Virginia pros - Treatment of VA Tax Relief Refund ?

[FEDUKE404]

Never mind.

[rbynaker]

It is included in the 1099-G and would fall under the normal recovery rules. Not sure if they will issue one in the balance due/then refund situation you describe but I think they would. If so then I think the refund would get allocated pro-rata between 2018 tax amounts paid in 2018 (i.e. withholding) and 2018 amounts paid in 2019 (balance due), just like refunds for folks who make their 4Q-ES in January.

Example: TP had $675 withheld in 2018 + paid a $75 balance due on 5/1/19 = total 2018 VA tax $750. In October (just in time for the state election), TP received a $110 bribe to reelect the incumbents--er, wait, no, sorry, that's called something else like "Tax Relief Refund". Since 90% of the tax (675/750) was paid in 2018, then 90% of the refund is allocated as a 2018 recovery of $99 and the remaining $11 is treated as a reduction in 2019 taxes paid. That drops the $75 down to $64. The $99 may or may not be a taxable recovery depending on the tax benefit rule.

Are we having fun yet?

Rick

[TAX4US]

A question comes into play. You had to file by a particular day(don't recall) to get this money. If going to give some to part why not give it to all returns filing in that particular tax year. Some clients who filed after the date did not get the $. They feel they have been unfairly left out. Just from what I am hearing.

[rbynaker]

A question comes into play. You had to file by a particular day(don't recall) to get this money. If going to give some to part why not give it to all returns filing in that particular tax year. Some clients who filed after the date did not get the $. They feel they have been unfairly left out. Just from what I am hearing.

Yes, July 1st. I agree, not a fair system but they don't let me write the laws. At the time they didn't know how much money would be in the slush fund for this so it was technically "up to $110" per taxpayer but they must have done well enough to pay everybody. I'd like to see a second round of refunds for folks who filed after 6/30/19 but I'm not holding my breath.

Rick (in VA)

[Burke]

The Commonwealth has never been known for logic. . .and much of the issue for the 2019 special payment was ~political.
One of my favorite "Are you kidding me?!?" issues with VA taxes is that if a client is making four estimated tax payments, the first payment is paid/mailed to a different entity than are the other three. (My client prefers to pay the county and not send the paperwork to Richmond, so I prepare the four "local" estimated payment coupons + instructions.) IIRC, VA Dept of Taxation does (did) not allow setting up estimated payments via tax software at the time of efiling.FE

I have always sent ALL estimated state tax payments to Richmond. Its not a problem. In the old days, many clients did not want local employees to see these as they may have known the payor, and the TP's wanted to keep that info private. They can now be done online by the TP. On the rebate, most people did not itemize so it does not factor into income (unless they did and then the usual tax refund rules apply.) I tried to get all clients to file by 7/1/19 but several just couldn't manage to do it so they missed out.

[Burke]

In the meantime, this client is pondering the possibilities of his county moving to WV or KY. Person is not at all pleased with the people in Richmond. (Actually, that is a gross understatement!)FE

Well, THAT would be interesting. A county wants to secede? You are correct, there is a vast difference between far southwest VA, and NOVA!