Tax Type
Individual Income Tax
Description
Taxes paid by residents to other states; Earned or business income taxed by another state
Topic
Credits
Date Issued
05-16-1997
May 16, 1997
Re: Request for Ruling: Individual Income Tax
Dear*******
This will reply to your letter dated April 23, 1997, in which you request a ruling regarding the allowance of an out-of-state tax credit for you and your wife (the "Taxpayers") for the 1996 taxable year.
FACTS
The Taxpayers are domiciliary residents of Virginia. During the 1996 taxable year, the wife resided in Oregon and received earned and business income. Because of the length of time she spent in Oregon, she was considered an actual resident of that state for tax purposes. The Taxpayers moved to Oregon in December of 1996, filed a joint Virginia part-year resident return, and claimed a credit for taxes paid to Oregon on the wife's earned and business income.
The Taxpayers' returns were reviewed by the department, and the tax credit was disallowed. The Taxpayers contend the credit was properly claimed, and request a ruling on this issue.
RULING
The department has previously issued a ruling in a similar case. See Public Document ("P.D.") 97-98 (2/24/97), copy enclosed. In P.D. 97-98, the taxpayer was a domiciliary resident of Virginia with California earned income. Because the taxpayer was considered an actual resident of California, he was unable to claim the out-of-state tax credit on his California return. The department determined that Virginia law does not prohibit the taxpayer from claiming the credit on his Virginia return when such circumstances exist. Thus, the credit was allowed on the Virginia return.
In the instant case, Oregon law does not permit the Taxpayers to claim a credit on the Oregon return for taxes paid to Virginia because of the wife's actual residency status. Consequently, the credit would be allowed on the Taxpayers' Virginia return.
Accordingly, your 1996 Virginia part-year resident return will be processed as submitted with credit for taxes paid to Oregon on the wife's earned and business income. Should you have any questions regarding this ruling, please contact ***** of my staff at **********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12476M
Related Documents
Rulings of the Tax Commissioner