Susan (55) is single and required to file a Virginia return. She was permanently and totally disabled as a result of an accident on her job. During the year, she received $18,000 in federally taxable disability benefits. These benefits replaced the wages she lost as a result of the accident. How are these benefits handled on her Virginia return?

The first $10,000 of the benefits she received will be subtracted from her federal adjusted gross income on her Virginia return.

No special reporting is required on Susan's Virginia return because Virginia follows the federal treatment of these benefits.

On Susan's Virginia return, these benefits are added to her federal adjusted gross income.

On Susan's Virginia return, these benefits are subtracted from her federal adjusted gross income. Mark for follow up