A line in an article on retirement plans in Sunday's Business section was garbled. The line, in the paragraph that began "Meanwhile, persons who fund both plans now risk penalties," should have read, "And, in addition, the normal 10 percent penalty (which the House bill increased to 15 percent) for early withdrawal -- before age 59 1/2 -- would apply."

Virginia taxpayers have a choice of four filing categories: single, married filing jointly, married filing separate returns or married filing separately on a combined return. There is no Virginia category corresponding to either the federal head of a household or a widow(er) with dependent child.

A Virginia joint return is authorized only if you filed a joint federal return or if neither spouse was required to file a federal return. But you may use the combined separate category whether you filed your federal return jointly or separately.

Combined-separate filing is usually the better method if both spouses had Virginia taxable income. Try both joint and combined separate filing to see which yields the lower total tax. If you file a combined separate return, use column A for the wife's data, column B for the husband's. All other filers should use column B only.

The table for state filing minimums, page 32, shows $3,000 as the lowest figure for filing in any category. The law prescribes lower minimums for some categories -- $1,900, for instance, for a single taxpayer under 65. But there is a basic filing "exception" for all taxpayers: If your Virginia adjusted gross income is less than $3,000, a Virginia tax return is not required regardless of the normal rule. Exemptions

The number of personal and dependent exemptions -- each worth $600 a year -- is the same as on the federal return. But in addition to the normal extra exemption for age, there is a further $400 allowance for each taxpayer (but not dependent) who was 65 or older on Dec. 31, 1985. This extra allowance is claimed on line 29 of Form 760 or line 4b of the 760S. Income

Transfer to line 5 of Virginia Form 760 or line 3 of Form 760S the figure for adjusted gross income from your federal return. If you are filing a combined-separate return, enter in columns A and B the amounts attributable separately to each spouse. Don't subtract any Social Security or Railroad Retirement benefits that were taxable on your federal return; although these are not taxable in Virginia, they will be handled in a later step. Adjustments

All of the adjustments you had claimed on the federal return are allowed, without modification, on the Virginia return. This allowance is automatic and requires no entry on your tax return, because the starting point for your Virginia calculations is federal adjusted gross income -- that is, after all federal adjustments had been subtracted. Additions

Four principal additions are required to adjust federal income for Virginia tax purposes. On your Virginia return, you must add any interest earned on obligations of states other than Virginia (plus Puerto Rico and the Virgin Islands) not reported on your federal return.

Because the combined-separate filing category effectively eliminates any "marriage tax penalty," you must add back any deduction you claimed on federal Schedule W for a two-earner couple. Enter the add-back in the column of the lower-earning spouse -- the one who qualified for the credit on the federal return.

If you used 10-year averaging on Form 4972 in reporting a lump-sum distribution on your federal return, you must add back all of the ordinary income and 40 percent of the capital-gains portion, minus the amount of the federal minimum distribution allowance. Attach a copy of Form 4972 to your Virginia return.

Taxpayers who used ACRS (Accelerated Cost Recovery System) for depreciation of business property (on federal form 4562) may have to restore 30 percent of the depreciation taken. If you used Schedule C and had a substantial ACRS deduction, see your tax adviser or visit a Virginia tax office for assistance. Subtractions

In addition to the extra $400 allowance for age 65 mentioned earlier, you should subtract from Virginia income any interest on federal obligations and any state tax refund reported on your federal return.

This is the point at which you deduct any Social Security and Railroad Retirement benefits, to the extent that they were included in federal income. If you qualified for a Schedule R credit on your federal return, you may subtract for Virginia the amount of disability income used on Schedule R (not the amount of the federal credit). Attach a copy of Schedule R to your Virginia return.

Pension or retirement income of a former employe of the state or any of its subdivisions or agencies (or the surviving spouse of such an employe) is exempt from state income tax. But if you claim this subtraction, you may not take either the disability income subtraction explained above or the credit for taxpayers age 62 and over, explained below.

If you're eligible for any two or all three of these special deductions, you may select whichever one you wish. Do a little scratch-pad arithmetic and choose the one that gives you the best tax break. Deductions

The standard deduction is equal to 15 percent of adjusted gross income (line 5 of Form 760, line 3 of the 760S) not to exceed $2,000 -- but at least $1,300 regardless of income. For a married person filing separately, the maximum is $1,000 and the minimum $650. (If you reported a lump-sum distribution on line 24, the 15 percent is applied against the total of lines 5 and 24.)

The Virginia Department of Taxation has eliminated the need for you to do the arithmetic this year. A new "Standard Deduction Table" is found on pages 12 and 13 of the instruction booklet, where you can find the correct standard deduction for your income and filing status.

You may itemize on the Virginia return only if you itemized on the federal return. If your federal itemized deductions exceeded the federal ZBA for your filing status (which should be true in most cases) or if you were required to itemize on the federal return, then you must itemize on your Virginia return.

If you are filing a combined-separate return, you may allocate your total deduction (whether standard or itemized) to either spouse in whatever proportion you wish. Normally, the better tax practice is to assign all deductions to the spouse with the greater separate income.

Virginia itemized deductions are almost the same as federal deductions except for the exclusion of a deduction taken on federal Schedule A for state or local income taxes paid, not allowed as a Virginia deduction.

One difference: Virginia allows 18 cents a mile for travel in your own vehicle claimed as a part of your charitable contributions. If you used the standard 12-cent rate on your federal Schedule A for qualifying mileage, the additional 6-cents-per-mile itemized deduction will be allowed on the Virginia return as a subtraction from federal adjusted gross income on Form 760, Line 35.

Transfer only a single figure for itemized deductions from federal Schedule A to the Virginia return. Be sure you use total deductions from line 24 of the federal schedule, and not simply the excess (after subtracting the ZBA) from line 26. Child Care

Virginia allows a deduction for child and dependent care, rather than a tax credit as on the federal return. So don't use the amount of the federal credit for your Virginia return.

Instead, carry over to line 10(c) of Form 760 the amount of allowable expenses from line 5 of federal Form 2441 (plus any qualified 1984 expenses actually paid in 1985), and attach a copy of Form 2441 to your Virginia return.

Like the federal ceiling, Virginia limits the deduction to $2,400 for care of one dependent, $4,800 for two or more. The deduction may be allocated to husband or wife, or in part to each, on a combined separate return. Tax Credit for the Elderly

You may qualify for a special tax credit if you were at least 62 years old on Dec. 31, 1985, had adjusted gross income of less than $16,463 and had less than a specified amount (depending on your age) of Social Security or Railroad Retirement benefits.

The credit base for each age group and the instructions for claiming the credit are found on pages 10 and 11 of the instruction booklet. The credit is calculated in Part VI of Form 760. Tax Paid to Another State

If you paid income tax to another state, you may be eligible for a credit on your Virginia tax. The qualifications are described on page 3 of the tax booklet; the instructions for completing Part V of Form 760 appear on page 10. Wildlife Program

You may elect to donate any part of all of your tax refund to support the state conservation program for nongame wildlife. Enter an amount (not larger than your refund) on line 20(a) of Form 760 or line 10(a) of the 760S; that amount will be subtracted from your refund and turned over to the Commission of Game and Inland Fisheries. Your contribution will be a valid deduction on both your federal and Virginia 1986 returns if you itemize. Political Contribution

You also may contribute $2 of your refund to the Virginia central committee of either the Democratic or Republican parties. On a joint or combined separate return, each spouse may elect this contribution independently.

Check the appropriate box on line 20(b) or 20(c) of Form 760, line 10(b) or 10(c) of Form 760S. Like the wildlife contribution, this election only works if you are due a tax refund; otherwise, you may only make such contributions directly. Do not send additional money for either of these purposes with your tax return. Renewable Energy Credit

Virginia allows a tax credit for the same kinds of renewable-energy-source expenditures as are allowed on the federal return. Energy conservation measures such as insulation and storm windows do not qualify for the Virginia credit.

The credit for 1985 is 20 percent of each qualified expenditure up to a maximum of $1,000. Calculate the credit on Virginia Form 300, which must be attached to your return. Any credit not used for 1985 (or earlier years) may be carried forward through 1988, when this Virginia tax credit expires.