Coalfield Employment Enhancement Credit

This credit benefits individuals, estates, trusts and corporations who have an economic ownership interest in metallurgical coal mined in Virginia. For the purposes of the credit, metallurgical coal is defined as bituminous coal used for the manufacture of iron and steel with calorific value of 14,000 BTUs or greater on a moisture and ash free basis. In addition, taxpayers can claim the credit for the production of coalbed methane.

The credit may be earned for taxable years beginning on or after Jan. 1, 2018, but before Jan. 1, 2023, and claimed in the third taxable year after the credit was earned. 

Compute your allowable credit on Form 306

A similar credit covering tax years 1996 - 2016 expired on Dec. 31, 2016. Before it expired, the credit was available for all coal mined by such methods and was not restricted to metallurgical coal.

Reference: Virginia Code 58.1 - 439.2

Motion Picture Production Tax Credit (Refundable)

Allows a refundable income tax credit to any motion picture film production company with qualifying expenses of at least $250,000 for taxable years beginning on or after Jan. 1, 2011. The credit is capped at $6.5 million per biennium per fiscal year. Qualifying companies must submit an initial application 30 days prior to the start of production to the Virginia Film Office (VFO) and must have a memorandum of understanding. Additionally the production company must submit documentation to the VFO after completion of the production in order for the VFO to issue certification of the credit. This credit is administered by the Virginia Film Office. For additional information please contact Becky Beckstoffer at 800.854.6233.

The credit expires Jan. 1, 2022.

Reference: Virginia Code 58.1-439.12:03

Education Improvement Scholarships Tax Credit

You may qualify to claim this credit if:

You donated money or marketable securities (stocks, bonds, etc.) to an approved scholarship foundation. The Virginia Department of Education (VDOE) has to approve the donation before you give it to the foundation.

What is it?

A credit equal to 65% of the value of the donation. Claim the credit against:

  • Individual income tax
  • Corporation income tax
  • Bank franchise tax
  • Insurance premiums license tax
  • Tax on public service corporations

Individuals must donate at least $500 (cash or securities) to qualify for this credit. A $500 donation equals a $325 credit. An individual may be issued no less than $325, and no more than $81,250, in credits each year. These limits do not apply to businesses, including sole proprietorships.

Unused credits may be carried forward for up to 5 years.

Is there a cap?

Yes. VDOE can issue no more than $25 million in these credits annually. Credits are issued on a first come, first served basis.

What is an approved scholarship foundation?

Approved scholarship foundations must disburse at least 90% of the value of donations (in the form of scholarships) it receives between July 1 and June 30 by the following June 30. VDOE is responsible for approving scholarship foundations for this credit, and maintains a list of approved foundations on their website.

To claim the credit

First, visit VDOE’s program page, and follow their procedures for preauthorization. Receive certification from VDOE, then complete Schedule CR.

Foreign Source Retirement Income Credit

Virginia residents may claim a credit for income taxes paid to a foreign country on pension or retirement income derived from employment in a foreign country. The retirement income must be included in Virginia taxable income on the return to which this credit is applied. The credit is nonrefundable and excess credits cannot be carried forward.

To compute the credit, the foreign currency must be converted into U.S. dollars using the prevailing exchange rate that most nearly reflects the value of the currency at the time the taxes were actually paid to the foreign country.

For purposes of this credit, a foreign country shall include all possessions of the United States. Any foreign country that does not qualify for the federal foreign tax credit (IRC 901[j]) does not qualify for this Virginia credit.

Complete Schedule CR, Section 1, Part 10 to claim this credit. Attach a copy of the return filed in the foreign country or other proof of tax payment to the foreign country and a schedule showing computation of foreign currency converted to U.S. dollars.

Reference: Virginia Code 58.1 - 332.1.

Trust Beneficiary Accumulation Distribution Credit

You may qualify to claim this credit if you were the beneficiary of a trust whose Virginia taxable income includes all of part of an accumulation distribution by the trust.

For the years in which income was accumulated, the distributing trust would have reported the income on its own fiduciary return and paid taxes accordingly. To prevent double taxation of the distribution to the beneficiary, Virginia law allows the beneficiary to claim a credit for the income taxes paid by the trust. 

Computation of credit: (D ÷ T) x P = C

D = Virginia addition for accumulation distribution
T = Total Virginia taxable income reported by the trust on Form 770 for the years in which the income was accumulated
P = Virginia income tax paid by the trust for the years in which the income was accumulated
C = Allowable Virginia tax credit to be claimed by the beneficiary

A schedule showing the credit computation must be attached to your return.

Reference: Virginia Code 58.1-370.