Does the IRS tax retirement income that Virginia does not?

[GaryB0]

I have finished my taxes but am afraid to file them.  I owe $1000 to the IRS but on my Virginia return I am refunded $2000.  It just seems like something is not adding up.

[MargaretL · Accepted solution]

You are correct. The IRS (federal) does tax retirement income, while VA allows taxpayers born on or before Jan 1,1952 to claim a deduction of max $12,000 for each taxpayer on the return for 2016. VA also allows a subtraction for Social Security benefits that were included on your federal tax return. so it is entirely possible that you owe to the federal IRS but not on the state tax return.