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Individual and Corporate Income Tax

Individual and Corporate Income Tax. Virginia. 2010 Legislative Updates. Agenda. Fixed Date Conformity Advancement New Tax Credits Tax Credit Changes Changes 2010 and Beyond Filing Season Updates Common Filing Errors Electronic Filing Initiative How to Get Information.

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Individual and Corporate Income Tax

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  1. Individual and Corporate Income Tax Virginia 2010 Legislative Updates

  2. Agenda • Fixed Date Conformity Advancement • New Tax Credits • Tax Credit Changes • Changes 2010 and Beyond • Filing Season Updates • Common Filing Errors • Electronic Filing Initiative • How to Get Information

  3. Fixed Date Conformity Advancement Dec 31 2008 Jan 222010

  4. Advancement of Virginia's Fixed Date Conformity NOTE: If federal legislation is enacted that affects fixed date conformity, we will publish supplemental instructions on our website

  5. Not Conforming

  6. Net Operating Loss (NOL) Carryback Virginia will continue to disallow any 5-year carry-back of net operating losses (“NOL”) allowed for NOL‘s generated in either taxable year 2008 or 2009

  7. Domestic Production Federal Return IRS 3% in 2005-2006 6% in 2007-2009 9% in 2010 and after Virginia does not conform

  8. Domestic Production Individual Code 15 Virginia Return Corporate Code 17 NEW Addition Codes PTE Code 19

  9. Cancellation of Debt Income (CODI) Reacquire Debt in TY 2010 Federal Return Reacquire Debt in TY 2009 Defer CODI to TY 2014 - 2018

  10. Cancellation of Debt Income (CODI) Individual Code 13 Virginia Return Corporate Code 15 NEW Addition Codes PTE Code 17

  11. Dealer Disposition of Real Property • Qualifying Virginia individuals and corporation can defer payment of a portion of the Virginia income tax incurred from the sale of real property provided: • The sale occurs on or after January 1, 2009 • The property sold is real estate • The taxpayer reports the entire gain as income on the federal return Married

  12. Dealer Disposition of Real Property Individual Code 14 Virginia Return Corporate Code 16 NEW Addition Codes PTE Code 18 MFS Married

  13. Conforming

  14. No Limitation on Individual Income Tax Itemized Deductions Federal Schedule A $$$$ 2010 Virginia Return

  15. No Limitation on Individual Income Tax Itemized Deductions • This is for taxable year 2010 only • The taxpayer may base the Virginia computation on the amount that was claimed on the 2010 federal Schedule A – no adjustment for high income • Itemized deductions still must be reduced by the amount deducted for state income taxes

  16. New TAX CREDITS

  17. Low Income Housing Communities of Opportunity New Credit • Must have applied and qualified for prior to June 30, 2010 • Taxpayers could begin qualifying for on January 1, 2010

  18. Communities of Opportunity May claim a credit equal to 10% of the fair market value of the rent for each qualifying housing unit Five-year carryforward period through TY 2015 or until the total of credits has been taken Nancy Palmer 804/371-7102

  19. Beginning with the 2010 taxable year, certain corporate and individual employers are allowed an income tax credit for certain new “green jobs” that are created in Virginia.

  20. $500 Credit for each qualifying job Credit for up to 350 jobs New Credit Green Jobs Creation $175,000 is the maximum per year $50K + Salary Jan 1 2010 – Jan 1 2015

  21. TAX CREDITS Changes

  22. 2010 Form 500T Land Preservation Credit (LPC) 2010 Schedule CR 2010 Schedule 500 CR 2010 Schedule VK1

  23. Land Preservation Credit The amount of Land Preservation Credits that may be claimed on income tax returns has been reduced from $100,000 per taxpayer to $50,000 per taxpayer effective for credits claimed for taxable years beginning on and after January 1, 2009, but before January 1, 2011. $100K $50K

  24. Land Preservation Credit • Tax years 2009 and 2010 each taxpayer’s claim is limited to $50,000 and will be allowed an additional two years to claim the credit. • Tax year each taxpayer’s claim is limited to $50,000 and will be allowed an additional three years to claim the credit

  25. Land Preservation Credit • The reduction in the amount of credit that can be claimed on the return does not reduce the amount of credit that may be earned or held by the taxpayer.

  26. Land Preservation Credit • As required by law, a cap is placed on the total amount of credits that can be approved in each taxable year.

  27. Land Preservation Credit • Fee Changes: • For donations resolved on or after July1, 2010, the fee cap of $10,000 has been removed. • However, the fee calculation remains the same at 5% of the amount being transferred / allocated.

  28. Land Preservation Credit • For details on the credit:  Application and Transfer Instructions for Land Preservation Credits  (804) 786-2992  

  29. Livable Home Must apply to the DHCD for approval to take the credit

  30. Changes 2010 and Beyond

  31. Individual

  32. Individual Income Filing Threshold Increase Single MFS Married • $11, 650 • $11,650 • $23,300 Reminder Tax Years 2010 and 2011 Next increase is 2012…

  33. New Power of Attorney Process Effective July 1, 2010, Senate Bill 905 requires the Virginia Department of Taxation to provide copies of written materials to a taxpayer’s personal representative

  34. New Power of Attorney Process • For TAX to mail copies of written materials to a taxpayer’s representative automatically, the representative needs to complete and submit Form R-7 to register as an “Authorized Agent”. Please note – an Authorized Agent must be a person. • The taxpayer must then submit PAR 101, naming the authorized agent and specifying the tax type, tax account, and tax periods covered by the POA. • Forms available at www.tax.virginia.gov

  35. Virginia 2010 Form Changes First, the Big Changes: Forms 760PY and 763 have been completely redesigned!

  36. The NewForm 760PY

  37. The NewForm 763

  38. Form Changes – Individual Income Tax • The new Forms 760PY and 763 both now follow the same flow as the Form 760, the Resident Individual Income Tax return • The Schedule NPY has been eliminated

  39. Form Changes – Individual Income Tax • Each return now has its own Schedule ADJ to report additions, subtractions, deductions, the low income credit, contributions, and other adjustments: • Schedule 760PY ADJ (with 2 columns) • Schedule 763 ADJ

  40. Form Changes – Individual Income Tax • The new Forms 760PY and 763 will also use: • The Schedule CR (credits) • The Schedule OSC (out-of-state credits) • Schedule INC – computer-generated Forms 760PY and 763 may include the Schedule INC to report Virginia withholding

  41. Form Changes – Individual Income Tax BIG Change: We have relabeled the columns A and B on the Form 760PY • Taxpayer “A” is now the primary taxpayer • Taxpayer “B”, for married taxpayers filing a combined return, is the secondary taxpayer

  42. Form Changes – Individual Income Tax • The Form 760PY - If you itemized deductions, make sure you complete Line 11 through Line 13

  43. Other Form Changes – Individual Income Tax • The Schedule ADJ, used with Form 760, now has separate line items for joint filers for reporting the disability subtraction – line 5 is now Lines 5a and 5b

  44. Other Form Changes – Individual Income Tax • By separating out the disability subtraction into 2 lines for joint filers, delays can be avoided when a joint return includes both an age deduction and a disability subtraction

  45. Other Form Changes – Individual Income Tax • Several checkboxes have been eliminated from the Forms 760, 760PY, and 763 including the VK-1 withholding • Form 763S has minor revisions on page 2 to assist with the processing of claims from spouses of military service members • Form 770 can now be used by a Charitable Remainder Trust – check the box and enter $0 on the Virginia Tax Amount line

  46. Did you Know ????? • Federal legislation signed into law on November 11, 2009, the Military Spouses Residency Relief Act, affects Virginia income tax filing requirements for certain spouses of military personnel.

  47. Did you Know ????? • 763-S Virginia Special Nonresident Claim For Individual Income Tax Withheld Military Spouse Qualification for refund

  48. Did you Know ????? • Reduce Period of Limitation for Collection Action • House Bill 17 (Chapter 30) reduces the period of limitations for TAX to make or institute collection action from twenty to ten years from the date of the assessment • Effective for assessments issued on or after July 1, 2010

  49. Did you Know ????? FORM VA4 PERSONAL EXEMPTION WORKSHEET • Use this form to notify your employer whether you are subject to Virginia income tax withholding and how many exemptions you are allowed to claim. • You must file this form with your employer when your employment begins. • If you do not file this form, your employer must withhold Virginia income tax as if you had no exemptions.

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