Tax Type
Individual Income Tax
Description
Employee funded cafeteria benefit plan
Topic
Taxable Income
Date Issued
07-29-1988
July 29, 1988
Re: Ruling Request
Cafeteria Plans
Dear***************
This is in reply to your letter of April 27, 1988 in which you request a ruling regarding the status of a cafeteria style benefit plan (I.R.C. §125) for Virginia tax purposes.
In the Commonwealth of Virginia the Department of Taxation administers income taxation, while unemployment compensation is administered by the Virginia Employment Commission. Therefore, I will restrict my responses to the status of a cafeteria style benefit plan for Virginia income tax purposes. I have forwarded a copy of your letter and a copy of this letter to the Virginia Employment Commission in order that they may respond to your questions regarding unemployment compensation.
Federal adjusted gross income is the starting point for determining an individual's Virginia adjusted gross income and Virginia taxable income. Accordingly, those employee benefits that are included in federal adjusted gross income are similarly included in Virginia adjusted gross income. Conversely, employee benefits excluded from federal adjusted gross income are excluded from Virginia adjusted gross income.
For purposes of the Virginia income tax, the taxable status for federal purposes of employee contributions paid for health care premiums or a deferred compensation plan under I.R.C. §401K, will determine the Virginia income tax treatment of such a plan.
If you have any further questions regarding the Virginia income tax, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner