What is the best way to claim VA state withholding when living in DC but working in VA

Forum|Forum|2 years ago
March 5, 2024
1 reply
10 views

I have a client that lives in DC [all year] but works in VA.

His company only took out VA state withholding

Does he need to pay the computed DC tax and separately file for a VA refund using VA form 763-S

Or can he file a tax credit claim using DC D-40 line 29 with Schedule U?

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rbynaker

Level 13

Oops.

Step 1: Get the employer to stop VA W/H and, if you're lucky, you might get them to start DC W/H. But if they have no DC nexus they're likely not required to (they can, however, register and choose to withhold as a courtesy to the employee.) Then you'll only have 2 1/2 months of this problem next year.

Step 2: You'll file a VA 763-S (on paper) and attach the W-2 showing withholding. If you file now they MIGHT have the refund in time to turn it over to DC (along with more tax to cover the higher tax rate).

Rick

C

cmannoAuthor

Level 3

Thank You very much.

I have already advised client to get his company to stop VA W/H and change to DC W/H [VA and DC have a reciprocity agreement].

I get using VA 763-S is a good way to go but was wondering if we could use DC form D-40 with Schedule U to claim a tax credit from VA W/H saving the hassle and delay in claiming a refund from VA? [The form says to include the resident Tax return so that needs to go first]

And yes, client is aware of the higher taxes in DC relative to VA ;-(

rbynaker

Level 13

There's no VA tax to credit. It's just refundable withholding done in error.

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