Virginia tax

[TAX4US]

Ok to all my Virginia cohorts. I have a TP that lived in MD all her life. Took a medical deduction on most of her MD returns due to Nursing home cost. TP recently moved to Virginia due to cost being cheaper here. After several years TP received a reimbursement from the INS company from expenses paid while in MD. This income was separately state on the 1040 as other reimbursements. This reimbursement was received while a Virginia resident but the expenses were never deducted on a Virginia return. TP filed a non-resident return to MD to pay the tax on this income. TP also took a deduction under Virginia adjustments to remove this income from Virginia tax. Can Virginia tax this as it was never used on the Virginia return as a deduction? Your thoughts

[kathyc2]

Ok to all my Virginia cohorts. I have a TP that lived in MD all her life. Took a medical deduction on most of her MD returns due to Nursing home cost. TP recently moved to Virginia due to cost being cheaper here. After several years TP received a reimbursement from the INS company from expenses paid while in MD. This income was separately state on the 1040 as other reimbursements. This reimbursement was received while a Virginia resident but the expenses were never deducted on a Virginia return. TP filed a non-resident return to MD to pay the tax on this income. TP also took a deduction under Virginia adjustments to remove this income from Virginia tax. Can Virginia tax this as it was never used on the Virginia return as a deduction? Your thoughts

I would think that since it was income while a VA resident it would be taxable to VA only. I don't think it matters that expenses as incurred were deducted years ago from MD income.

[Snaggletooth]

Amend the Appropriate Returns

Since this was a reimbursement, could you not use it to reduce the medical expenses deducted in the year to which the reimbursement applies? Anticipatory reimbursements which reduce Sch A deductions are an exception to the cash method of reporting for individuals.

The likely effect is that the client may not have to pay anyone or any state.

[TAX4US]

I will try to help TP in this case. I only reviewed the return when VA question the deduction. I too agree that it should have been handled differently.