Virginia Personal Exemption for a Dependent

[Reel35]

A bit confused on the rules for claiming a personal exemption on a Virginia return.  The Virginia law explicitly states "A deduction in the amount of $930 for each personal exemption allowable to the taxpayer for federal income tax purposes." (Code of Virginia § 58.1-322.03).  Now a person claimed as a dependent on someone else's Federal return would not be eligible to claim a personal exemption for themselves on their Federal return (I'm aware the value of a personal exemption is $0 for Federal purposes).  Given this, I would think that the dependent would therefore not be eligible to take the personal exemption on their own Virginia return.  However, the Virginia tax form has 1 exemption hard coded into the form and, indeed, turbotax is deducting the personal exemption on the return.  Boxes on the Virginia return indication the taxpayer is a dependent are appropriately checked.  Any idea what I'm missing here?

I appreciate any clarity provided!

[DMarkM1]

No.  VA DOR says each "filer" has an exemption of $930.  Here is the VA reference.  VA doesn't limit the exemption, but does only allow the VA standard deduction to apply to earned income for tax filers who can be claimed as dependents according to VA 58.1-322.03). 

[Reel35]

Thanks for the quick reply.

I have looked at that webpage as well but I'm not sure I understand how it's consistent with the actual law.  While I agree with the comment about the standard deduction, the exemption is a bit different.  In fact, that same page also states "You will usually claim the same number of personal and dependent exemptions that you claimed on your federal return."  The exception to this rule, it notes, is when you have different filing statuses on your Federal and Virginia returns, which is not the case in the scenario.  Not to mention, no one is "claiming" exemptions on their federal return at the moment, and haven't for several years, so the webpage is clearly out of date.  Furthermore, my read of VA§ 58.1-322.03(2)(a) does limit the exemptions you claim on your return to those that you would qualify for on your Federal return (so, not a dependent).  I guess I'm wondering where in the Virginia regs this law written in VA§ 58.1-322.03 is overridden, because I just can't seem to find it.

Certainly don't expect you do hunt down the governing section of the Virginia Code and I do really appreciate the quick reply. 

[JulieS]

Yes, you are correct that the Virginia law references exemptions and the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated federal exemptions. 

The Virginia instructions use exemptions and dependents interchangeably. For example: "Generally, you may claim the same number of dependent exemptions allowed on your federal return."

Perhaps because the TCJA is set to expire in 2025, they decided to keep the wording of their existing laws in place even though they are not consistent with the federal laws. 

In any case, millions of Virginians are claiming exemptions in the same manner they did before 2017 and there have not been any problems with it. 

[Reel35]

Thank you, JulieS.

I'll keep searching for the guiding law.  I'm definitely missing something and relying on "everyone else is doing it" just isn't satisfying my curiosity.  To your point about the change with the TCJA, I think the Virginia law as written is completely accurate and still works.  As I'm sure you know, the TCJA did not eliminate the personal exemption, it merely set the exemption to $0 (and thus no one "claims" it).  So as long as you are eligible for the $0 exemption on the Federal return, you are eligible for the personal exemption on the Virginia return.  Therein lies my confusion.  Dependents are not eligible for the Federal personal exemption.  Additionally, allowing it for state purposes means that dependent has TWO personal exemptions being taken for them, assuming the dependent also files their own state return.  Seems a bit odd a state would allow that.

Thanks again for taking the time to reply.