Document Number
Tax Type
Individual Income Tax
Professional athletes
Persons Subject to Tax
Date Issued
October 31, 1988

Re: Ruling Request: Individual Income Tax
Virginia Source Income

Dear ******************

This is in reply to your letter dated August 10, 1988 and to your follow-up letter dated September 15, 1988, regarding the proper Virginia income tax liability of a professional athlete, who is a nonresident of Virginia.

After reviewing the list of specific questions in your letter dated August 10, 1988, I believe that the following explanation of our general policy as it relates to the taxation of nonresidents will better answer your questions.

Professional athletes are taxed in Virginia as any other resident or nonresident individuals:


There are two types of Virginia residents, domiciliary residents and actual residents. Domiciliary residents are those whose legal domicile in the technical sense is Virginia. In most cases, domiciliary residents actually live in Virginia. Actual residents are those who have their place of abode in Virginia for an aggregate of more than 183 days of the taxable year, even though their legal domicile is in another state or country. Every domiciliary or actual resident of Virginia is subject to Virginia income tax as a resident. This means that the individual's entire income is subject to taxation whether it came from sources within Virginia or from sources outside of Virginia.


Individuals who are neither domiciliary nor actual residents of Virginia and have income from Virginia sources are taxed as nonresidents. The Virginia taxable income of a nonresident is defined under Virginia Code §58.1-325 as:
    • an amount bearing the same proportion to his Virginia taxable income, computed as though he were a resident, as the net amount of his income, gain, loss and deductions from Virginia sources bears to the net amount of his income, gain, loss and deductions from all sources.
"Income and deductions from Virginia sources" is defined under Virginia Code §58.1-302 to include income from, "[a] business, trade, profession or occupation carried on in Virginia." (Emphasis added.) Under the above definition, the income earned by an athlete, attributable to the amount of time that he is working in Virginia (whether or not such services include actual "playing time") in Virginia, is considered income from Virginia sources.

Application to Professional Athletes

Generally, a nonresident athlete must apportion his income to determine the amount of his pay that is attributable to Virginia sources. Such apportionment should be based upon factors which most equitably determine the athlete's portion of total income that is attributable to services performed in Virginia. Services performed in Virginia would include actual games played in Virginia, as well as the team meetings and practices held in Virginia. The athlete should compute the ratio of work days spent within Virginia to his total number of work days.

However, if the amount of Virginia source income can be separately identified by event (i.e. race winnings, golf tournament winnings, etc.), it is not necessary to allocate wages to determine the amount of income from Virginia sources.

Signing Bonuses

The signing bonus received by a professional athlete would be taxed in the same manner as a bonus received by any other individual taxpayer. If the athlete is a resident of Virginia (either a domiciliary resident or an actual resident), to the extent such a bonus is included in federal adjusted gross income, it would be includable in Virginia taxable income regardless of the source of the income.

If the athlete is a nonresident of Virginia, such a signing bonus would be included in federal adjusted gross income and in Virginia taxable income computed as if a resident. However, in the computation of nonresident's allocation percentage (the ratio of his net amount of his income, gain, loss and deductions from Virginia sources to the net amount of his income, gain, loss and deductions from all sources), a signing bonus would generally not be considered Virginia source income. For example, if a player is paid a signing bonus which is paid to him without regard to his performance of any services on behalf of the team, it would not be deemed to be Virginia source income. Only if the signing bonus was predicated upon the performance of actual services in Virginia would the bonus be deemed to be Virginia source income.

Enclosed are copies of the forms and instructions that you requested. If you have any further questions, please do not hesitate to contact the department.


W. H. Forst
Tax Commissioner

Last Updated 08/25/2014 16:46