Virginia Additions to Income
The starting point for computing Virginia taxable income is federal adjusted gross income. Certain items of income that are either not taxable for federal purposes or are not reported in federal adjusted gross income are taxable on the Virginia return. These items, which are listed below, must be reported as additions to federal adjusted gross income on the Virginia return.
Interest on Obligations of Other States
Federal law generally exempts interest on state and local government bonds and securities from income tax. Since Virginia law exempts only income from Virginia state and local obligations, an addition is required to bring interest income from obligations of other states into Virginia taxable income. The amount to be added back on the Virginia return is the income less related expenses.
Medical and Dental Expenses
If you claimed a deduction for medical expenses on your 2017 federal return, you must make an addition on your Virginia return to account for the difference in the amount allowed in Virginia. In Virginia, you can deduct the total amount of qualified medical and dental expenses that exceeds 10% of your federal adjusted gross income. On your federal return, you can deduct the amount that exceeds 7.5%. Because the threshold is higher in Virginia, you must make an addition on your Virginia return to account for the difference.
Use the Medical and Dental Expenses Addition worksheet to calculate the amount you need to add back to your Virginia return.
Visit www.irs.gov for more information about which medical and dental expenses are eligible for deduction.
If you have already filed your 2017 Virginia individual income tax return, and claimed a deduction for medical and dental expenses, you will need to amend your return.
Fixed Date Conformity Additions
Bonus Depreciation: If you claimed a federal depreciation deduction and one or more of the depreciable assets received the special 30% or 50% bonus depreciation deduction under IRC § 168(k) in any taxable year from 2001 through 2017, or the bonus depreciation under IRC §§ 168(l), 168(m), 1400L, or 1400N, then depreciation must be recomputed for Virginia purposes as if such assets did not receive such bonus depreciation. If your total 2017 Virginia depreciation calculation is less than your 2017 federal depreciation calculation, then the difference must be recognized as an addition.
Other Fixed Date Conformity Additions
- Interest on federally exempt U.S. obligations - Enter the amount of interest or dividends exempt from federal income tax, but taxable in Virginia, less related expenses.
- Accumulation distribution income - Enter the taxable income used to compute the partial tax on an accumulated distribution as reported on federal Form 4970.
- Lump-sum distribution income - If you received a lump-sum distribution from a qualified retirement plan and used the 20% capital gain election, the 10-year averaging option, or both on federal Form 4972, complete the table below:
Enter the total amount of distribution subject to federal tax.
(ordinary income and capital gain) 1. _______________
Enter the total federal minimum distribution allowance,
federal death benefit exclusion and federal estate
tax exclusion. 2. _______________
Subtract Line 2 from Line 1. Enter this amount
on your Virginia Schedule ADJ. 3. _______________
- Income from Dealer Disposition of Property - Enter the amount that would be reported under the installment method from certain dispositions of property. If, in a prior year, the taxpayer was allowed a subtraction for certain income from dealer dispositions of property made on or after Jan. 1, 2009, in the years following the year of disposition, the taxpayer is required to add back the amount that would have been reported under the installment method. Each disposition must be tracked separately for purposes of this adjustment.
- Telework Expenses - Individuals who claim the Virginia Telework Expenses Tax Credit are not allowed to exclude those expenses from Virginia Income. To the extent excluded from federal adjusted gross income, any expenses incurred by a taxpayer in connection with the Telework Expenses Tax Credit must be added to the Virginia return. No adjustment is required for the 2017 taxable year.
- First-Time Home Buyer Savings Accounts - To the extent excluded from federal adjusted gross income, an account holder must add any loss attributable to his or her first-time home buyer savings account that was deducted as a capital loss for federal income tax purposes. For more information, see the First-Time Home Buyer Savings Account Guidelines.
- Food Crop Donation - To the extent a credit is allowed for growing food crops in the Commonwealth and donating such crops to a nonprofit food bank an addition to the taxpayer’s federal adjusted gross income is required for any amount claimed by the taxpayer as a federal income tax deduction for such donation.
- Others not Listed - Enter the amount of any other income not included in federal adjusted gross income, which is taxable in Virginia. Attach an explanation of the addition.