Virginia has made the following changes for the upcoming 2020 tax year:
Deductions & Subtractions:
- Increased Standard Deduction- For taxable years beginning January 1, 2019 to January 1, 2026, the standard deduction has increased from $3,000 to $4,500 for individuals and married filing separate returns and increased from $6,000 to $9,000 for married filing joint returns.
- Changes to Certain Itemized Deductions- beginning on or after January 1, 2019, taxpayers may claim a deduction for the actual amount of real and personal property taxes imposed by Virginia or any other taxing jurisdiction not otherwise deducted solely on account of the $10,000 annual limitation on the federal deduction for state and local taxes paid. Virginia also deconforms from the suspension of the overall limitation on itemized deductions, commonly known as
the Pease limitation. For tax year 2020 Virginia will deconform from the increase in medical expense deduction.
- Virginia's Fixed Date Conformity with the IRS Code was advanced from December 31, 2018 to December 31, 2019 with certain exceptions. Virginia will continue to deconform from certain assets under federal law with the five year carryback for NOL created in 2008 or 2009.
- Taxpayer's may take a subtraction from income regarding an investment in a Virginia real estate investment trust made on or after January 1, 2019 but before December 31, 2024.
- For tax years after January 1, 2020, if the federal government made an adjustment to your income via an audit the partner may need to file an amended return if income was not reported on the additional return.
- There has been an extension to the sunset date of the Major Business Facility Job Tax Credit. The credit is now set to sunset for taxable years beginning on or after July 1, 2022.
- Any taxpayer holding a Port Volume Increase Tax Credit issued in taxable years beginning on and after January 1, 2018, but before January 1, 2022, may transfer unused but otherwise allowable credits to another taxpayer for use on the Virginia income tax return.
- Taxpayers may claim the Recyclable Materials Tax Credit beginning January 1, 2020 but before January 25, 2025 for machinery and equipment used mostly in facilities that perform advanced recycling. See Schedule CR.
- Taxpayers may claim a Motion Picture Tax Credit in future fiscal years other than the year they were performed starting on July 1, 2020, but before January 1, 2027. See Schedule CR.
- Changes have been made to the Research and Development tax credit for tax years beginning after July 1, 2020 the application due date for the forms MRD and RDC has been extended from July 1 to September 1 of the year following the incurred expenses.
- The sunset date for the Green Job Creation tax credit has been extended from January 1, 2021 to January 1, 2025.
- Communities of Opportunity Tax Credit added an additional area located within the Washington Arlington-Alexandria Metropolitan Area may now qualify for the credit when before they did not qualify before. Only the Richmond Metropolitan or Virginia Beach-Norfolk-Newport News area qualified for the credit. This applies to taxable years beginning on or after January 1, 2020, but before January 1, 2025.
- Taxpayers that need to file amended returns must now use codes to indicate the reason the return is being amended.
- Effective July 1, 2020 recent tax law changes require taxpayers to report federal adjustments to the State of Virginia Department of Revenue. Taxpayers may be required to file an amended return. See instructions for amended returns.