The tax laws in the state are governed by Chapter 11 of the West Virginia Code. State Personal Income Tax is imposed on the West Virginia taxable income of resident individuals, estates and trusts wherever their income is earned. Nonresident individuals, estates and trusts are also subject to this tax on income from West Virginia sources.
Almost all taxpayers who file Personal Income Tax returns file only one return per year. However, taxpayers whose West Virginia adjusted gross income other than wages are expected to exceed $400 plus the amount allowed for the personal exemptions must file quarterly returns and pay estimated tax. Taxpayers who fail to remit quarterly estimated tax payments may be subject to penalties.
The annual return of a farmer will be treated as his declaration of estimated tax if the annual return is filed on or before March 1 of the succeeding year and the tax shown to be due on the return is paid in full at the time of filing.
Tax returns must also be filed by employers who are required to withhold tax from wages they pay to their employees. The frequency of filing withholding tax returns depends on the amount of tax the employer withholds. Every employer who withholds more than $250 per month must file monthly withholding returns with the State Tax Department. Employers who withhold less than $250 per month are required to file quarterly returns. The State Tax Department may permit an employer who withholds less than $150 in a calendar quarter and the aggregate for the calendar year can reasonably be expected to be less than $600 to file an annual return.
Employers whose average withholding tax payment per calendar month for the preceding calendar year exceeded $100,000 are required to remit the tax attributable to the first fifteen days of June on or before June 23 each year. The employer may elect to remit an amount equal to 50 percent of the employer's liability for compensation payable or paid to employees in May. The amount of tax paid for the first fifteen days of June is credited against the total liability for the month of June.
The West Virginia Personal Income Tax is said to be a conformity statute because any term used in this law has the same meaning as when it is used in a comparable context in federal income tax law unless a different meaning is clearly required.
DETERMINATION OF TAX LIABILITY
Computation of West Virginia taxable income begins with federal adjusted gross income to which specific increases and/or decreases are made. A taxpayer generally determines his tax liability by computation using tax rates and the West Virginia Resident Income Tax Return form IT-140.
Nonresident taxpayers who are residents for income tax purposes of Kentucky, Maryland, Ohio, Pennsylvania or Virginia and their taxable West Virginia income is received only as salary or wages must file a West Virginia Personal Income Tax form IT-140NR-S.
Residents of Pennsylvania or Virginia who have spent more than 183 days in West Virginia are residents of West Virginia for income tax purposes. Form IT-140NR-S is essentially a request for a refund only, and neither computation nor reference to a table is required.
Nonresident taxpayers whose residence for income tax purposes is anywhere other than the five states named above file form IT-140NR/PY that, like form IT-140 for residents, requires computation and the use of tax rates.
West Virginia modifications that decrease federal adjusted gross income are as follows:
West Virginia modifications that increase federal adjusted gross income are as follows:
West Virginia adjusted gross income (WV AGI) results when the applicable West-Virginia increasing and/or decreasing modifications have been applied to federal adjusted gross income. To determine West Virginia taxable income, the taxpayer takes a deduction from WV AGI based upon the number of personal exemptions he claimed on his federal return.
No subtractions are allowed from WV AGI for a standard deduction or for any federal itemized deductions.
Taxpayers whose federal adjusted gross income is less than $10,000 may exclude a portion of their earned income. With the exception of married filing separate filers, all taxpayers with federal adjusted gross income of $10,000 or less may claim an exclusion for earned income of up to $10,000 per year. Married filing separate filers with federal adjusted gross income of $5,000 or less may claim an exclusion for earned income of up to $5,000. Earned income is income attributable to wages and salaries or other labor income.
Personal Income Tax rates differ with each taxable income category. Although the rates increase as taxable income increases, each rate is independent of every other rate.
TAX RATE SCHEDULES
$0 -_____$10,000__________$ 0.00_____________3.0%_______________$ 0
10,000 - 25,000________300.00___________ 4.0%_______________10,000
25,000 - 40,000________900.00____________4.5%_______________25,000
40,000 - 60,000________1,575.00_________6.0%_______________40,000
Married Filing Separate Returns
____________But Not_____________________ _______________________ ____________Of Excess
$0 - ____$ 5,000___________$ 0.00_____________3.0%_______________$ 0
5,000 - 12,500___________150.00____________4.0%_______________5,000
12,500 - 20,000________450.00____________4.5%_______________12,500
20,000 - 30,000________787.50____________6.0%_______________20,000
30,000 -_________ ____________1,387.50_________6.5%_______________30,000
West Virginia Personal Income Tax liability must be at least 25 percent of any federal minimum tax or alternative minimum tax for the taxable year. If tax liability determined from tax tables or rate schedules does not equal the 25 percent minimum, the West Virginia minimum tax will be the amount necessary to yield total tax equal to 25 percent of the federal minimum tax less the tax liability determined by tax tables or rate schedules.