Rulings of the Tax Commissioner
Individual Income Tax
Itemized deduction; Standard deduction; Nonresident aliens
March 24, 1997
Re: Request for Ruling: Individual Income Tax
This is in reply to your letter of November 18, 1996, in which you request a ruling regarding the Virginia individual income tax return of nonresident alien individuals. I apologize for the delay in responding to your letter.
Nonresident alien individuals may be required to file a federal nonresident alien income tax return. While such individuals are allowed certain limited itemized deductions, they may not claim a federal standard deduction. You request a ruling on whether the Virginia standard deduction may be claimed by nonresident alien individuals when no standard deduction is allowed on the federal nonresident alien return and no itemized deduction amounts are actually claimed.
Code of Virginia
§ 58.1-301 provides that terminology and references used in Title 58.1 of the
Code of Virginia
will have the same meaning as provided in the Internal Revenue Code unless a different meaning is clearly required. One of the ways that Virginia "conforms" to federal law is in the treatment of the itemized and standard deductions when computing Virginia taxable income.
Internal Revenue Code (IRC) § 63(c)(6)(B) provides that a nonresident alien individual is not eligible for the federal standard deduction. Treasury Regulation (Treas. Reg.) § 1.873-1(a)(4) further provides that, "The standard deduction shall not be allowed in computing the taxable income of a nonresident alien individual." This regulation addresses the itemized deductions that may be claimed by nonresident aliens in determining federal taxable income, however, these deductions are limited. A nonresident alien, therefore, is only allowed to claim certain itemize deductions and is not allowed to claim a standard deduction under federal law.
Title 23 of Virginia Administrative Code (VAC) 10-110-143(1)(a), copy enclosed, provides in pertinent part:
Any taxpayer who itemizes his deductions for federal income tax purposes
also itemize deductions for Virginia income tax purposes. The federally allowable amount of itemized deductions . . . shall be subtracted from FAGI in determining Virginia taxable income, but must be reduced by any amount claimed as a deduction for income taxes paid to Virginia or any other state, locality, foreign country, or other taxing jurisdiction. (Emphasis added.)
As a nonresident alien must itemize deductions for federal tax purposes, the individual must itemize deductions for Virginia tax purposes. If a nonresident alien does not claim an itemized deduction amount on the federal tax return, a standard deduction may not be claimed on the federal or Virginia returns.
Thank you for discussing your concerns with the department. If you have further questions, please contact**********at ******** .
Danny M. Payne