Personal Tax West Virginia

PERSONAL INCOME TAX IN WEST VIRGINIA

The tax laws in the state are governed by Chapter 11 of the West Virginia Code. State Personal Income Tax is imposed on the West Virginia taxable income of resident individuals, estates and trusts wherever their income is earned. Nonresident individuals, estates and trusts are also subject to this tax on income from West Virginia sources.

Almost all taxpayers who file Personal Income Tax returns file only one return per year. However, taxpayers whose West Virginia adjusted gross income other than wages are expected to exceed $400 plus the amount allowed for the personal exemptions must file quarterly returns and pay estimated tax. Taxpayers who fail to remit quarterly estimated tax payments may be subject to penalties.

The annual return of a farmer will be treated as his declaration of estimated tax if the annual return is filed on or before March 1 of the succeeding year and the tax shown to be due on the return is paid in full at the time of filing.

Tax returns must also be filed by employers who are required to withhold tax from wages they pay to their employees. The frequency of filing withholding tax returns depends on the amount of tax the employer withholds. Every employer who withholds more than $250 per month must file monthly withholding returns with the State Tax Department. Employers who withhold less than $250 per month are required to file quarterly returns. The State Tax Department may permit an employer who withholds less than $150 in a calendar quarter and the aggregate for the calendar year can reasonably be expected to be less than $600 to file an annual return.

Employers whose average withholding tax payment per calendar month for the preceding calendar year exceeded $100,000 are required to remit the tax attributable to the first fifteen days of June on or before June 23 each year. The employer may elect to remit an amount equal to 50 percent of the employer's liability for compensation payable or paid to employees in May. The amount of tax paid for the first fifteen days of June is credited against the total liability for the month of June.

The West Virginia Personal Income Tax is said to be a conformity statute because any term used in this law has the same meaning as when it is used in a comparable context in federal income tax law unless a different meaning is clearly required.

DETERMINATION OF TAX LIABILITY

Computation of West Virginia taxable income begins with federal adjusted gross income to which specific increases and/or decreases are made. A taxpayer generally determines his tax liability by computation using tax rates and the West Virginia Resident Income Tax Return form IT-140.

Nonresident taxpayers who are residents for income tax purposes of Kentucky, Maryland, Ohio, Pennsylvania or Virginia and their taxable West Virginia income is received only as salary or wages must file a West Virginia Personal Income Tax form IT-140NR-S.

Residents of Pennsylvania or Virginia who have spent more than 183 days in West Virginia are residents of West Virginia for income tax purposes. Form IT-140NR-S is essentially a request for a refund only, and neither computation nor reference to a table is required.

Nonresident taxpayers whose residence for income tax purposes is anywhere other than the five states named above file form IT-140NR/PY that, like form IT-140 for residents, requires computation and the use of tax rates.

West Virginia modifications that decrease federal adjusted gross income are as follows:

  1. the first $2,000 of benefits received under the West Virginia Public Employees' Retirement System or the West Virginia Teachers' Retirement System or military or federal civil service retirement benefits received to the extent included in federal taxable income;
  2. the first $20,000 of annual military retirement income, including survivorship annuities;
  3. all benefits received under the West Virginia Department of Public Safety Death, Disability, and Retirement Fund or retirement income received as pensions or annuities from any police or firefighter's retirement system;
  4. income from any source received by persons who are sixty-five years of age or older or who are totally and permanently disabled or received by their surviving spouses, regardless of age, to the extent included in federal taxable income, if the deduction does not exceed $8,000 for a single return or a maximum of $8,000 per person for a joint return;
  5. interest on United States obligations to the extent included in federal adjusted gross income;
  6. interest or dividends on obligations or other securities of any United States authority, commission or agency, which is included in federal adjusted gross income but is exempt by federal law from State income taxation except for dividends from national bank stock, but including federal interest and dividends paid to shareholders of a regulated investment company;
  7. interest or dividend income from bonds issued by the State of West Virginia or its authorities, commissioners, or instrumentalities where the interest is subject to federal taxation but exempt by West Virginia law from State taxation;
  8. State tax refunds included in federal adjusted gross income;
  9. the first $2,000 of deposits made to medical savings accounts offset by any withdrawals made for purposes other than payment of medical expenses if the medical savings account qualifies under West Virginia law but not under federal law for such treatment;
  10. qualified payments made toward tuition pre-payment contracts during the tax year;
  11. certain other income which this State is prohibited from taxing under federal law that are included in federal adjusted gross income, specifically Railroad Retirement benefits;
  12. premiums that are paid for long-term care insurance that provides coverage for the taxpayer, the taxpayer's spouse, parent or dependent if the amount of the premiums is not allowable as a deduction when determining the taxpayer's federal adjusted gross income beginning with tax years starting on or after January 1, 2000;
  13. an amount equal to the difference between the amount that would have been received had the plan not been terminated and the amount actually received from the guarantor for retirees who retire under an employer-provided defined benefit plan that terminated prior to or after retirement and is covered by a guarantor whose maximum benefit guarantee is less than the maximum to the which the retiree was entitled from the 2001 through 2006 tax years1, and
  14. active duty military pay received by West Virginia National Guard or reserve forces members who are called to active duty for Operation Enduring Freedom or for domestic security duty as a result of a call out under the authority of the President of the United States.

West Virginia modifications that increase federal adjusted gross income are as follows:

  1. interest income on State and local obligations other than those of West Virginia and its political subdivisions;
  2. interest or dividend income from obligations or securities of any United States authority, commission or agency that are, by federal law, exempt from federal income tax but not from State income tax;
  3. interest on money borrowed to purchase obligations that earn income exempt from State income tax;
  4. the amount of lump sum distributions for which the taxpayer has elected to be separately taxed for federal income tax purposes, and
  5. the amount withdrawn from a medical savings account that is used for a purpose other than payment of medical expenses.

West Virginia adjusted gross income (WV AGI) results when the applicable West-Virginia increasing and/or decreasing modifications have been applied to federal adjusted gross income. To determine West Virginia taxable income, the taxpayer takes a deduction from WV AGI based upon the number of personal exemptions he claimed on his federal return.

EXEMPTIONS

  1. Any individual taxpayer, whether resident or nonresident, is currently allowed $2,000 for each exemption to which he is entitled for the taxable year for federal income tax purposes. A husband and wife who file a joint federal return but separate West Virginia returns may each claim only the exemptions to which they would have been entitled as individuals if they had filed separate federal returns. A surviving spouse is allowed one additional $2,000 exemption for two taxable years following the year of the death of his or her spouse. Those claimed as dependents on another's return are entitled to a $500 exemption. Estates and trusts are allowed only one $600 exemption.-

DEDUCTIONS

No subtractions are allowed from WV AGI for a standard deduction or for any federal itemized deductions.

EXCLUSIONS

Taxpayers whose federal adjusted gross income is less than $10,000 may exclude a portion of their earned income. With the exception of married filing separate filers, all taxpayers with federal adjusted gross income of $10,000 or less may claim an exclusion for earned income of up to $10,000 per year. Married filing separate filers with federal adjusted gross income of $5,000 or less may claim an exclusion for earned income of up to $5,000. Earned income is income attributable to wages and salaries or other labor income.

RATES

Personal Income Tax rates differ with each taxable income category. Although the rates increase as taxable income increases, each rate is independent of every other rate.

TAX RATE SCHEDULES

All Taxpayers Except Married Filing Separate Returns
___________But Not___________________________________________________________Of Excess

Over____Over___________________________ ____________Plus_________________Over

$0 -_____$10,000__________$ 0.00_____________3.0%_______________$ 0

10,000 - 25,000________300.00___________ 4.0%_______________10,000

25,000 - 40,000________900.00____________4.5%_______________25,000

40,000 - 60,000________1,575.00_________6.0%_______________40,000

60,000 -______________________2,775.00_________6.5%_______________60,000

Married Filing Separate Returns

____________But Not_____________________ _______________________ ____________Of Excess

Over___Over______________ ________________________Plus________________Over

$0 - ____$ 5,000___________$ 0.00_____________3.0%_______________$ 0

5,000 - 12,500___________150.00____________4.0%_______________5,000

12,500 - 20,000________450.00____________4.5%_______________12,500

20,000 - 30,000________787.50____________6.0%_______________20,000

30,000 -_________ ____________1,387.50_________6.5%_______________30,000

MINIMUM TAX

West Virginia Personal Income Tax liability must be at least 25 percent of any federal minimum tax or alternative minimum tax for the taxable year. If tax liability determined from tax tables or rate schedules does not equal the 25 percent minimum, the West Virginia minimum tax will be the amount necessary to yield total tax equal to 25 percent of the federal minimum tax less the tax liability determined by tax tables or rate schedules.