Deductions from Income
Deductions from income are adjustments made to federal adjusted gross income (AGI) to determine Virginia taxable income. These deductions are applied on Virginia individual income tax forms and are essential for calculating the correct tax liability.
Key Deduction Forms and Instructions
- Form 760: Used by full-year residents. Deductions are reported on Schedule ADJ, and the total is entered on Line 13 of Form 760. The deduction amount is subtracted from the total income (Line 9) to compute Virginia taxable income (Line 15).
- Form 760PY: For part-year residents. Deductions are calculated based on the period of residence in Virginia. The total deductions are entered on Line 14, which is then subtracted from gross income to determine taxable income.
- Form 763: For non-residents and part-year residents. Deductions are reported on Schedule ADJ, and the total is entered on Line 13. These deductions reduce the total income to arrive at Virginia taxable income.
Types of Deductions
Deductions may include:
- Standard deductions or itemized deductions as allowed under Virginia law.
- Adjustments to federal AGI, such as business deductions, capital losses, or other allowable subtractions.
- Personal exemptions (if applicable), which are subtracted from total income to determine taxable income.
Important Notes
- Deductions must be supported by federal tax return documentation (e.g., Form 1040 and schedules).
- Only deductions that apply to Virginia taxable income should be included. For example, deductions for income earned outside Virginia may not be deductible.
- Part-year residents must allocate deductions based on time spent in Virginia using the ratio schedule provided in Form 760PY instructions.
Source:
Form 760 Instructions
Form 760PY Instructions
Form 763 Instructions
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.