Form 763 Virginia Non-Resident return

[JeffCPA]

My clients are residents of PA, but they had some real estate in VA that they sold and had a profit.  So, I am preparing and filing a VA non-resident return, which is Form 763

My clients had some schedule C income, none of which is taxable on their VA non-resident return.   However, their Federal Schedule C income is flowing onto the VA Schedule FED/CG form.  that form is asking me to enter the VA locality where this Schedule C income was earned.   Of course, it was not earned in VA at all, and so it is not taxable to VA. In the drop down  menu for locality there is nothing to enter to label this as non-resident income.   And I am getting an error message now, which is preventing me from efiling the VA non-resident return.  I have not called intuit tech yet, but is this a software glitch.  I tried deleting this VA Sch FED/CG from the return, but it does not go away.   what should I be doing here??  Help!!!

[rbynaker · Accepted solution]

This is a "feature" that either VATax or ProSeries decided to introduce a few years ago.  Prior to that there was an option to select Non-resident/Out-of-state but that was removed.  I never found a resolution to it but you might try calling support.  They'll tell you to come back here and post something in the Idea Exchange where it will be ignored, but it might make you feel better. 🙂  Maybe there's some secret way to get this to work now but more likely they'll tell you that you "have to" mail in the return.

I would just pick a County/City from the list (maybe the one the real estate was located in?) and efile it.  It doesn't affect the math any.

Rick

[Terry53029]

In ProSeries Pro if you have nonresident state returns to file, you have to fill out part XI on the federal information worksheet, then quickzoom to nonresident state allocation worksheet. If you skipped this step then you need to delete the nonresident state, and do over, starting in part XI

[JeffCPA]

Hello Rick.  Thanks for this reply and information.   I am not surprised by your response, as I was thinking exactly what you have stated about this question.   I think it is a sofware issue, that they simply do not know about, and/or know about but have ignored, and/or know about, but don't know how to fix it.  Either way, frustrating and a mess.   I may very well go ahead and just indicate a county of some sort and file return that way, as I long as it does not change the outcome.  Thanks.   Jeff

[JeffCPA]

Thanks Terry.   Appreciate the input.   I did do exactly what you are saying to do in the first instance.   However, for good measure, I deleted the VA state return completely, and then did part XI on fed. information worksheet again, and then did VA non-resident return again, and I am still getting the same pop up error message.  There is something wrong with the software.  Thanks for your input.   Jeff

[Greta]

Maybe pick Bath County, they have really low real estate and personal property taxes 🙂  Whoever in Bath County gets to see the return perhaps will figure out that it's nonresident.

I am SO frustrated that the county info does not transfer from the prior year. It makes me open the prior year just to discover what the county is for my hundreds of Virginia clients. It takes a dreary two days just to get this done ahead of tax season. I have been tempted to put them all in Bath County just to register a complaint.

[Terry53029]

@JeffCPA  I have done a client with same scenario as your client (Different state), and had no issues. I made a mock return using VA as non resident state, and still no issues. When doing VA the nonresident 763 computes the tax based on total income, and then uses a percent on VA taxable income to federal income to compute VA tax. In my mock return the total income was $378843. The taxable income for VA was $50000 (capital gain from sale of VA property) The form then calculates percent of total income to VA income of 13.2% (378843/50000) which is correct. form 763 then calculates VA taxable income of $45843, and a tax of $2378 which to me sounds reasonable and correct. I used the ProSeries Pro 2023 program. 

[JeffCPA]

Thanks Terry.    My issue is not that the VA non-residet return is calculating things incorrectly.  Rather there is a particular form that is demanding i report my clients Schedule C income from their federal return get reported on their VA non-resident, as being earned in a particular VA county.  That makes no sense.  They are not VA residents, and their Schedule C income was not earned in VA.   Thanks for your input though.