Tax Consequence of Rollover out of Virginia 529

[dgoldbe1]

I currently have about $12k in a Virginia 529 account that I contributed over a few years to get the state tax deduction when we lived there. I've since left the state and am considering rolling to funds over to another 529 account. I know that there shouldn't be any federal tax consequences, but Virginia529's documentation says this:

A Rollover to a non-Virginia Qualified Tuition Program or non-Virginia Qualified ABLE Program will require the Account Owner to add back to his or her Virginia taxable income any amounts previously deducted from the Account Owner’s Virginia taxable income as a result of Invest529 Contributions.

Does this mean that I will have to amend the returns where I took the deductions? Or, will the deductions be reported as income for this year's taxes? I wouldn't have any other income in Virginia that year, so that seems to be a non-issue since it would be below the standard deduction. Does any of this make sense?

Thanks,
David

[Hal_Al]

Q. Does this mean that I will have to amend the returns where I took the deductions?

A. No.

Q. Will the deductions be reported, as income,  for this year's taxes?

A. Yes, it will be reported on this year's VA return.  But, it will not be reported as income. It will be reported as an adjustment to income on Schedule 763 ADJ.

Q. I wouldn't have any other income in Virginia that year, so that seems to be a non-issue since it would be below the standard deduction. Is that right?

A.  No. Virginia, like most states, makes non residents report all their income, regardless of where sourced ("the filing threshold for a nonresident is determined by Virginia adjusted gross income computed as a resident, including income from all sources"). 

I'm of the opinion that you do not need to file a VA tax return, but cannot quote you a reference. I base that on the opinion you have no actual VA source income (it's only an adjustment). "Nonresidents of Virginia with income at or above the filing threshold must file if any of their income is from Virginia sources."  The VA filing instructions list what is VA source income. See page 7 at 

https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2023-760-instructions.pdf