What are Virginia Schedule ADJ Subtractions?
Virginia Schedule ADJ is used to adjust your federal Adjusted Gross Income (AGI) for Virginia tax purposes. Subtractions on Schedule ADJ reduce your federal AGI to determine your Virginia AGI, which is then used to compute Virginia-specific deductions and limitations, including the itemized deduction cap.
Key Points About Schedule ADJ Subtractions:
- Line 6a (Subtraction): This line allows taxpayers to subtract certain federal deductions that are not allowed for Virginia tax purposes. These subtractions are necessary to conform Virginia’s tax calculation to its own rules, which may differ from federal law.
- Conformity Worksheet Requirement: Before completing Virginia Schedule A, you must complete the Conformity Worksheet. If you have a subtraction on Schedule ADJ, Line 6a, you must use the amount from Line 5 of the Conformity Worksheet (not your federal AGI) to compute Virginia limitations.
- Impact on Itemized Deductions: The adjusted AGI from the Conformity Worksheet is used to determine if you are subject to Virginia’s limited itemized deduction rules. If your federal filing status and income exceed certain thresholds, you may be required to use the Limited Itemized Deduction Worksheet.
- Part-Year Residents: For part-year residents, only deductions incurred while a Virginia resident should be considered when completing Schedule ADJ and related worksheets.
When Are Schedule ADJ Subtractions Used?
Schedule ADJ subtractions are used when there are differences between federal and Virginia tax laws. For example, Virginia does not conform to certain federal changes, such as the increase in the SALT deduction cap under H.R. 1 (One Big Beautiful Bill Act) for tax years beginning on or after January 1, 2025. Therefore, certain federal deductions may need to be subtracted to align with Virginia’s tax rules.
Important Notes:
- Virginia’s rolling conformity with the Internal Revenue Code is suspended for tax years beginning on or after January 1, 2025, and before January 1, 2027.
- You must claim the same type of deductions (standard or itemized) on your Virginia return as you claimed on your federal return.
- If you claim itemized deductions on your Virginia return, you must complete Schedule A and use the Conformity Worksheet if you have any additions or subtractions.
Source:
Schedule A Instructions
Disclaimer: Always verify with the official Federal or State Department of Revenue Forms and Instructions for the most accurate and up-to-date information.