Important Information Regarding Virginia Fiduciary Income Tax Returns: Return Filing and Other Requirements Applicable to Virginia's Revised Definition of Resident Estate or Trust
Virginia Tax is announcing a revision to the definition of “resident estate or trust.” Under legislation enacted by the 2019 General Assembly, an estate or trust is no longer considered a resident estate or trust for Virginia income tax purposes on or after July 1, 2019, solely because it is being administered in Virginia.
Therefore, unless an estate or trust administered in Virginia also meets one of the three remaining criteria, it’s considered a nonresident estate or trust for Virginia income tax purposes. The criteria include:
- The estate of a decedent who at the time of death was domiciled in Virginia;
- A trust created by the will of a decedent who at the time of death was domiciled in Virginia; or
- A trust created by or consisting of property of a person domiciled in Virginia.
All resident estates and trusts that are required to file a federal fiduciary income tax return or that have any Virginia taxable income for the taxable year are required to file an income tax return in Virginia. A nonresident estate or trust is not required to file an income tax return in Virginia unless it is required to file a federal fiduciary income tax return and had Virginia source income.
For taxable years beginning on or after July 1, 2019, the new definition of “resident estate or trust” will be in effect for the entire taxable year. A taxpayer should use the new definition contained in this legislation to determine if it was a “resident estate or trust” for such taxable years. For taxable years ending on or before June 30, 2019, the new definition of “resident estate or trust” does not apply.
However, for many taxpayers this new definition became effective during the midst of their taxable year. For these taxpayers, the new definition will only apply to the portion of their taxable year that occurs on or after July 1, 2019. The old definition will apply to the portion of their taxable year that occurred prior to July 1, 2019.
Details can be found in Tax Bulletin 19-7 and in the Laws, Rules, and Decisions section of our website.