Commonwealth of Virginia Department of Taxation 2002 Legislative Update
Individual Income TaxOverview Filing Season 2002Statistics as of October 16,2002 • Refunds issued faster than ever before: • Current Year Returns = 95% in 12 days or less • All individual returns = 92% in 12 days or less • Error Inventory at record low: • less than 48K in Inventory • Projected year end inventory is less than 10K • Last year, we had 248K inventory on October 16th and ended year at 173K in inventory Filing Season 2002 is ranked best season ever!
Topics of Discussion • Fixed Date Conformity • Tax Credits • Refund Checkoffs • Contributions to the General Fund • Form Changes
Fixed Date Conformity • Virginia laws conform to federal laws as they existed on December 31, 2001 • Two laws passed by Congress will require adjustments to Virginia returns: • Victims of Terrorism Relief Act of 2001 • Job Creation and Worker Assistance Act of 2002
Fixed Date Conformity • Situations requiring special additions to Federal Adjusted Gross Income (FAGI): • Employee-Provided Death Benefits • Qualified Disaster Relief Payments • Disability Income • Foster Care Payments • Educator Expenses • Clean Fuel Vehicle Deduction • Bonus Depreciation
Fixed Date Conformity Bonus Depreciation New Forms created for special depreciation adjustment: Virginia Forms 4562 and 2106 To determine special Virginia depreciation adjustment: Complete VA Forms 4562 and 2106 Subtract Virginia depreciation from federal depreciation
Fixed Date Conformity • Situations requiring special subtractions from Federal Adjusted Gross Income (FAGI): • Bonus Depreciation • Subchapter S Corporation Discharge
Fixed Date Conformity • 5-year NOL carryback • Must recalculate NOL carryback under the rules as of 12/31/01 for Virginia purposes • Two-year carryback for Virginia purposes • Clean Fuel Credit • Virginia credit reduced by 25%
Tax Credit Neighborhood Assistance Program Tax Credit Tax credit equal to 45 percent of the monetary donation As of July 1, 2002, minimum monetary donation eligible for a tax credit reduced from $900 to $500.
Tax Credit • Neighborhood Assistance Act Tax Credit - Qualifying Nursing Services • Effective July 1, 2002 • Nurses are eligible for a tax credit under the Neighborhood Assistance Plan.
Tax Credit • Land Preservation Tax Credit - Amended • Tax Credit can be transferred to another taxpayer or corporation. • Taxpayer can subtract of any gain or income realized. • The income must have been included on the taxpayer’s federal income tax return.
Refund Checkoffs • Contributions to promote Organ and Tissue Donations Checkoff • Contributions to Public School Foundations Checkoff • 4-H Educational Centers Checkoff • Permanent Status for Housing Program Checkoff - Amended
Effective July 1, 2002 Checks should be made payable to the State Treasurer Tax Commissioner will receive payments and submit to State Treasurer monthly With permission from donors, their names will be posted on department’s website Contributions to the General Fund
Form 760 Separate name field for primary and secondary filers Oval added for returns adjusted for fixed date conformity Ovals for farmer, fisherman, merchant seaman and Coalfield credit moved to page 2 Form Changes
Form Changes Form 760-ADJ Line 2a added to report Special Fixed Date Conformity additions Line 6a added to report Special Fixed Date Conformity subtractions Six-digit code boxes added to report voluntary contributions to School Foundations
Form Changes Form 760PY Line 33 added to report Special Fixed Date Conformity additions Line 37 added to report Special Fixed Date Conformity subtractions
Form Changes Form 763 Line 31 added to report Special Fixed Date Conformity additions Line 38 added to report Special Fixed Date Conformity subtractions
Form Changes Form 760CG Form updated for Special Fixed Date Conformity adjustments Schedule INC replaces W2s and 1099s New Schedule FED added to report information from Schedules C, C-EZ, 2106 and 4562
We look forward to working with the Tax Professional Community during the upcoming tax season. Together we can provide the taxpayers of Virginia excellent customer services, while working to keep the cost of government down.www.tax.state.va.us