My state taxes were withheld all year (income=$75,211, state taxes withheld=$4784). Why do I still owe $4k in taxes to VA?

[sajani-2012]

This is my first time filing in the state of VA.

[MindyB]

It sounds like your withholding should have covered your tax liability, based on Virginia's top marginal rate of 5.75%. Are you sure your W-2 showed Virginia in Box 15 of your W-2 and this is what you entered in TurboTax, and not your prior state of residence?

If you are sure the entry is correct, I would be happy to take a look at the return. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[SteamTrain]

Edit any tax forms that had VA withholding on them,

Make absolutely sure the state withholding is in the correct box on that particular form.

Especially if you "uploaded" any pictures or PDFs of any of your forms...the $$ might have gone into the wrong g...so always go back and edit every form you entered to make sure EVERY box has the correct $$ in it.

[sajani-2012]

Hi MindyB - thank you for your prompt response! Now that I look at it, Box 15 does say DC instead of VA. Is this the problem? Should I have my employer correct it to say VA?

[MindyB]

Yes, this will need to be corrected going forward, but it cannot be changed now. If the issue is just payroll did not update your address, you can contact payroll to let them know.  However, if you continued to work in DC, file Form D-4A with your employer to stop DC withholding.  DC and Virginia have a reciprocal agreement, meaning you pay taxes to your home state of Virginia and do not need to file in DC.

Now, to correct the issue for 2024, that you are having, you will need to file a non-resident DC tax return and a resident VA tax return. You will request a refund of all of the DC tax paid, and you will owe tax in Virginia. Since DC and VA have a reciprocal agreement, there is no credit for taxes paid to other states.

Here is a TurboTax article you may find helpful: How do I file a nonresident state return?

[sajani-2012]

Wow wow wow. Okay, I'll work with my employer on this. Thank you so much again!