The system is asking for VA from 763S for a college student with work study. We live in MD. It says he owes nothing and nothing was taken out on his W-2. Do we even file with VA since it was earned as part of his financial aid package?

[ChristinaS · Accepted solution]

No need to file VA based on what you are describing. The return would be all 0s.

VA and MD have reciprocity, so you only declare wage income to your home state. You would need to file the 763-S to get VA taxes withheld back. If they withheld no VA taxes, then you have nothing to worry about.

If he continues to work in VA, ensure that he presents Form VA-4 to certify exemption from VA withholding. VA shouldn't be on the W2 at all.

http://www.scps.virginia.edu/uploads/vataxform.pdf