year. -
the tax will be reduced by multiplying it by the number of months in the short taxable year and dividing the resulting amount by 12.
2. If the taxable year for which an underpayment of estimated tax exists is a short taxable year due to a change in annual accounting periods, in annualizing the income for the months in the taxable year preceding an installment date, for purposes of Va. Code § 58.1-492D.1.c, the personal exemptions allowed as deductions shall be prorated by multiplying such deduction by the ratio of months in the short taxable year to 12 months.
3. If "the preceding taxable year" referred to in Va. Code § 58.1-492D.1.b was a short taxable year, for purposes of determining the applicability of the exception described in Va. Code § 58.1-492D.1.b, the tax, computed on the basis of the facts shown on the return for the preceding year, shall be the tax computed in the manner described in Va. Regs. § 630-2-340. If the tax rates or the taxpayer's status with respect to personal exemptions. for the taxable year with respect. to which the underpayment occurs differs from such rates or status applicable to the preceding taxable year, the tax determined in accordance with this subparagraph shall be recomputed to reflect the rates and status applicable to the year with respect to which the underpayment occurs.
§ 630--2-493. DECLARATIONS OF ESTIMATED TAX TO BE FILED WITH COMMISSIONER OF REVENUE OF COUNTY OR CITY.
Every resident individual who is required by these regulations to file a declaration of estimated tax shall file his declaration with the commissioner of the revenue for the county or city in which he resides. Every nonresident individual who is required by these regulations to file a declaration of estimated tax shall file such declaration with the commissioner of the revenue for the county or city in which all or a part of his income from sources within Virginia was derived. A declaration is not required to be filed with more than one commissioner of the revenue. The Department of Taxation will supply forms for preparing declarations of estimated tax. The commissioners of the revenue shall mail or deliver them not later than January 15 of each year to the taxpayers needing them as far as can be determined. Failure of any taxpayer to receive any such form shall not relieve him of his obligation to file a declaration of estimated tax.
§ 630-2-495. PAYMENT OF ESTIMATED TAX; NOTICE OF INSTALLMENT DUE.
The estimated tax with respect to which a declaration is required by these regulations shall be paid as specified in Va. Regs. § 630-2-491 to the treasurer of the county or city with whose commissioner of the revenue the taxpayer files his declaration of estimated tax.
In every case the taxpayer may make his first payment to the treasurer of the county or city by attaching such payment to the declaration when the taxpayer files it with the commissioner of the revenue.
(This is statutory language. No further interpretation is required.)
§ 630-2-496. WILLFUL FAILURE OR REFUSAL TO FILE DECLARATION OF ESTIMATED TAX, OR MAKING FALSE AND FRAUDULENT STATEMENT, A MISDEMEANOR.
Not regulated.
§ 630-2-497. VIRGINIA CODE § 58.1-306 APPLICABLE TO DECLARATION OF ESTIMATED TAX.
Va. Code § 58.1-306 (relating to special instances in which an individual taxpayer may file an income tax return with the Department of Taxation) shall also apply to a declaration of estimated tax.
(This is statutory language. No further interpretation is required.)
§ 630-2-498. OATHS OR AFFIRMATIONS UNNECESSARY ON RETURNS, DECLARATIONS AND REPORTS; MISDEMEANOR TO SUBSCRIBE FALSE RETURN, DECLARATION OR REPORT.
Returns, declarations, and reports filed under these regulations do not need be verified by the oath or affirmation of the person or persons who are required by law to sign the same. The signature of such person or persons to any such return, declaration or report is sufficient. It is a Class 1 misdemeanor for any such person willfully to subscribe any such return, declaration or report which he does not believe to be true and correct as to every material matter.
(This is statutory language. No further interpretation is required.)
VIRGINIA DECLARATION OF ESTIMATED
INCOME TAX BY INDIVIDUALS
REGULATIONS
VIRGINIA DEPARTMENT OF TAXATION
January 1, 1985
January 1, 1985
INTRODUCTION
These regulations for the Virginia. Declaration of Estimated Income Tax by Individuals are-published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions sad updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation section is numbered to reference the section of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify, these regulations, for. purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the section number 630-2-491 identifies the agency (630), the individual estimated tax (2), and the section of Title 58.1, Code of Virginia, which is interpreted (491).
W. H. Forst
State Tax Commissioner,
Virginia Department of Taxation
P. O. Box 6-L
Richmond, Virginia. 23282
VIRGINIA DECLARATION OF ESTIMATED
INCOME TAX BY INDIVIDUALS
REGULATIONS
INCOME TAX BY INDIVIDUALS
REGULATIONS
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to § 38-48.6 of the Code of Virginia (recodified as § 58.1-203)
EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith.
REFERENCES: Code of Virginia §§ 58.1-321, 58.1-322, and 58.1-490
through 58.1-498 are regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on
and after January 1, 1985.
SCOPE: Applicable to all individuals subject to declaration of estimated income tax.
SUMMARY: These are initial regulations interpreting the Virginia declaration of estimated income tax by individuals, consisting of §§ 630-2-490.1 through 630-2-498. These regulations set forth the requirements and procedures for declaring and paying estimated income tax by individuals and the consequences of failing to comply. They also serve to bring together in one document the applicable statutory provisions and explanation and illustration thereof.
ADOPTION DATE: September 19, 1984.
TABLE OF CONTENTS
Regulation
Section Subject Page
630-2-4.90.1 DEFINITIONS
-
- Taxable Year
Taxable Income
Virginia Adjusted Gross Income
Estimated Tax
Commissioner
- Taxable Year
630-2-490.2 DECLARATIONS OF ESTIMATED TAX
-
- Requirement of Declaration
Contents of Declaration
Joint Declaration by Husband and Wife-
- Time for Filing Declaration
Declaration of Estimated Tax by a-
- Farmer or Fisherperson
Amendments of Declaration
Return as Declaration or Payment
Fiscal Year
Short Taxable Year
Declaration for Individual Under-
- a Disability
-
- Time for Filing Declaration
-
- Requirement of Declaration
630-2-491 PAYMENTS OF ESTIMATED TAX
-
-
- General
Farmers and Fisherpersons
Amendments of Declaration
Application to Short Taxable Year
Fiscal Year
Installments or Entire Estimated Tax Paid in Advance
Payment is on Account of Tax for Taxable Year
Credit Against Estimated Tax Liability
- General
-
630-2-492 FAILURE BY INDIVIDUAL TO PAY ESTIMATED TAX
-
-
- Additions to the Tax
Amount of Underpayment
Period of Underpayment
Exception
Application of section in Case of-
-
- Tax Withheld on Wages
-
-
- Additions to the Tax
-
630-2-493 DECLARATIONS OF ESTIMATED TAX TO BE
FILED WITH COMMISSIONER OF REVENUE
OF COUNTY OR CITY
630-2-495 PAYMENT OF ESTIMATED TAX; NOTICE OF
INSTALLMENT DUE
630-2-496 WILLFUL FAILURE OR REFUSAL TO FILE
DECLARATION OF ESTIMATED TAX, OR
MAKING FALSE AND FRAUDULENT
STATEMENT, A MISDEMEANOR
430-2-497 VIRGINIA CODE § 58.1-306
APPLICABLE TO DECLARATION OF
ESTIMATED TAX
630-2-498 OATHS OR AFFIRMATIONS UNNECESSARY ON
RETURNS, DECLARATIONS AND REPORTS;
MISDEMEANOR TO SUBSCRIBE FALSE
RETURN, DECLARATION OR REPORT
§ 630-2-490.1. DEFINITIONS. -- For the purpose of these regulations and unless otherwise required by the context:
"Taxable dear" means an individual's taxable year for federal income tax purposes-.
"Taxable income" means an individual's federal adjusted gross income for the taxable year with the additions, subtractions, deductions and other modifications. and adjustments set forth in Va. Code § 58.1-322 and regulations promulgated thereunder.
"Virginia adjusted gross income" means federal adjusted gross income (FAGI) for the taxable year plus the addition set forth in Va. Code § 58.1-3228, and less the subtractions set forth in Va. Code § 58.1-322C and the additional $400 deduction for taxpayers over 65 years of age..
"Estimated tax" means the amount which an individual estimates to be the individual income tax due for the taxable year, less the amount estimated to be the sum of any credits allowable against the tax.
"Commissioner" means the State Tax Commissioner.
§ 630-2-490.2. DECLARATIONS OF ESTIMATED TAX.
A. Requirement of declaration. 1. Every resident and nonresident individual shall make a declaration of his estimated tax for every taxable year, if his Virginia adjusted gross income, other than from wages on which tax is withheld under Va. Code § 58.1-460 et seq. and Virginia Withholding. Income Tax Regulations, § 630-6-460 et seq. (the "Withholding Requirements"), can reasonably be expected to exceed $400 plus the sum of the personal exemptions to which he is entitled. In other words, a declaration is required if (i) the amount of Virginia adjusted gross income from which no tax is withheld is greater than (ii) the sum of $400 and the personal exemptions to which the taxpayer is entitled. This requirement of declaration is in effect throughout the entire taxable year.
2. A taxpayer is not required to file a declaration if
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- a. he is single and his expected Virginia adjusted gross income is less than $3,000; or,
b. he is married and the combined expected Virginia adjusted gross income of the couple is less than $3,000; or
c. he is not required to file a Virginia income tax return pursuant to the provisions of Va. Code § 58.1-342.
- a. he is single and his expected Virginia adjusted gross income is less than $3,000; or,
Example 1:
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- Taxpayer A is employed to render domestic service in the local chapter of a college fraternity. The wages he receives are not subject to withholding. Va. Code § 58.1-460. 2. His only other income consists of interest and dividend payments. His total Virginia adjusted gross income for his taxable year is expected to exceed $10,000. Because his estimated Virginia adjusted gross income exceeds $400 plus his one Virginia personal exemption ($600), he must file a declaration.
- Taxpayer A is employed to render domestic service in the local chapter of a college fraternity. The wages he receives are not subject to withholding. Va. Code § 58.1-460. 2. His only other income consists of interest and dividend payments. His total Virginia adjusted gross income for his taxable year is expected to exceed $10,000. Because his estimated Virginia adjusted gross income exceeds $400 plus his one Virginia personal exemption ($600), he must file a declaration.
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- Assume that Taxpayer A, in addition to his income above, also works in the local grocery store and taxes are withheld from his wages. However, as in Example 1, his Virginia adjusted gross income on which taxes: are not withheld (from domestic service, interest. and dividends) is expected to exceed $10,000 for the taxable year, which is greater than $400 plus his one personal exemption of $600. Therefore, he must file a declaration.
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B. Contents of declaration. - In the declaration required under sub-section A the individual shall state:
1. The amount which he estimates as the amount of individual income tax for which he will be liable for the taxable year;
2. The amount, if any, which he estimates will be withheld from wages for the taxable year under the Withholding Requirements;
3. The excess of the amount estimated under paragraph 1 of this sub-section over the amount estimated under paragraph 2 of this subsection shall be considered the estimated tax for the taxable year to be paid by the individual as hereinafter provided; and
-4. Such other information as may be required by the Commissioner. Form 760-ES is currently in use for this purpose.
C. Joint declaration by husband and wife. - A husband and wife may file a joint declaration, in which case the liability with respect to the estimated tax shall be joint and several. A joint declaration may not be made: (i) if either the husband or the wife is a nonresident of Virginia unless both are required to file an individual income tax return, (ii) if they are separated under a decree of divorce or of separate maintenance, or (iii) if they have different taxable years. If a joint declaration is made but a joint return is not made for the taxable year, the estimated tax for such year may be treated as the estimated tax of either the husband or the wife, or may be divided between them as they mutually agree.
D. Time for filing declaration. - A declaration of estimated tax of an individual other than a farmer-or fisherperson shall be filed on or before Play 1 of the taxable year, except that if the requirements of subsection A are met for the first time:
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- (1) After April 15 and before June 2 of the taxable year, the declaration shall be filed on or before June 15, or
(2) After June 1 and before September 2 of the taxable year, the declaration shall be filed on or before September 15, or
(3) After September 1 of the taxable year, the declaration shall be filed on or before January 15 of the succeeding year.
- (1) After April 15 and before June 2 of the taxable year, the declaration shall be filed on or before June 15, or
E. Declaration of estimated tax by a farmer or fisherperson. - If at least two-thirds of a self-employed individual’s total estimated gross income for the taxable year is from farming (including oyster farming) or fishing, the declaration of estimated tax may be filed at any time on or before January 15 of the succeeding year, instead of the time other-wise prescribed. However, if the income tax return for the taxable year is filed on or before March 1 of the succeeding year and the total tax is paid at. that time, the return will be considered a timely declaration and payment of the January 15 installment under the provisions of subsection A below.
A person farming or fishing for a living whose services are legally subject to the will and control of an employer, whether paid by salary or commission, or in cash, fish or produce, is an employee and not a self-employed person. If there is no withholding the employee is subject to the same estimated tax requirements as any other employee.
F. Declaration of estimated tax of forty dollars or less. - A declaration of estimated tax of an individual having a total estimated tax for the taxable year of $40 or less may, be filed at any time on or before January 15 of the succeeding year, but the entire amount of estimated tax must be paid at the time of filing. However, if the income tax return for such taxable year is filed on or before March 1 of the succeeding year and the total tax is paid at that time, the return will be considered a timely declaration and payment of the January 15 installment under the provisions of subsection H below.
G. Amendments of declaration. - An individual may amend a declaration at any time throughout the year by increasing or decreasing the amount of installment-payment noted on the payment-voucher form accompanying the payment.
H. Return as declaration or payment. - If on or before March I of the succeeding taxable year as individual files his return for the taxable year for which the declaration is required, and pays therewith the full amount of the tax shown to be due on the return:
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- 1. Such return shall be considered as his declaration if no declaration was required to be filed during the taxable year, but is otherwise required to be filed on or before January 15.
2. Such return and payment shall be considered as the last installment of estimated tax which would otherwise have been payable on or before January 15.
- 1. Such return shall be considered as his declaration if no declaration was required to be filed during the taxable year, but is otherwise required to be filed on or before January 15.
Filing a return on or before March 1 of the succeeding taxable year or filing a declaration or payment of the last installment on January 15 will not relieve a taxpayer of liability for additions to tax for underpayment of any of the installments of estimated tax that were due on May 1, June 15 or September 15 of the taxable year.
Example 1: Taxpayer A discovers on September 15, 1983 that his expected. Virginia adjusted gross income for calendar year 1983, other than from his salary on which his Virginia employer withholds taxes, will exceed $400 plus his personal exemptions. Taxpayer is required to file his declaration by January 15, 1984, but by filing his 1983
income tax return on or before March 1, 1984 and paying in full his tax liability shown on the return, Taxpayer is deemed to have timely filed the declaration required by Va. Regs. § 630-2-490D(3).
Example 2: Taxpayer A makes the same discovery but on September 1, 1983. He must file his declaration on or before September 15, 1983 accompanied by the first installment of estimated tax payment. His second installment would be due January 15, 1984. (See Va. Regs. § 630-2-491A.3.) However, because he files his 1983 return on February 28, 1984 accompanied by payment in full of his 1983 liability, he is deemed to have timely made the filing/payment of his second installment.
I. Fiscal. year. - This section shall apply to a taxable year other than a calendar year by substituting the corresponding fiscal year months.
J. Short taxable year. - A separate declaration must be filed where a return is required for a period of less than 12 months, unless the short period is less than four months or the requirements to file are first met after the first day of the last month in the short taxable year. In the case of a decedent, no declaration need be filed after the date of death.
For the purpose of determining whether a declaration must be filed for a short taxable period which results from a change in annual accounting period, taxable income for the short period shall be placed on an annual basis by multiplying the amount thereof by 12 and dividing the result by the number of months in the short period.
K. Declaration far individual under a disability. - The declaration of estimated tax for as individual who is unable to make a declaration by reason of any disability shall be made and filed by his guardian, committee, fiduciary or other person charged with the care of his person or property (other than a receiver in possession of only a part of his property), or by his duly authorized agent.
§ 630-2-491. PAYMENTS OF ESTIMATED TAX.
A. General. - The estimated tax relating to the filed declaration shall be paid as follows:
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- 1. If the declaration is filed on or before May 1 of the taxable year,. the estimated tax shall be paid in four equal installments. The first installment shall be paid at the time the declaration is filed, and the second, third and fourth installments on the following June 15, September 15, and January 15, respectively.
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- 2. If the declaration is filed after May 1 but on or before June 15 of the taxable year, and is not required to be filed on or before May 1 of the taxable year, the estimated tax shall be paid in three equal installments. The first installment shall be paid at the time the declaration is filed, and the second and third installments on the following September 15 and January 15, respectively.
3. If the declaration is filed after June 15 but on or before September 15 of the taxable year, and is not required to be filed on or before June 15 of the taxable year, the estimated tax shall be paid in two equal installments, the first at the time the declaration is filed, and the second on the following January 15.
4. If the declaration is filed after September 15 of the taxable year, and is not required to be filed on or before September 15 of the taxable pear, the estimated tax shall be paid in full at the time the declaration is filed.
5. If the declaration is filed after the due date, including cases where an extension of time has been granted, paragraphs 2, 3 and 4 of this subsection shall not apply, and all installments of estimated tax which would have been due shall be paid at or before the time of filing, and the remaining installments shall be paid at the times at which, and in the amounts in which, they would have been payable if the declaration had been filed when due.
- 2. If the declaration is filed after May 1 but on or before June 15 of the taxable year, and is not required to be filed on or before May 1 of the taxable year, the estimated tax shall be paid in three equal installments. The first installment shall be paid at the time the declaration is filed, and the second and third installments on the following September 15 and January 15, respectively.
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- Example: Taxpayer B becomes obligated on April 1, 1983 to file a declaration of estimated tax, due on or before May 1, 1983, and is required to pay his estimated tax in four equal installments (by May 1, June 15, and September 15, 1983 and by January 15, 1984). In fact, he files the declaration on September 20, 1983, at which time he is delinquent in the payment of three installments of his estimated tax for taxable year 1983. Therefore, he must pay three-fourths of his estimated tax when he files his declaration September 20, 1983.
B. Farmers and fisherpersons. - If a self-employed farmer or fisher-person referred to in Va. Regs. § 630-2-490E makes a declaration of estimated tax after September 15 of the taxable year and on or, before the following January 15, the estimated tax shall be paid in full at the time the declaration is filed.
C. Amendments of declaration. - If any amendment of a declaration is filed, the remaining installments, if any, shall be ratably increased or decreased (as the case may be) to reflect any increase or decrease in the estimated tax by reason of such amendment. If any amendment is made after September 15 of the taxable year, any increase in the estimated tax by reason thereof shall be paid at the time of making such amendment.
Example: Taxpayer Z estimated his tax liability for taxable year 1982 to be $1,600, and timely filed his declaration and paid $400 on May 1, 1982. On June 1, 1982 he won a grocery store sweepstakes, which increased his 1982 estimated tax liability by $300 to $1,900. To absorb the estimated increase in tax liability, each of his three subsequent estimated tax installments on June 15 and September 15, 1982 and January 15, 1983 was increased to $500.
D. Application to short taxable year. - In the case of a short taxable year of an individual for which a declaration is required to be filed the estimated tax shall be paid in equal installments, one at the time of filing the declaration, one on the 15th day of the sixth month of the taxable year and another on the 15th day of the ninth month of such year unless the short taxable year closed during or prior to such sixth or math month, and one on the 15th day of the first month of the succeeding taxable year. For example, if the short taxable year is the period of 10 months from January 1, 1982 to October 31, 1982, and the declaration is required to be filed on or before May 1, 1982, the estimated tax is payable in four equal installments, one on the date of filing the declaration, and one each on June 15, September 15, and November 15, 1982. If in such case the declaration is required to be filed after May 1 but on or before June 15, the tax will be payable in three equal installments, one on the date of filing the declaration, and one each on September 15, and November 15, 1982. The provisions of Va. Regs. § 630-2-491A.5., relating to payment of estimated tax in any case in which the declaration is filed after the due date, are equally applicable to the payment of the estimated tax for short taxable years.
In the case of a decedent, no payment of estimated tax need be filed after the date of death.
E. Fiscal year. - This section shall apply to a taxable year other than a calendar year by substituting the corresponding fiscal year months. For example, for a fiscal year of July 1 through June 30, if the declaration is filed on or before November 1, the estimated tax shall be paid in four equal installments, the first when the declaration is filed and the second., third and fourth installments on the following, December 15, March 15 and July 15, respectively.
F. Installments or entire estimated tax paid in advance. - An individual may elect to pay any installment of his estimated tax before the date prescribed for its payment. An individual may also elect to file a declaration of estimated tax in the closing days of a calendar year for his taxable year about to begin, and may pay in full the amount of his estimated tax for such taxable year at the time he files the declaration.
G. Payment is on account of tax for taxable year. - Payment of the estimated tax, or any installment-thereof, shall be considered payment on account of the tax for the taxable year. For example, a payment made on May 1, 1984 will be applied to income tax for taxable year 1984 and may not subsequently be applied to any additional tax assessed for any taxable year other than 1984.
H. Credit against estimated tax liability. - See Va. Code § 58.1-499 and regulations thereunder with respect to crediting income tax overpayment against estimated tax for the ensuing year.
§ 630-2-492. FAILURE BY INDIVIDUAL TO PAY ESTIMATED TAX.
A. Additions to the tax. - In the case of any underpayment of estimated tax by an individual, except as provided in subsection D, there shall be added to the individual income tax for the taxable year an amount determined at the rate established for interest., under Va. Code § 58.1-15, upon the amount of the underpayment (determined under subsection B), for the period of the underpayment (determined under subsection C). The amount of such addition to the tax shall be reported and paid at the time of filing the individual income tax return for the taxable year.
B. Amount. of underpayment. - For purposes of subsection A, the amount of the underpayment shall be the excess of:
- 1. The amount of the installment which would be required to be paid if the-estimated tax were equal to 80% (66-2/3% in the case of a self-employed farmer or fisherperson referred to in Va. Regs. § 630-2-490E) of the tax shown on the individual income tax return for the taxable year, or if no return was filed, 80% (66-2/3% in the case of self-employed farmers or fisherpersons referred to in Va. Regs. § 630-2-490E) of the tax for such year, over
2. The amount, if any, of the installment paid on or before the last date prescribed for such payment.
C. Period of underpayment. - The period of the underpayment shall run from the date the installment was required to be paid to the earlier of the following dates:
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- 1. May 1, if a calendar year, or the 15th day of the fourth month following the close of the taxable year, if a fiscal year.
2. With respect to any portion of the underpayment, the date on which such portion is paid. For purposes of this paragraph, a payment of estimated tax on any installment date shall be considered a payment of any previous underpayment only to the extent such payment exceeds the amount of the installment determined under subsection B.1 for such installment date.
- 1. May 1, if a calendar year, or the 15th day of the fourth month following the close of the taxable year, if a fiscal year.
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- Example 1: Taxpayer C filed her return for taxable year 1983 on May 1, 1984 showing a tax liability of $10,000. She had paid $1,500 of estimated tax on each of May 1, June 15 and September 15, 1983 and January 15, 1984, and had made no other payments before the return was filed. Because each $1,500 payment was less than 80% of $2,500 (one-quarter of the tax shown as due on the return), addition to tax is applicable to each underpayment on each installment date, computed as follows (and assuming an annual interest rate of 12%):
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- Amount of each underpayment installment:
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- 80% of $2,500 = $2,000
- less installment paid 1,500
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- $ 500
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- less installment paid 1,500
- 80% of $2,500 = $2,000
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1st installment-- period: 5/1/83 to 5/1/84 $ 60.00-
- (12% of $500)
(10.5% of $500)
3rd installment--period: 9/15/83 to 5/1/84 37.50
(7.5% of $500)
4th installment--period: 1/15/84 to 5/1/84 17.50-
- (3.5% of $500)
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- Total addition to tax . . . . . . . . . . . . . . $167.50
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- (3.5% of $500)
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- Example 2: Taxpayer had a. total tax liability of $5,000, 80% (or $4,000) of which would be due in quarterly installments of $1,000 each. He made payments as follows: $200 on May 1, $800 on June 15, $2,500 on September 15 and $0 by January 15. The $1,500 overpayment from September 15 would be applied to the other quarterly underpayments in the following order and amounts: $800 to May 1, $200 to June 15, and $500 to January 15.
D. Exception. - Notwithstanding the provisions of the preceding sub-section A, B and C, the addition to the tax with respect to any under-payment of any installment shall not be imposed if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment of such installment equals or exceeds whichever of the following is the lesser:
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- 1. The amount which would have been required to be paid on or before such date if estimated tax were whichever of the following is the least:
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- a. The tax shown on the return of the individual for the preceding taxable year, if a return showing a liability for tax was filed by the individual for the preceding taxable year and such preceding year was a taxable year of 12 months, or
b. An amount equal to the tax computed, at the rates applicable to the taxable year, on the basis of the taxpayer's status with respect to personal exemptions for the taxable year, but otherwise on the basis of the facts shown on his return for, and the law applicable to, the preceding taxable year, or
c. An amount equal to 80% (66-2/3% in the case of self-employed farmers or fisherman referred to in Va. Regs. §- 630-2-490E) of the tax for the taxable year computed by placing on an annualized basis the taxable income for the months in the taxable year ending before the month in which the installment is required to be paid. For purposes of this paragraph the taxable income shall be placed on an annualized basis by:- (i) Multiplying by 12 (or, in the case of a taxable year of less than 12 months, the number of months in the taxable year) the taxable income (computed without deduction of personal exemptions) for the months in the taxable year ending before the month in which the installment is required to be paid,
- a. The tax shown on the return of the individual for the preceding taxable year, if a return showing a liability for tax was filed by the individual for the preceding taxable year and such preceding year was a taxable year of 12 months, or
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- ii) Dividing the resulting amount by the number of months in the taxable year ending before the month in which such installment date falls, and
(iii)Deducting from such amount the deductions for personal exemptions allowable for the taxable year (such personal exemptions being determined as of the last date prescribed for payment of the installment); or -
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2. An amount equal to 90% of the tax computed, at the rates applicable to the taxable year, on the basis of the actual taxable income for the months in the taxable year ending before the month in which the installment is required to be paid.
The periods involved, for a calendar year taxpayer, are January 1 to April 30 January 1. to May 31, and January 1 to August 31. Virginia taxable income for the applicable period is computed as follows: there is subtracted from the federal adjusted gross income for the 4-, 5- or 8-month period, as applicable, (i) the Virginia subtractions specified in Va. Code § 58.1-322, (ii) the greater of itemized deductions or standard deduction, (iii) child and dependent care deduction, and (iv) the dollar amount of exemptions claimed on the return; and there is added to federal adjusted gross income the Virginia additions specified in Va. Code § 58.1-322. Virginia income tax is calculated on the resulting Virginia taxable income. If the estimated tax installment relating to the period is at least 90% of such tax, no addition to tax is required.
3. Examples. a. Taxpayer E filed a return for calendar year 1982 showing a tax liability of $4,750. For calendar year 1983 E made timely estimated tax payments which, together with withholding payments, totalled $4,750. E's return for calendar year 1983 revealed a total tax liability of $6,000, which was underpaid by $1,250 or more than 20%. However, because E's withholding and timely estimated tax payments for calendar year 1983 at least equalled the tax shown on his 1982 return, the exception in Va. Regs. § 630-2-492D.1.a applies and no addition to the tax will be imposed.
b. Assume the same facts as in Example a except that Taxpayer E adopted a daughter and son on January 1, 1983 and made estimated tax payments in calendar year 1983 totalling $4,700. The exception of Va. Regs. § 630-2-492D.1.a does not apply because the 1983 estimated tax payments are less than the tax shown on his 1982 return. However, Va. Regs. § 630-2-492D.1.b permits E to recalculate his 1982 tax liability using his two additional $600 exemptions. Assuming that E has reached the 5.75% tax bracket, the $1,200 would yield tax savings of $69 (5.75% of $1,200). The $69 tax savings would reduce his recomputed 1982 tax liability to $4,681. Because the total amount of estimated tax paid by each installment date exceeds the amount which would have had to be paid on or before each of such dates if the estimated tax were $4,681, no addition to the tax will be imposed.
c. Taxpayer F's 1982 return revealed a total tax liability of $830, but she qualified for an age credit in the amount of $830 so that no tax was due for 1982. She had one exemption for both 1982 and 1983, and $100 in withholding and estimated tax payments were made for calendar year 1983. Her 1983 tax liability was $1,000. The exception of Va. Regs. § 630-2-492D.1.a does not apply because the 1983 payments are less than the $830 tax liability shown on her 1982 return. However, Va. Regs. § 630-2-492D.1.b provides an exception because the 1983 payments of $100 at least equal the tax (figured using the applicable non-refundable credits) which would have been due on her 1982 income, using 1983 rates and personal exemptions.
d. Taxpayer G, who claims one exemption and itemizes deductions, made four timely installment payments of estimated tax totalling $3,900 for calendar year 1984. His calendar year 1984 tax liability was $5,000 and his receipt of Virginia adjusted gross income accelerated as the year progressed, as the following worksheet illustrates:
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- 1/1/84 to 1/1/84 to 1/1/84 to
Virginia adjusted gross
income $15,500 $27,000 $64,000
1) Annualized Va. adjusted
gross income for periods)
shown $46,500 $64,800 $96,000
2) Annualized itemized
deductions for periods)
shown, or Standard
Deduction if not itemized 6,000 12,000 9,000
3) Total dollar amount of
exemptions 600 600 600
4) Taxable income - subtract
lines 2 and 3 from 1 39,900 52,200 86,400
5) Virginia tax on the amount
shown on line 4 2,074 2,782 4,748
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- 20% (or 40% (or 60%(or
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25%) of 50%) of 75%) of
Installments due through line 5: line 5: line 5:
the-applicable period $414.80 $1,112.80 $2,848.80
Installments paid through
the applicable period $975 $1,950 $2,925
Because the total of estimated payments through each of the three periods is at least (and, in fact, exceeds) 80% of the tax on the annualized taxable income for the applicable period(s), no addition to tax applies because of the exception is Va. Regs. § 630-2-492D.1.c.
e. Taxpayer H, who claims one exemption and itemizes deductions, had $100,000 of federal adjusted gross income for calendar year 1983 and a tax liability of $5,000. H expected her income to be $70,000 and had paid estimated tax in four $975 installments. Her calendar 1982 tax liability was $4,000. As the following worksheet illustrates, her estimated tax payment for each of the 4-, 5- and 8-month periods is at least (and, in fact, exceeds) 90% of the tax liability for the applicable period and no addition to tax applies because of the exception in Va. Regs. § 630-2-492D.2.
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- 1/1/83 to 1/1/83 to 1/1/83 to
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1) Federal AEI for periods)
shown. $17,500 $29,000 $69,000
2) (a) Add Virginia Additions
and/or
(b) Subtract Virginia
Subtractions for period(s)
shown -2,000 -2,000 -3,000
3) Subtract
(a) Itemized deductions for
period(s) shown, or (if
greater)
(b) Standard Deduction on the
income shown -2,000 -5,000 -6,000
4) Subtract Child and Dependent
Care. Deduction for the period(s)
shown -0- -0- -0-
5) Subtract dollar amount of
exemptions -600 -600 -600
6) Virginia taxable income for
period(s) shown 12,900 21,400 59,400
7) Virginia tax on amounts shown
on line 6 522 1,010 3,196
8) 90% of line 7 470 909 2,876
9) Installments paid through
the applicable period 975 1,950 2,925
E. Application of section in case of tax withheld on wages. – For purposes of applying this section -
- 1. The estimated tax shall be computed without any reduction for the amount which the individual estimates as his credit under Va. Code § 58.1-480 and its regulations (relating to tax withheld at source on wages), and
2. The amount of the credit allowed under Va. Code § 58.1-480 and its regulations (dealing with withheld amounts credited to individual taxpayer) for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each installment date (determined under Va. Code § 58.1-491 and its regulations) for such taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld.
F. Short taxable year. -
- 1. In any case in which the taxable year for which an underpayment of estimated tax exists is a short taxable year due to a change in annual accounting periods, in determining the tax -
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- (i) Shown on the return for the preceding taxable year (for purposes of Va. Code § 58.1-492D.1.a),
(ii) Based on the personal exemptions and rates for the current taxable year but otherwise on the basis of the facts shown on the return for the preceding taxable year, and the law applicable to such year (for purposes of Va.
- (i) Shown on the return for the preceding taxable year (for purposes of Va. Code § 58.1-492D.1.a),
the tax will be reduced by multiplying it by the number of months in the short taxable year and dividing the resulting amount by 12.
2. If the taxable year for which an underpayment of estimated tax exists is a short taxable year due to a change in annual accounting periods, in annualizing the income for the months in the taxable year preceding an installment date, for purposes of Va. Code § 58.1-492D.1.c, the personal exemptions allowed as deductions shall be prorated by multiplying such deduction by the ratio of months in the short taxable year to 12 months.
3. If "the preceding taxable year" referred to in Va. Code § 58.1-492D.1.b was a short taxable year, for purposes of determining the applicability of the exception described in Va. Code § 58.1-492D.1.b, the tax, computed on the basis of the facts shown on the return for the preceding year, shall be the tax computed in the manner described in Va. Regs. § 630-2-340. If the tax rates or the taxpayer's status with respect to personal exemptions. for the taxable year with respect. to which the underpayment occurs differs from such rates or status applicable to the preceding taxable year, the tax determined in accordance with this subparagraph shall be recomputed to reflect the rates and status applicable to the year with respect to which the underpayment occurs.
§ 630--2-493. DECLARATIONS OF ESTIMATED TAX TO BE FILED WITH COMMISSIONER OF REVENUE OF COUNTY OR CITY.
Every resident individual who is required by these regulations to file a declaration of estimated tax shall file his declaration with the commissioner of the revenue for the county or city in which he resides. Every nonresident individual who is required by these regulations to file a declaration of estimated tax shall file such declaration with the commissioner of the revenue for the county or city in which all or a part of his income from sources within Virginia was derived. A declaration is not required to be filed with more than one commissioner of the revenue. The Department of Taxation will supply forms for preparing declarations of estimated tax. The commissioners of the revenue shall mail or deliver them not later than January 15 of each year to the taxpayers needing them as far as can be determined. Failure of any taxpayer to receive any such form shall not relieve him of his obligation to file a declaration of estimated tax.
§ 630-2-495. PAYMENT OF ESTIMATED TAX; NOTICE OF INSTALLMENT DUE.
The estimated tax with respect to which a declaration is required by these regulations shall be paid as specified in Va. Regs. § 630-2-491 to the treasurer of the county or city with whose commissioner of the revenue the taxpayer files his declaration of estimated tax.
In every case the taxpayer may make his first payment to the treasurer of the county or city by attaching such payment to the declaration when the taxpayer files it with the commissioner of the revenue.
(This is statutory language. No further interpretation is required.)
§ 630-2-496. WILLFUL FAILURE OR REFUSAL TO FILE DECLARATION OF ESTIMATED TAX, OR MAKING FALSE AND FRAUDULENT STATEMENT, A MISDEMEANOR.
Not regulated.
§ 630-2-497. VIRGINIA CODE § 58.1-306 APPLICABLE TO DECLARATION OF ESTIMATED TAX.
Va. Code § 58.1-306 (relating to special instances in which an individual taxpayer may file an income tax return with the Department of Taxation) shall also apply to a declaration of estimated tax.
(This is statutory language. No further interpretation is required.)
§ 630-2-498. OATHS OR AFFIRMATIONS UNNECESSARY ON RETURNS, DECLARATIONS AND REPORTS; MISDEMEANOR TO SUBSCRIBE FALSE RETURN, DECLARATION OR REPORT.
Returns, declarations, and reports filed under these regulations do not need be verified by the oath or affirmation of the person or persons who are required by law to sign the same. The signature of such person or persons to any such return, declaration or report is sufficient. It is a Class 1 misdemeanor for any such person willfully to subscribe any such return, declaration or report which he does not believe to be true and correct as to every material matter.
(This is statutory language. No further interpretation is required.)
Rulings of the Tax Commissioner