Filing Status

Residents

Married filers should pay special attention to the information under Spouse Tax Adjustment below.

Filing Status 1 - Single: If your filing status on your federal return was Single, Head of Household, or Qualifying Widow(er), you must use Filing Status 1 on your Virginia income tax return. You are considered single if you are unmarried, or if you are divorced or legally separated under a separate maintenance decree.

Filing Status 2 - Married, Filing a Joint Return: You may use this status if you are married and (1) you filed a joint federal return; (2) both you and your spouse are Virginia residents, or (3) neither you nor your spouse was required to file a federal return. When only one spouse has income, a married couple should use Filing Status 2.

Filing Status 3 - Married, Filing a Separate Return: If you and your spouse filed separate federal returns, you may use this filing status. If you and your spouse filed a joint federal return, but only one of you is a Virginia resident, the resident must use Filing Status 3. When using Filing Status 3, complete your tax return as follows: (1) Compute your federal adjusted gross income as though you had filed separately on your federal return; (2) claim only the personal and dependent exemptions, itemized deductions (if claimed on your federal return), and child and dependent care expense amounts that you could claim if you had filed a separate federal return. If one spouse claimed itemized deductions, the other spouse must also. (3) Be sure to provide your spouse's name and social security number in the spaces included on the return for that information.

Spouse Tax Adjustment: If you are using Filing Status 2 and both you and your spouse have income, you may benefit from the Spouse Tax Adjustment. You will need to have your federal tax return and, if applicable, a completed Virginia Schedule ADJ to prepare the worksheet.

Married couples who file a joint Form 760 may be eligible for an adjustment of up to $259 against their joint income tax liability if each spouse received income during the taxable year. With this adjustment, two-income couples who file a joint return owe no more tax than the combined tax that would be due if separate returns were filed. Joint taxable income must be over $3,000 to benefit from this adjustment.

Virginia's income tax is imposed at graduated rates, starting at 2% and capping at 5.75%. The highest rate applies to income over $17,000. When a married couple chooses to file a joint return (Filing Status 2), they report their income together in the same column on the return. The first $17,000 of their total taxable income is then taxed at the lower rates, with the remainder being subject to tax at the rate of 5.75%. If a couple elects to use the Spouse Tax Adjustment, they calculate their income tax separately using the Spouse Tax Adjustment worksheet. As a result, the first $17,000 of each of their incomes will be taxed at the lower rates. Consequently, using the Spouse Tax Adjustment can result in a tax savings of up to $259.

Nonresidents

Filing Status 1 - Single: If your filing status on your federal return was Single, Head of Household, or Qualifying Widow(er), you must use Filing Status 1 on your Virginia income tax return. You are considered single if you are unmarried, or if you are divorced or legally separated under a separate maintenance decree.

Filing Status 2 - Married, Filing a Joint Return: You and your spouse may file a joint return if: (1) you filed a joint federal return; or (2) neither of you was required to file a federal income tax return; and (3) both spouses had income from Virginia sources. If only one spouse had income from Virginia sources, a separate return must be filed under Status 4. If one spouse had Virginia source income and the other spouse had no income from any sources, use Filing Status 3.

Filing Status 3 - Married, Spouse Has No Income from Any Sources: Use this filing status if: (1) you filed a joint federal return; or (2) neither spouse was required to file a federal income tax return; or (3) one spouse filed a separate federal return and the other spouse had no gross income and could not be claimed as a dependent of another taxpayer. If item (3) applies, the Virginia standard deduction is limited to $3,000.

Filing Status 4 - Married, Filing a Separate Return: A separate Virginia return MUST be filed if: (1) both husband and wife are nonresidents and have income from Virginia sources, but do not choose to file a joint return under Status 2; or (2) both husband and wife are nonresidents and both had income, but only one had income from Virginia sources; or (3) only one spouse is a nonresident and the couple cannot elect to file a joint resident return.

When using Filing Status 4, complete your tax return as follows: (1) Compute your federal adjusted gross income as though you had filed separately on your federal return; (2) claim only the personal and dependent exemptions, itemized deductions (if claimed on your federal return), and child and dependent care expense amounts that you could claim if you had filed a separate federal return. If one spouse claimed itemized deductions, the other spouse must also. (3) Be sure to provide your spouse's name and social security number in the spaces included on the return for that information.

Part-Year Residents

Although full-year and part-year residents use different Virginia income tax forms, their options for choosing a filing status are the same. Married filers should pay special attention to the information under Status 2 or Status 4 - Which Is Best for You?

Filing Status 1 - Single: If your filing status on your federal return was Single, Head of Household, or Qualifying Widow(er), you must use Filing Status 1 on your Virginia income tax return. You are considered single if you are unmarried, or if you are divorced or legally separated under a separate maintenance decree.

Filing Status 2 - Married, Filing a Joint Return: You may use this status if you are married and (1) you filed a joint federal return; (2) both you and your spouse are Virginia residents, or (3) neither you nor your spouse was required to file a federal return. When only one spouse has income, a married couple should use Filing Status 2.

Filing Status 3 - Married, Filing a Separate Return: If you and your spouse filed separate federal returns, you may use this filing status. If you and your spouse filed a joint federal return, but only one of you is a Virginia resident, the resident must use Filing Status 3. When using Filing Status 3, complete your tax return as follows: (1) Compute your federal adjusted gross income as though you had filed separately on your federal return; (2) claim only the personal and dependent exemptions, itemized deductions (if claimed on your federal return), and child and dependent care expense amounts that you could claim if you had filed a separate federal return. If one spouse claimed itemized deductions, the other spouse must also. (3) Be sure to provide your spouse's name and social security number in the spaces included on the return for that information.

If you and your spouse filed separate federal returns, you may file a combined Virginia return using Filing Status 4, as described below.

Filing Status 4 - Married, Filing Separately on a Combined Return: You may file a combined return under Filing Status 4 if: (1) both you and your spouse had income; (2) both you and your spouse are residents of Virginia; and (3) you filed a joint federal return, or separate federal returns. Status 4 can provide significant tax savings for married filers, as described below.

Status 2 or Status 4 -- Which Is Best for You?

Married couples filing Form 760PY, the Virginia part-year resident return, have two options for reporting their income on the same return. A married couple may elect to file a joint return under Filing Status 2, or to file a combined return under Filing Status 4.

Virginia's income tax is imposed at graduated rates, ranging from 2% to 5.75%. The highest rate applies to taxable income over $17,000.When a married couple files a joint return under Filing Status 2, they report their income together in Column B of the return. The lower rates are then applied to the first $17,000 of their total taxable income, and the remainder is taxed at 5.75%. Under Filing Status 4, each spouse reports his or her income separately, using Columns A and B of the return. The lower tax rates are then applied separately to the first $17,000 of each spouse's taxable income, which can result in a tax savings of up to $259.

Filing Status 2 should be used if:

• Only one spouse had income; or
• One spouse's income will be reduced to zero or less after claiming the age deduction and any personal exemptions.

How to Use Filing Status 4

Use Column B to report income and deductions for the spouse whose name and social security number appear on the return first. Use Column A for the other spouse.

Each spouse must claim his or her own income. Income must be allocated to the spouse who earned the income and with respect to whose property the income is attributable. For example, if one spouse owns an interest in a partnership, the income from the partnership must be assigned to that spouse on the return. As a general rule, you may not divide income equally between spouses.

Virginia additions and subtractions with respect to trade, business, production of income or employment must be allocated to the spouse to whom they relate. For example, if one spouse owns an interest in an S corporation that passes through income that is exempt from Virginia tax, that spouse must claim the subtraction for the income on the Virginia return.

Each spouse must claim his or her own exemptions. Exemptions for dependents may be allocated as the spouses mutually agree.

The key to receiving the maximum benefit is the allocation of exemptions and deductions. Careful consideration should be given to the allocation of any exemptions for dependents. As a general rule, those exemptions should be allocated to the spouse who has the highest income, particularly if that person's income is over $17,000.