Virginia Schedule OSC

What is Virginia Schedule OSC?

Schedule OSC, Credit for Tax Paid to Another State, is a schedule of the Virginia Department of Taxation for the individual income tax. The Department explains the credit this way: "To help prevent payment of taxes to multiple states on the same income, Virginia law provides a credit for taxes paid to another state." It adds: "If any part of your Virginia taxable income is also taxed by another state, this credit may be available to you."

The blank on this page is the 2025 schedule; its footer prints "Rev. 04/26".

Which returns does it go with?

The total credit on line 21 of the schedule is carried to line 24 of one of three Virginia returns: Form 760, the resident return; Form 760PY, the part-year resident return; or Form 763, the nonresident return. The computation differs by return: several lines begin "If filing Form 760 or Form 760PY" and continue "If filing Form 763".

Who may claim the credit?

The Department's page on the credit says that the guidelines for claiming it differ based on residency.

• A resident: "If you received income from another state and were required to pay income taxes as a nonresident in that state, you may be eligible for a credit for the income taxes you paid to that state provided the income is also taxed by Virginia." For residents the page names the qualifying income: earned income, business income, and gain from the sale of any capital asset not used in a trade or business. For residents it also sets out requirements for certain states, among them: "If you have income from Arizona, California, or Oregon sources, you can't claim a credit for taxes paid to those states on your Virginia income tax return. Claim a credit on the nonresident income tax return for the appropriate state." The Department identifies separate rules for pass-through entity composite returns and says that, in dual-residency cases, the state of domicile generally allows the credit even if reciprocity would otherwise apply.
• A part-year resident generally can't claim the credit, unless the other state's income is received during the period of residency in Virginia.
• A nonresident generally can't claim a credit, except for income taxes paid as a resident of Arizona, California, the District of Columbia or Oregon. The page adds: "You will be eligible for this credit only if the income that you paid taxes on to one of these states is also taxed by Virginia."

The page has further rules for married taxpayers who do not file a joint return both in Virginia and in the other state.

What is on the schedule?

At the top are the Social Security number and the name or names as shown on the Virginia return. The schedule then has two computations, "Credit Computation - 1" and "Credit Computation - 2", one for each credit; the Department says: "If you're claiming a credit for more than one state, calculate each credit separately using the Schedule OSC." Beside the heading of the first computation is an oval to fill in only if you qualify for the special border-state computation described in the instructions. The 2025 instructions for Form 760 name the border states (Kentucky, Maryland, North Carolina and West Virginia) and say that a filer required to file a return with Virginia and only one other state, that state being one of the four, "may qualify for a special computation" under the conditions they list. Each computation has:

• the filing status claimed on the other state's tax return and the person claiming the credit (you, your spouse, or both), each entered as a number from a printed list;
• the qualifying taxable income on which the other state's tax is based, the Virginia taxable income, and the qualifying tax liability owed to the other state;
• the state, with the instruction to enclose a copy of the other state's return;
• the Virginia income tax, an income percentage, the product of two of the lines above, and the credit, which is the lesser of two amounts; the lines to use are named for the return being filed.

Line 21 is the total credit. The schedule prints: "If claiming more than 2 credits, use additional Schedules OSC."

What is enclosed?

The schedule prints: "You must enclose a copy of the return from each state for which you are claiming credit." The Department's page says the same of the supporting documents: "Attach a copy of each state's return and schedules to your Virginia return along with your completed Schedule OSC." It adds that W-2s, 1099s and Schedule K-1s can't be used to support a claim for this credit, because state withholding may differ from the tax actually owed to the other state.

The 2025 instructions for Form 760 say to enclose a copy of the other state's return "if the taxpayer filed an individual return in the other state", and they name other documents for an owner or shareholder included in a pass-through entity's nonresident composite return and for a credit on corporation income tax paid to a state that does not recognize the federal S corporation election.

An owner or shareholder claiming a credit for eligible entity-level PTE tax must also include a statement from the PTE detailing their share of the income, tax liability and tax paid.

The rules are on the Department's page Credit for Taxes Paid to Another State.

Relevant to Virginia Schedule OSC form

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