Question on Need to File State Return in DC (or Virginia)

Forum|Forum|3 years ago
March 13, 2023
2 replies
6 views

Hello,

I am doing my daughter's taxes. I live in Washington state. She is a full time student, so she is technically a Washington State resident. We have no state taxes here. However, she worked this past summer in Virginia. She made less than $5k. However, she did pay about $300 in federal tax and about $250 in state tax which she should get back.

The bizarre thing that I don't understand is that her W-2 has employer address in Virginia where she worked. Her personal address as stated on this W-2 is her physical address in the District of Columbia. Line 15 of this W-2 asking for "State" shows "DC". I am interpreting this to mean that her employer paid taxes to "DC" which seems strange to me. So, several questions:

1) Does she need to file a state income tax return for the District of Columbia (DC) or for Virginia? I would have thought that entering "DC" in box 15 of W-2 would help make this determination in TurboTax but it appears to be dictated by choice of state income in personal info section.

2) I know she is under income threshold limit for even having to file a state or federal return, but I am assuming that in order to get a refund of the taxes she paid, that she will need to file. Please verify.

3) There is a $45 additional fee for the ability to file a state return in TurboTax. Is there any way around this given circumstances described above? That's pure piracy when seeking refund of $250.

Thanks much.

Timoshenko

MaryK4

Level 15

She will NOT have to file a Virginia tax return because she is Single and her VAGI is less than $11,950 (filing threshold) and the employer did not withhold for for Virginia.

Because she is not a resident of DC and did not work in DC, you can use Form D-40B, Non-Resident Request for Refund D-40B (Fill-in) instead of filing a DC nonresident return to get the DC withholding back. She can also file a federal return to get the federal withholding.

I provided the DC form so you do not have to pay the TurboTax filing fees.

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TimoshenkoAuthor

Level 3

This is fantastic. Much appreciated.

However, can you confirm my understanding that because my daughter is a full-time student, that it is entirely appropriate to claim WA state as her state of residency?

The issue that gives me pause is that it appears from the D40B form that she would be declaring a "Domicilary state exemption" yet there is verbiage that says "I did not maintain a place of abode for a total of more than 183 days". While at school, she lived in DC, well over 183 days.

Thanks much.

Timoshenko

Cynthiad66

Level 14

Attending college in a state does not come anywhere close to making you a resident of that state *FOR TAX PURPOSES*. While colleges will have their own residency requirements to determine if you pay resident tuition rates or non-resident tuition rates, it has absolutely no bearing on your home state for your taxes.

@Timoshenko

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TimoshenkoAuthor

Level 3

Hi Cynthiad66,

That is the same verbiage that I found when googling this subject. However, I would ideally still like to find some further guidance related to justifying non-residence in light of D-40B verbiage that states "who did not maintain a place of abode with the District of Columbia for an aggregate of 183 days or more during the taxable year." This verbiage suggests she is a resident and I don't see any verbiage that would provide an "out" given that she is a student ... other than this general language from google. I do see further instructions in 2000 D-40B instructions indicating that "any individual who wants a ruling as to his/her liability for District of Columbia income taxes [must file form D-40B]".

Noting again that this whole thing is a bit of a silly exercise because her income is below threshold limits and I could file a DC state return but TurboTax wants to charge me $45 to do so. I don't want to pay this but also compare this with the potential cost (in terms of my time) from potential future hassles. Noting that the D-40B form requires attachment of W-2 form but not federal return, so income threshold issue may go unrecognized.

Thanks.

Timoshenko