Filing your Vermont income tax return for the 2023 tax year requires understanding state and federal tax obligations. This process begins with preparing your federal income tax return, since Vermont uses information from that filing to determine your state taxable income and any credits you can claim. This connection simplifies reporting for many taxpayers because much of the data is already calculated at the federal level.
The Vermont Department of Taxes requires residents, part-year residents, and nonresidents with Vermont-source earned income to file if they meet certain income thresholds. Filing on time meets legal requirements and helps you avoid interest, penalties, and unnecessary delays in receiving any refund. The state’s income tax system provides various credits, including the earned income tax credit, which is designed to reduce the tax burden for eligible taxpayers.
This guide offers step-by-step instructions for tax filing, explains critical due dates, and outlines payment and refund tracking procedures. It also covers common forms, deductions, exemptions, and payment methods for individuals, self-employed taxpayers, and business entities. Throughout this resource, you will find references to official Vermont Department of Taxes pages, such as Vermont Individual Income Tax and myVTax, to help you file accurately and on time.
Vermont requires an individual income tax return from residents, part-year residents, and nonresidents who meet specific income conditions. A Vermont resident must file if total earned income or other taxable income meets or exceeds the state’s threshold for the 2023 tax year. Part-year residents follow the same rule, but only for the portion of the year they lived in Vermont. Nonresidents file if they received Vermont-source income such as wages from Vermont employment, business income from Vermont operations, rental property income, or capital gains from property in the state. For all taxpayer categories, filing rules apply whether income comes from an employer, self-employment, or other business entities.
Vermont follows the same tax year as most taxpayers in the federal income tax system. Calendar year filers report income earned from January 1 to December 31, while fiscal year taxpayers report based on their approved 12-month period that does not end on December 31. Tax years beginning in 2023 follow the same filing cycle, with the April filing deadline in 2025 for both state and federal returns. The Vermont Department of Taxes uses figures from the federal income tax return, including adjusted gross and taxable income, to calculate individual income taxes owed and any eligible credits.
The Vermont individual income tax return depends heavily on accurately completing the federal income tax return. Taxpayers must transfer information such as adjusted gross income, taxable income, and any federal tax credits that affect Vermont’s income tax credit calculations. Because Vermont bases its taxable income on federal data, filing the federal return first is essential for accuracy. Self-employed individuals, corporations, and other business entities should ensure that payroll taxes, tax withholding, and estimated tax payments made during the year are correctly reflected. This alignment between federal and state returns helps avoid errors, supports accurate tax payment records, and ensures all required forms are submitted by the due date.
The Vermont individual income tax return is directly connected to the federal income tax return. Vermont calculates taxable income, credits, and specific adjustments using figures from the federal filing. Preparing the federal return first ensures accurate reporting for state purposes and avoids common filing errors. Vermont taxpayers risk incorrect income transfers, missed credits, and calculation mistakes that could delay refunds or lead to additional tax bills without the completed federal return.
The federal return must be completed first to ensure that all pertinent information is accurately transferred to Vermont forms. Then, taxpayers can properly claim exemptions, deductions, and credits under federal and state rules.
Aligning their federal and state returns can ensure that payroll taxes, tax withholding, and estimated tax payments made throughout the year are appropriately credited. Corporations, self-employed taxpayers, and other business entities rely on accurate federal filings to support their Vermont tax filing obligations. In addition, the procedure guarantees that the deadlines for submission and payment are fulfilled, saving taxpayers from penalties, interest, and other compliance problems.
By using the federal income tax return as the basis for the Vermont filing procedure, taxpayers can improve the accuracy of their income tax returns for the 2023 tax year and lower the possibility of expensive errors.
The general schedule for individual income tax returns in Vermont for the 2023 tax year is the same as that for federal income tax returns. The standard deadline is April 15, 2025. The deadline is moved to the following working day if this date falls on a weekend or a legal holiday. Taxpayers may incur penalties, interest, and refund delays if they file their returns after the deadline. This deadline applies to nonresidents with earned income from Vermont and part-year residents. It is essential to meet the April filing deadline to file taxes accurately and prevent further expenses.
Some Vermont taxpayers must pay estimated taxes all year long. This is relevant to corporations, business entities, and independent contractors anticipating owing more than a certain sum after the refundable and withholding credits deduction. The first installment is typically due in the fourth month of the tax year, and payments are generally due in four equal installments. Unless otherwise specified by state law, these deadlines adhere to the federal schedule. Making timely estimated tax payments lowers the possibility of underpayment fines and ensures that Vermont tax laws are followed.
Taxpayers who cannot complete their return by the standard due date may request an extension of time to file. However, an extension does not delay the due date for tax payment. Any balance owed must be paid by the April deadline to avoid interest and penalties. Vermont accepts extension requests using the appropriate state form, and in many cases, approval of a federal extension by the IRS will automatically extend the state deadline. Extensions are valid for taxpayers waiting on final tax statements or resolving complex filing issues, but they should be planned to ensure full payment is made on time.
The Vermont income tax credit reduces the individual income taxes a taxpayer owes for the tax year. It is calculated using federal income tax return details, including taxable income, adjusted gross income, and federal tax liability. The credit can lower the total tax payment or increase a refund. It applies to residents, part-year residents, and qualifying nonresidents who meet Vermont filing requirements. Accurate entry of deductions, exemptions, and income details is essential to ensure the correct credit amount.
Vermont offers multiple credits that provide additional tax relief beyond the standard income tax credit. These credits vary in purpose and eligibility but share the same goal of lowering the overall tax burden for qualifying taxpayers. Common options include:
Each credit has its forms, documentation requirements, and due date rules. For example, information returns, proof of payment, and supporting schedules must be filed with the Vermont individual income tax return. Taxpayers should review instructions carefully and ensure all claims are submitted with their tax filing to avoid delays in processing or loss of the credit. When used together, these credits can significantly reduce the total amount owed for the 2023 tax year.
The federal earned income tax credit aims to help working taxpayers with low and moderate incomes. It is predicated on earned income, which excludes investment income above a certain threshold but includes wages, salaries, tips, and income from self-employment. The number of qualifying dependents listed on the federal income tax return, filing status, and income level all affect eligibility. To be eligible, taxpayers must meet the Internal Revenue Service's requirements for residency, earned income, and social security numbers. Even if no taxes are owed, the credit lowers the amount of federal income tax owed and could lead to a refund.
Vermont offers its own earned income tax credit for the 2023 tax year, set at 38 percent of the federal credit amount. Suppose a taxpayer files a Vermont individual income tax return and satisfies the state's residency requirements. In that case, they will automatically be eligible for the Vermont credit if they are also eligible for the federal credit. Both full-time and part-time residents are eligible for the Vermont credit, which is obtained by submitting the main tax form with the relevant Vermont schedule. Data from the federal income tax return must be transferred accurately for the credit to be computed accurately. The earned income tax credit has the potential to drastically lower individual income taxes or boost the tax year's refund, so timely filing by the April deadline is essential.
The first step in filing a Vermont individual income tax return is getting the appropriate forms and supporting documentation ready. Having these materials ready ensures accurate reporting, helps avoid delays, and reduces the chance of errors. Whether you are a resident, part-year resident, nonresident, self-employed, or operating a business entity, these forms and records will be necessary for the 2023 tax year.
Supporting documentation should also be included as needed. This may include information returns such as W-2 forms from employers, 1099 forms for contract work, bank interest, or other taxable income, and records of tax withholding and payroll taxes.
Maintaining complete and accurate records ensures that all reported income, deductions, and exemptions are verifiable. This preparation helps meet Vermont’s tax filing standards, supports accurate tax payment calculation, and ensures compliance with state and federal requirements for the 2023 tax year.
Gather All Necessary Documents: Collect all income records, deduction receipts, and information returns needed to complete your federal and Vermont income tax returns. This includes W-2 forms from employers, 1099 forms for contract work, interest, dividends, or other income, and proof of tax withholding or payroll taxes paid. Self-employed taxpayers should also have business income and expense records ready.
Complete Your Federal Income Tax Return First: Vermont’s tax system relies on figures from your federal return to calculate adjusted gross income, taxable income, and certain credits, such as the earned income tax credit. Completing the federal return ensures that all required amounts, including exemptions, deductions, and total tax payment information, are correctly transferred to Vermont forms.
Fill Out Form IN-111: Enter personal details, including your name, address, and social security number, exactly as they appear on your federal return. Report adjusted gross and taxable income from your federal return, then apply Vermont-specific adjustments if required. Select your filing status to match your federal filing.
Add Required Schedules and Forms: If you claim credits such as the earned income tax credit, the child and dependent care credit, or the credit for the elderly or disabled, include Schedule IN-112. Nonresidents or part-year residents must complete Schedule IN-113 to determine the Vermont-source portion of their income. Include property or renter credit forms if applicable.
Apply Deductions and Exemptions: Determine whether to use the standard deduction or itemize deductions based on which option provides greater tax relief. Include any allowable exemptions and calculate amounts according to Vermont tax law for the applicable tax year.
Calculate Your Vermont Individual Income Taxes: Use Vermont’s tax tables or rate schedules to determine the amount of tax owed. Apply any income tax credits you qualify for, and adjust for any tax withholding or estimated tax payments already made during the tax year.
Review for Accuracy: Double-check all entries to confirm that names, social security numbers, and dollar amounts match supporting documentation. Ensure that all forms are signed and dated. If you are filing jointly, both spouses must sign.
Submit Your Return by the Due Date: File electronically through Vermont’s myVTax system for faster processing, or mail paper forms to the correct address based on whether a payment is included. If you cannot file by the due date, submit an extension request along with any tax payment due to avoid penalties and interest.
Keep Copies for Your Records: Retain copies of your filed return, payment confirmation, and all supporting documents for at least three years after the filing date. Keeping organized records helps with future tax filings and in the event of an IRS or Vermont Department of Taxes inquiry.
Estimated tax is required when the amount of Vermont individual income taxes owed will not be fully covered through tax withholding. Taxpayers such as self-employed individuals, business entities, and corporations often make quarterly payments to meet this requirement. Payments are due in four installments throughout the tax year, with the first generally due in the fourth month. The amounts are based on projected adjusted gross income, taxable income, and credits for the year. Timely estimated tax payments prevent underpayment penalties and ensure taxpayers comply with state filing rules.
Payroll taxes are amounts withheld by employers from employee wages to cover state and federal income taxes and social security contributions. These withholdings are reported on information returns such as the W-2, which must be provided to employees by each year's due date. Employers are responsible for promptly sending these amounts to the Vermont Department of Taxes and the Internal Revenue Service. Accurate payroll tax withholding ensures that employees’ tax payment obligations are met during the year, reducing the likelihood of owing a large balance when filing a return.
Certain products and activities in Vermont—such as fuel, tobacco, and particular business operations—are subject to excise taxes. These taxes may impact specific taxpayers and businesses participating in regulated activities, even though they are not included in the typical Vermont individual income tax return. Companies that collect excise taxes or owe them must keep track of all transactions, file the necessary paperwork, and pay by the deadline. Excise taxes may affect an individual's overall business or investment activity planning. Compliance with excise tax rules is essential to avoid penalties, especially for corporations or sole proprietors whose income may include taxable goods or services.
There are several ways to pay Vermont individual income taxes, each tailored to the taxpayer's preferences. Making the correct payment choice helps maintain accurate records for the tax year, guarantees timely processing, and prevents penalties.
Vermont also offers tax relief programs to assist taxpayers who cannot pay their full balance immediately. These include installment agreements, penalty waivers in certain hardship situations, and flexible scheduling for payment arrangements. Taxpayers seeking relief should contact the Vermont Department of Taxes before the due date to request assistance, as this increases the likelihood of avoiding additional interest or penalties while keeping their account in good standing.
Tracking the status of a Vermont personal income tax refund or confirming any balance due is an essential step after filing. Taxpayers can verify the progress of their return, review the payment record, and check whether any exemptions, deductions, or credits were applied correctly. This process can also identify if the Vermont Department of Taxes issues a bill or notice that requires action.
Both fiscal year and calendar year filers can use the state’s online system to view their account status. The system allows taxpayers to review prior payments, confirm receipt of the current year’s filing, and see information from the previous tax year. For corporations and business entities, online access is especially helpful in tracking payments for multiple accounts or tax types. The same system provides copies of filed forms and information returns, such as W-2s or 1099s, for verification purposes.
If paying a balance due, taxpayers should confirm the date the payment was processed and ensure it met the applicable tax deadline. Late payments can result in additional interest or penalties. Payment history pages also show if the Department has issued a refund, applied a credit to another tax obligation, or sent a bill for underpayment. Keeping these records helps maintain compliance and ensures all filing obligations are met for the current and future tax years.
Completed and Signed Forms: Ensure you file Form IN-111 and all required schedules with accurate information. Both spouses must sign if filing jointly. Include any corporation or business entity forms if applicable.
Accurate Taxpayer Information: Verify that names, addresses, and social security numbers match official records. Review information return entries, such as W-2s and 1099s, for accuracy.
Applied Exemptions and Credits: Confirm that all exemptions, deductions, and credits, including personal income tax credits, are correctly calculated and documented.
Reviewed Tax Statement and Payment: Check that the statement reflects all payments made during the year, including withholding, estimated tax payments, and additional paying arrangements.
Met Tax Deadline: To avoid penalties or interest, ensure the return and any payment due are submitted on or before the applicable tax deadline.
Recordkeeping: Save copies of filed returns, payment confirmations, and supporting pages from the previous tax year for at least three years. These records may be needed if the Department of Taxes issues a bill or requests documentation.
If you miss the tax deadline, file your return as soon as possible to reduce penalties and interest. Even if you cannot pay the full amount, submitting the correct forms promptly shows compliance. Include any exemption you qualify for to reduce your balance, and check each page of your return for accuracy before sending it.
Eligible Vermont taxpayers can e-file their income tax return for free using the state’s online filing system. This option works for both fiscal year and calendar year filers. The system confirms submission instantly and allows you to view each page before finalizing. Corporations and business entities may have different filing requirements.
Submit the proper Vermont form before the original due date to request an extension. Remember, an extension only grants extra time to file, not to pay. Include details from your tax statement, such as taxable income and withholding. Review every page for completeness and apply any eligible exemption to lower the amount owed.
Taxpayers sometimes miss exemptions, deductions for charitable contributions, and certain income tax credits. The earned income tax credit, child and dependent care credit, and credits for taxes paid to other states are commonly underclaimed. Reviewing each page of your filing and verifying eligibility before you file can help you claim the maximum allowed benefits.
Self-employed taxpayers should calculate estimated tax based on expected income, deductions, and credits for the tax year. Payments are due quarterly, starting in the fourth month of the year. Filing accurate forms and reviewing every page helps avoid penalties. Applying exemptions can lower payment amounts and improve cash flow during the year.
If you receive a bill, read it carefully to understand the reason for the adjustment. It may relate to missing information, a math error, or unreported income. Compare it with your tax statement and supporting documents. Check each return page and ensure all exemptions, deductions, and credits were applied correctly before responding.
Corporations and business entities must file the appropriate Vermont forms based on their structure. Unless otherwise stated, deadlines often match individual taxpayer dates. Review each page of your filing, ensure all income is reported accurately, and claim any eligible exemption. Proper documentation, including information returns, is essential to comply with state requirements and avoid penalties.
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