Due to concern over the Virginia state tax code status, I am writing to update you on your 2018 state return.

Below are some common questions I have been receiving and that you likely have yourself. If you have any additional questions regarding the information below please feel free to call, email or text me any time.

Q:  Why can’t I file my Virginia state tax return today?  When can I file it?

A:  Virginia’s General Assembly has not finished writing tax rules for 2018. I know it’s hard to believe, but it’s true, tax rules can change after the year is finished. As of today, we frankly have no way of knowing when you will be able to file your 2018 state tax return.

Q:  Why aren’t the tax rules finalized yet?

A:  Your Virginia taxable income is derived from your federal tax return. The new 2018 federal tax laws mean Virginia taxable income increases for all of us – so much so that over the next two years Virginia’s additional tax revenue will be $1.2B (yes billion) - higher than what was expected. As a result, the General Assembly is debating whether the windfall surplus should be spent on social programs, or returned to you and me, the taxpayers.

Q:  Where is the surplus coming from?

A:  It’s coming from you, me and all state taxpayers. Federal tax laws change yearly, and each year Virginia adopts what is called Conformity (try not to let your eyes roll to the back of your head). Conformity means Virginia tax rules are reset so that changes in federal tax rules are neutral to you – that is to say, your state tax won’t increase or decrease based on changes in federal tax law.

Q:  So why is this year different?

A:  The 2018 tax law changes were the largest changes in several decades, and generally speaking it will result in reduced 2018 federal income taxes to you. However, the method used to reduce your federal income tax created an increase in your state income tax. If Virginia followed its traditional practice of Conformity then you would see a larger state refund. But when you flash $1.2B (yes billion) in politicians’ eyes, well, money changes everything as the song goes (if you are younger than 40 then Google Cyndi Lauper).

Q:  Does this affect my federal tax return?

A:  No. Your federal tax return is still due on April 15, 2019.

Q:  What happens next?  Will Virginia extend its May 1 tax filing deadline?

A:  Once the General Assembly finalizes the tax rules, the state tax department updates their software to reflect the new tax rules.  Only then can they begin processing tax returns. Software service providers also have to update and distribute their software to tax professionals like me (no snickering). I believe, and I caution that this is my opinion only, the date to file your state tax return will be extended. However, I firmly believe you will not be granted an extension to pay any tax that you owe. If the filing deadline is extended, it will just be for the paperwork. Again, that’s my opinion.