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General Assembly, Governor Strike Conformity Deal
The shifting saga of tax conformity appears to be coming to a close. A positive resolution appears to be in sight in the form of a deal between both parties and the Governor’s administration that would conform Virginia’s tax code with the U.S. Internal Revenue Code effective Dec. 31, 2018. HB 2529 and SB 1372 passed their opposite chambers and are on track to reach the Governor’s desk by the end of this week after the amendments are affirmed in their chambers of origin.
The bills are identical, and each contains an emergency clause, meaning they will take effect with the Governor’s signature, which would allow the Virginia Department of Taxation to begin processing returns.
Here is a complete list of the changes contained in the bill:
Allocates $420 million in refunds to compensate taxpayers for higher state taxes resulting from TCJA
Individual taxpayers will receive $110 and married couples $220
Refunds will only be issued to taxpayers who file before July 1, 2019
Effective beginning in the tax year 2018
Eliminates the disconformity with the temporary reduction in the medical expense deduction floor
Excludes Global Intangible Low-Taxed Income (GILTI) from the definition of taxable income for corporations
Creates an individual and corporate income tax subtraction for 20 percent of the business interest disallowed on federal
Effective beginning in the tax year 2019
Standard deduction raised by 50 percent to $4,500 for individuals and $9,000 for married couples
Deconforms with the federal SALT limitation
Reinstates the overall limitation on itemized deductions (also known as the Pease limitation)
Creates a nonreverting fund for any additional revenues created by TCJA to be used towards tax reform
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Please be advised that, based on current IRS rules and standards, the advice contained herein is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding penalties.
MillerMusmar, CPAs is an established accounting firm with offices in Reston, Virginia and Manassas, Virginia. We have a twenty-five-year history of providing top quality auditing, tax, and accounting services to clients throughout the Washington Metropolitan area and beyond. By combining the expertise of a mid-sized firm with the personal attention, we are both large and small enough to deliver the responsive service our clients need. For more information, please visit our website at www.MillerMusmar.com