Tax Type
Individual Income Tax
Description
Subtractions from federal adjusted gross income; Foreign students
Topic
Taxable Income
Date Issued
12-28-1994
December 28, 1994
Re: Ruling Request: Individual Income Tax
Dear********************
This will reply to your request for a ruling on Virginia tax treatment of income
received by foreign exchange students. I apologize for the delay in responding to your
request.
FACTS
Students from foreign countries attend U.S. colleges and universities. They
receive income from grants, scholarships, other educational sources, and personal
services performed in Virginia. United States treaties with foreign countries specify
the income that is exempt from federal taxation.
RULING
Code of Virginia §58-1.301 provides that Virginia individual income taxation
conforms with that of the Internal Revenue Code. As a "conformity" state, Virginia
bases its tax on federal adjusted gross income. Therefore, income received from grants,
scholarships, other educational sources, or personal services performed in Virginia that
is exempt from federal taxation by a United States treaty, is also exempt from Virginia
taxation. However, a student who is required to file a federal return and a Virginia
return, must attach a statement to the Virginia return verifying the income that is exempt
from federal taxation. Such statement should include, but is not limited to, the country
under whose treaty the exemption is claimed, whether the student is accorded the privilege
of residence permanently in the United States as an immigrant, the name of the university
or other educational institution to which the student is attending, the total amount of
compensation that is exempt under the treaty, the duration of time that exemption is allowed, and the student's arrival date in the United States. The exempt income may be deducted as "Other subtractions" on the Virginia return.
If you have other questions, please contact*******************
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/7862N
Rulings of the Tax Commissioner