Withholding Taxes: Virginia

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• A Virginia resident who is paid taxable wages for services performed outside of Virginia and does not qualify for an exemption from withholding is generally subject to Virginia income tax withholding. A nonresident is subject to Virginia income tax withholding on services performed in Virginia, unless there is a reciprocal withholding agreement with their state of residence. Virginia has entered into reciprocal agreements with the District of Columbia, Kentucky, Maryland, Pennsylvania and West Virginia. See Withholding on Residents, Nonresidents and Expatriates.
• When employees are hired they must complete and submit to their employer Form VA-4, Virginia Employee's Withholding Exemption Certificate. Virginia employers must use the form to compute their employees' Virginia income tax withholding. Federal Form W-4 is not an acceptable substitute. See Employee Withholding Form.
• Employers must calculate withholding on supplemental wage payments differently depending on whether they are paid with, or separate from, regular wages. See Supplemental Wages.
• All employers are required to give each employee an annual copy of Form W-2, Wage and Tax Statement, for the prior calendar year. See Form W-2 Requirements.
• Virginia employers are required to post both a federal and state poster to inform low income employees that they may be eligible for the federal or state Earned Income Tax Credit. See Earned Income Tax Credit Notices.
• Virginia employers must keep certain withholding tax records for at least three years after the tax due date or the date the tax was paid, whichever is later. See Recordkeeping Requirements.