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DCbound
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I am a DC resident, but Virginia state income tax is deducted from my paycheck. Do I still have to file DC taxes? If no, then what tax documents do I need to file in DC?

 
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I am a DC resident, but Virginia state income tax is deducted from my paycheck. Do I still have to file DC taxes? If no, then what tax documents do I need to file in DC?

OK...the answer is yes, you need to file a DC tax return...if you were a resident of DC in 2019.

 

Here's the thing.  VA and DC (and several other states in your area) have what is called a "Reciprocal tax agreement" where some of the states surrounding DC, and DC, agree to not assess an income tax on residents of one of the the other states if the individual crosses the border to work a W-2 job in the other state.

 

Thus, a resident of DC who crosses into VA daily to work a W-2 job, should only be assessed with DC tax withholding in boxes 15-to-17 of their W-2.  Likewise, a VA resident crossing into DC to work a W-2 job, should only be taxed VA state taxes.

 

But with that agreement in place, you needed to certify you were a DC resident with the VA Employer.  That is a form VA-4 with box 3 checked  (your employer's payroll or HR department should have these forms)....but here's a copy:

 

https://www.tax.virginia.gov/sites/default/files/taxforms/withholding/any/va-4-any.pdf

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...AND...if the VA employer can withhold DC taxes, you should also give them a form D-4 to start DC withholding. (DC hasn't been good about having updated D-4 forms. check with your employer).

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SO...what do you do about the VA withholding.  Since VA can't really tax your wages there, since you were a DC resident...you prepare and file a form 763-S by mail ( don't try to do this with TTX ) to get all the VA withholding back.

 

https://www.tax.virginia.gov/sites/default/files/taxforms/individual-income-tax/2019/763-s-2019.pdf

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Then, you only file a DC-Resident tax return for ALL your income for the entire year...even the VA wages.  DC does NOT give you a credit for taxes paid to VA...since VA wasn't supposed to be taxing that income in the first place, and DC expects you to go thru the process to get those VA taxes refunded to you.

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All of this presumes you were a DC resident all of 2019.  IF you moved from a VA residence-to-DC during 2019, then there will be  part-year taxes involved, where VA does get to tax some of your income,  during the time you were a VA resident,  as a part-year VA resident.....along with a part-year DC tax return  OR, if you moved from some other state into DC during 2019, then you may have part-year tax returns for DC and that other state to deal with too.

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Other info on which states are  Reciprocal tax states:

https://ttlc.intuit.com/community/state-taxes/help/which-states-have-reciprocal-agreements/01/25576

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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