Residency (CA and VA)

[KJM14]

A client lives in CA and considers it his primary home (domicile). He has primary house, job, votes, dmv, etc.

They have a 2nd home in Virginia to stay while visiting family.  It is possible that in some years, they may stay more than 183 (non-consecutive) days However, they do not expect to earn any income in VA.

Does a return need to be filed in VA (if they stay more than 183 days)?  If so how is that reported on CA/VA returns?   Part year resident for each doesn't seem right if they aren't moving.

[Just-Lisa-Now-]

I dont see any VA filing requirement when they stay there temporarily and aren't earning any money from that state.

[George4Tacks]

From this I believe they are considered residents https://www.tax.virginia.gov/residency-status#:~:text=Resident%20--%20A%20person%20who%20lives%20in%....

From the instructions, my guess is that they would be required to file, but they would get a credit for taxes paid to VA  on their CA return and not owe any additional tax, since I expect CA to be the  larger.  tax https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2020-form-760-instructions.pdf  If 

You need to determine their Virginia AGI - go through the instructions, or if you can do a demo VA return with the data, then PS can help you to determine the answer. 

[BobKamman]

A little prejudice is a dangerous thing. Why do you expect California taxes to be higher than Virginia’s? It’s only for higher incomes that California reaches into higher brackets. Virginia’s “progressive” tax rates are 2% up to $3,000; 3% from $3,000 to $5,000; 5% from $5,000 to $17,000; and 5.75% for income over $17,000.

California doesn’t exceed that 5.75% until a much higher amount: 1% up to $8,932; 2% on $8,933 to $21,175; 4% on $21,176 to $33,421; and 6% on $33,422 to $46,394.

[Greta]

I agree. I live in Virginia. The VA tax rate is practically a flat 5.75% rate as over a lowly $17K income.

[BobKamman]

History is written by the victors. Tax cliches are written by the wealthy.

Things people may not know: California is often described as high-tax, Texas as low-tax. But that's only true for high income. For the bottom 60%, taxes are lower in CA

https://twitter.com/paulkrugman/status/1430893053888262145 

[KJM14]

thanks for the reply.   There is no income from VA so would the reverse be true...They file in VA and get credit for taxes paid in CA?

I am not sure ProSeries will allow them to file as resident for both states so that was the other question (IF they ended up spending more that 183 days in VA in any one year)

thanks again

[Greta]

Virginia gives other-state credit only if there is a Virginia tax liability.

If find residency rules fuzzy. If I were in client's shoes, I'd just forget about Virginia since it had no income to declare, and file full-year CA.

[Terry53029]

As @George4Tacks  said VA has 183 day rule, and you will pay tax there on all your income, even if not earned in VA. You will get to apply for a credit on your CA return for any tax paid to VA. You will file full year resident for VA, and part year resident resident for CA. Here is a link for info:

https://www.investopedia.com/tax-residency-rules-by-state-5114689

[BobKamman]

From the instructions to California Schedule S:

*A dual resident is any taxpayer who is defined as a California resident under California law and a Virginia resident under Virginia law. If you are a dual resident, you are allowed to claim the other state tax credit for taxes paid to Virginia on Virginia source income.

Then it adds the following, because many members of Congress "live" in Virginia while representing their state or district back home:

Dual residents who are elected or appointed officials and staff as defined in R&TC Section 17014(b) may claim the other state tax credit for taxes paid to Virginia on all income taxed by Virginia whether or not it has a source in Virginia.

I would file resident returns for both states, if the 183-day test in Virginia is met, and take credit for California tax on the Virginia return.