Why do I qualify for Federal EIC but not for Virginia?

[sharruns]

I am eligible for Federal EIC but not Virginia

[JohnW152]

There are several reasons that you might not qualify for Virginia EIC, even though you received the credit on your federal return.

According to Virginia Earned Income Tax Credit (Refundable) and Virginia Earned Income Tax Credit (Non-refundable) on the Virginia Earned Income Tax Credit (EITC) & Credit for Low Income Individuals page, you're not entitled to state EIC if:

• you were claimed as a dependent on someone else’s Virginia income tax return, or
• you, your spouse, or any dependent listed on your return claimed one or more of the following exemptions, deductions, or subtractions:
  • subtraction for wages or salaries received by members of the Virginia National Guard
  • subtraction for up to $15,000 of military basic pay for military service personnel on extended active duty
  • subtraction for up to $15,000 of salary for a federal or state employee whose annual salary is $15,000 or less
  • additional personal exemption for blind or aged taxpayers 
  • age deduction

[rogerp7]

TT is saying I do not qualify for the Virginia low income credit, but I'm not disqualified based on any of the reasons given here. My income is definitely below the limit. How can I submit my numbers for review by Intuit to check if there is a bug with the program?

[DawnC]

Are you receiving one of the other, possibly larger, credits?   If you have no tax liability, the only one you would qualify for is the refundable EIC.   Verify your tax liability on your VA return.

 Virginians with lower income may qualify for one (but only one) of several income-based tax credits (link has details):

• Virginia Earned Income Tax Credit (Refundable)
• Credit for Low Income Individuals
• Virginia Earned Income Tax Credit (Non-refundable)

Both the Credit for Low Income Individuals and the non-refundable Earned Income Tax Credit cannot exceed the total amount of your tax.   You can only claim one of these credits, so choose the one that benefits you most.    @rogerp7 

[rogerp7]

Yes, this is the one: Virginia Earned Income Tax Credit (Refundable). I received it for 2023. I didn't owe any taxes, but got that credit. I only made a little more income in 2024. The only other change is I only lived in Virginia through August of 2024.

[AmyC]

The refundable VA EIC is 15% of your federal. You do qualify as a part year resident.  Are you receiving federal EIC? 

To see your forms:

• In desktop, switch to Forms Mode. 
• For online, see How do I preview my TurboTax Online return before filing?

@rogerp7 

[rogerp7]

Yes I am. My federal EIC is $621. So that's why it doesn't seem correct for Virginia.

Last year for 2023 it was $600 and I received $90 from Virginia.

I posted my own topic for this which includes my uploaded return token: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/tt-is-saying-i-don-t-qualify-for....

I hope someone can see what I'm seeing. Seems like a bug in the software.

[AnnetteB6]

Looking at your diagnostic tax file that you shared, I do see the message that states you are not eligible for the EITC on your Virginia return.  

However, it does appear that there may be a situation that needs to be corrected with regard to the refundable credit.  This is being reported for further investigation.  

@rogerp7 

[edited 2/8/2025 | 8:52 am PST]

[rogerp7]

Thanks for reporting this for further investigation.

And just to add more information, in 2023 my return also had a negative number for Virginia taxable income, but TurboTax said I qualified for the refund.

[DaveF1006]

According to the State of VA, your EIC credit is based off of 15% of your federal earned income credit. If you did not receive an Earned income Credit on your federal return, then you weren't eligible to receive this on your state return. 

You also may not claim this credit if

• you were claimed as a dependent on someone else’s Virginia income tax return, or
• you, your spouse, or any dependent listed on your return claimed one or more of the following exemptions, deductions, or subtractions:
  • subtraction for wages or salaries received by members of the Virginia National Guard
  • subtraction for up to $15,000 of military basic pay for military service personnel on extended active duty
  • subtraction for up to $15,000 of salary for a federal or state employee whose annual salary is $15,000 or less
  • additional personal exemption for blind or aged taxpayers
  • age deduction

Virginia Earned Income Tax Credit (EITC) & Credit for Low Income Individuals

[rogerp7]

Thanks. This is already all understood. None of the exclusions apply to my case. TurboTax checks for them, and when I look at the worksheet form it has none of these reasons checked. So TurboTax is ignoring its own worksheet.

[AmyC]

We have confirmed an issue with VA. Please give us a few days.

[rogerp7]

After digging around, I found a Virginia tax law that addresses this question. I learned that I cannot receive the refundable credit because I am a part-year resident. I advise adding another checkbox on the Low Income Credit Worksheet form, Part II, with this rule as another possible reason to not be eligible.

The law states:

"Instead of claiming one of the two nonrefundable credits above, this Act allows Virginia residents a third option, where they can choose to claim a refundable individual income tax credit equal to 15 percent of the federal EITC claimed by such residents for the same taxable year. Nonresidents and part-year residents are ineligible for the refundable credit, but they may continue to claim either the Nonrefundable Virginia Earned Income Tax Credit or the Nonrefundable Tax Credit for Low-Income Individuals."

I found the information here: https://www.tax.virginia.gov/sites/default/files/inline-files/2022-legislative-summary.pdf

Thanks for everyone's help who have looked into this.