VA IRS discrepency?

Question

So I currently live in AZ and did my return and found out VA IRS says I owe then like 1600 from 2001. The thing is I never even lived there till 2002. I asked how they even came up with this amt since I I only lived and worked there for like 5 mos. I filed my 2001 return in VA from the previous yr in AZ. So VA said they estimated what I owed by my 2002 work history. Has anyone ever heard of this? I have been filing taxes since age 16 and am now 28 and never owed more than 400.

Answer 1

While I haven't heard of your situation specifically, I can understand what happened.

When a state 'discovers' someone, either by their own means or someone starting to file in a state, they like to look back and assess from the earliest point in time.

I'm a little unclear - you said you didn't live in VA until 2002. But you lived there early enough in 2002 to file your 2001 tax return (by April 15, I imagine). So VA thinks you were there earlier and want you to pay for 2001?

If you truly did not work in the state of VA during 2001, you should be able to write a letter stating this and provide support. Someone from the individual audit staff will review the situation and help resolve it. (States pick up a lot of revenue by assessing taxes in this manner.) Unfortunately, the burden is on you right now.

IMO, if all of your earnings were from AZ in 2001 and that's how you filed send VA a letter and a copy of your 2001 return.

Let me know if you have questions. I'd be happy to help.

Answer 2

If you earned income while in VA then you have to file a tax return and pay taxes for those 5 months. It is a pain! My husband and I have moved between states 3 times and it is such a pain filing two tax returns--one for the income earned in each state. You should of seen it the time we moved separately and I had to file taxes for two different residency timelines for two different states. I was on the phone to each state's IRS office making sure I had everything right for like 30 minutes each before I was able to file anything!

As for the "estimated" owed taxes I am guessing that perhaps you were self-employed at some point and they figure you just didn't bother to pay any taxes. The other possibility is that your employer filed your W-2 with the state while not bothering to with-hold anything and the state just figured what you owed from that assuming you had no deductions other than the standard ones.