How to File Virginia Form 763 as a Nonresident Taxpayer

Filing taxes as a nonresident in Virginia requires understanding specific requirements and processes. For individuals earning income from sources within the state but residing elsewhere, completing Form 763 is crucial to meet tax obligations and avoid penalties.

This guide simplifies the process of filing Virginia Form 763 by focusing on the essential steps and considerations.

Nonresident Eligibility Criteria

Determining eligibility for filing Virginia Form 763 depends on residency and income criteria. A nonresident is someone who does not live in Virginia but earns income from Virginia sources, such as wages, business income, or rental income. The distinction between resident and nonresident status determines the tax form required.

Under Virginia tax law, a nonresident is typically defined as someone who spends fewer than 183 days in the state during the tax year and maintains a permanent residence outside the state. This applies to those with temporary work assignments or seasonal employment in Virginia. The 183-day rule is a common benchmark for determining tax residency.

Income from Virginia-based employment, business operations, or property is taxable regardless of where the taxpayer resides. Even if an individual lives in another state, income generated from Virginia sources must be reported on Form 763.

Income Types to Include

Nonresidents must report all income derived from Virginia sources on Form 763. This includes wages earned from employment within the state, such as working remotely for a Virginia-based company or traveling to Virginia for work. Income from partnerships or S-Corporations operating in Virginia must also be reported.

Rental income from Virginia properties, whether from short-term vacation rentals or long-term leases, is taxable. Taxpayers can deduct expenses associated with maintaining these properties, such as repairs or management fees, to reduce taxable income.

Capital gains from selling Virginia-based assets, such as real estate, are also subject to state tax. The gain is calculated by subtracting the asset’s adjusted basis from the sale price. Accurate records of purchase prices and improvements are essential for calculating these gains properly.

Steps to Complete the Form

Filing Virginia Form 763 requires gathering tax information, reporting income and deductions, and submitting the form accurately.

Gathering Tax Information

Start by collecting all relevant tax documents, including W-2 forms, 1099s, and records of Virginia-based income such as business activities, rental income, or capital gains. Compile documentation for deductions or credits, such as property management expenses or business-related costs. Be aware of Virginia’s progressive state tax rate, which ranges from 2% to 5.75% based on income levels.

Reporting Income and Deductions

Report all Virginia-sourced income, including wages, business income, rental income, and capital gains, in the appropriate sections of Form 763. Itemize deductions, such as business expenses or property-related costs, and ensure they are supported by proper documentation. Follow the Internal Revenue Code and Virginia tax regulations to determine allowable deductions. Additionally, explore state-specific credits or adjustments, like the Virginia Land Preservation Credit, that may apply.

Signing and Submitting

Ensure the form is signed by the taxpayer or an authorized representative, as unsigned forms may delay processing. The filing deadline for Virginia state taxes typically aligns with the federal tax deadline, April 15th. Forms can be submitted electronically through the Virginia Department of Taxation’s online portal or by mail. Retain a copy of the submitted form and supporting documentation for your records.

Filing and Payment Methods

Nonresidents can file Form 763 electronically or by mail. Electronic filing via the Virginia Department of Taxation’s online portal offers faster processing and instant confirmation of receipt. Paper filing is available for those who prefer a tangible submission.

Tax payments can be made electronically through direct debit, credit card, or electronic funds transfer (EFT). Alternatively, payments can be mailed by check or money order to the Virginia Department of Taxation. Include your taxpayer identification number and the tax year with mailed payments to ensure proper processing.

Amending a Return

If errors or omissions occur, taxpayers can amend Form 763 using the same form. Clearly mark it as “Amended” and include all originally reported information alongside the corrections. Attach supporting documentation, such as revised W-2s or proof for credits.

Amendments may be necessary to report additional income, adjust deductions, or claim overlooked credits. If the amendment increases tax liability, interest or penalties may apply. For amendments resulting in refunds, taxpayers must file within three years of the original filing date to claim them.

Recordkeeping and Documentation

Maintaining detailed records ensures accurate reporting and provides protection in case of an audit. Retain copies of filed returns, W-2s, 1099s, and other income-related documents for at least three years. Proper documentation of expenses and deductions, such as receipts or invoices, is essential for substantiating claims.

For taxpayers deducting property-related costs or business expenses, keep records such as contracts and receipts. This is particularly important for those claiming depreciation on Virginia-based rental properties.

Potential Penalties for Noncompliance

Noncompliance with Virginia tax regulations can result in significant penalties. Late filing incurs a penalty of 6% per month, up to a maximum of 30% of the unpaid tax. Interest on unpaid taxes accrues at the federal underpayment rate plus 2%, compounded monthly.

Underreporting income or claiming improper deductions can lead to additional penalties, including a 20% negligence penalty for careless or intentional disregard of tax rules. Fraudulent filings can result in a penalty equal to 100% of the underreported tax and potential legal action. Consulting a tax professional can help ensure compliance and reduce risks.