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Category: Virginia

Virginia Credit for Taxes Paid to Another State

Generally, Virginia will allow taxpayers filing a Resident Virginia income tax return to claim a credit for income tax paid as a nonresident to another state on earned or business income derived from sources outside Virginia or any gain, included in federal adjusted gross income, on the sale of a capital asset outside of Virginia provide the is taxed by both Virginia and the other state.

IF the income is from Arizona, District of Columbia, California or Oregon, you must claim the credit on the nonresident return of that state instead of on the Virginia return.

Border State Method
You may qualify for a special computation if you are required to file a return with Virginia and only of the following states: Kentucky, Maryland, North Carolina, or West Virginia. The income from the border state must consist solely of wages and salaries or business income from Federal Schedule C, and your Virginia taxable income must be at least equal to the taxable income shown on the other state's return. We will automatically calculate this special credit when you enter the corresponding 2 letter abbreviation.

Virginia part-year and nonresidents may qualify to claim this credit if they have income that is taxed in both Virginia and your other state and you are not allowed to claim the credit on the other state's tax return.

Note: TaxSlayer will automatically calculate this credit for your Virginia Resident return when you add a Nonresident state return to your account. For Part-Year returns that have income taxed in Virginia and another state, you will be required to enter the information asked within your TaxSlayer state program.