Vermont State Income Tax Filing: Forms, Deadlines, and Rules Explained

1. What Is Vermont State Income Tax Filing?

Vermont state income tax filing is the annual requirement to report income earned during the tax year to the Vermont Department of Taxes. This filing applies to residents, part-year residents, and nonresidents who have Vermont-source income.

Vermont state income tax is separate from federal income tax and must be filed even if you have already submitted your federal return to the Internal Revenue Service.

2. Who Must File Vermont State Income Tax?

You must file a Vermont state income tax return if you are a resident, part-year resident, or nonresident who had Vermont-source income or were required to file a federal income tax return. Filing requirements are based on residency status, income level, and the type of income earned.

Quick checklist (common scenarios)

1. Vermont residents: required to file if income exceeds Vermont filing thresholds
2. Part-year residents: must report income earned while living or working in Vermont
3. Nonresidents: must file if they earned income sourced from Vermont
4. Self-employed individuals: must report Vermont business or freelance income
5. LLC members and sole proprietors: must file Vermont returns for pass-through income

3. Your Filing Status and Income Type Decide Vermont Tax Forms

Vermont state income tax filing does not use a single form for all taxpayers. The form you must file depends on your residency status and the type of income earned during the tax year. Vermont uses different forms for residents, nonresidents, and taxpayers with simple income.

Key idea

1. Vermont resident: files Form IN-111
2. Part-year resident: files Form IN-111 (with allocation)
3. Nonresident: files Form IN-113 for Vermont-source income

Confirming your residency status and income source early helps ensure accurate Vermont state income tax filing and reduces the risk of notices from the Vermont Department of Taxes.

4. Documents Required for Vermont State Income Tax Filing

Preparing accurate documents in advance helps ensure smooth Vermont state income tax filing and reduces the risk of delays, notices, or penalties from the Vermont Department of Taxes.

1. W-2 and 1099 forms: reporting wages, contractor income, or other earnings
2. Federal tax return: Form 1040 used as a reference for Vermont filing
3. Vermont withholding records: state tax withheld from income, if applicable
4. Business income records: profit and expense details for self-employed taxpayers
5. Prior year Vermont return: helpful for consistency and carryforward items

5. DIY vs Accountant vs Managed Filing

Taxpayers and business owners usually choose one of three approaches: do it themselves, hire an accountant, or use a managed process. The right choice depends on complexity, time, and risk tolerance.

What typically changes your complexity?

1. Multiple LLCs or multiple partners
2. US-source income / withholding / treaty-related details
3. High bank activity and many transactions

Why founders choose managed filing

1. Fewer missed items and fewer back-and-forth messages
2. Clear checklist + timeline
3. More confidence that forms match the entity type

6. Step-by-Step: How to File Vermont State Income Tax

Step 1: Confirm your Vermont residency status

Start by determining whether you are a Vermont resident, part-year resident, or nonresident. Residency status determines whether you file Form IN-111 or Form IN-113 depending on residency status for Vermont state income tax filing.

Step 2: Gather income records and federal return details

Collect W-2s, 1099s, and your federal income tax return. Vermont state income tax filing uses federal income figures as the starting point for calculating state tax.

Step 3: Review Vermont-specific deductions and withholding

Verify Vermont tax withheld and applicable deductions, including any allowable Vermont adjustments and deductions, which may include a limited deduction for federal income tax paid, subject to income-based restrictions. Accurate withholding information helps prevent balances due or delayed refunds.

Common filing deadline: April 15 for most calendar-year filers

Step 4: Prepare and review the Vermont tax return

Complete the appropriate Vermont tax form using the MyVTax portal, approved tax software, or professional assistance. Review entries carefully before submission.

Step 5: Submit the return and retain confirmation

File your return electronically or by mail and keep a copy of the filed return, payment confirmation, or refund notice for your records.

Step 6: Plan for next tax year

Maintain organized income and expense records throughout the year to simplify future Vermont state income tax filing and reduce the risk of errors.

Helpful IRS reference:

• IRS Small Business and Self-Employed resources
• Employer Identification Number information

If you prefer guided assistance, FormLLC can help confirm your Vermont filing requirements and coordinate the preparation process.

7. Tips to Avoid Vermont Tax Notices and Penalties

• File your Vermont state income tax return by the April 15 deadline
• Pay any tax due even if you request an extension to file
• Verify Vermont tax withholding amounts before submission
• Keep copies of filed returns and payment confirmations
• Respond promptly to any notices from the Vermont Department of Taxes

8. Vermont Tax Costs, Penalties, and Filing Timelines

• Filing preparation cost: Varies based on income type and filing method used
• Record cleanup: Optional but helpful if income or withholding records are incomplete
• Late filing penalty: 5% per month of tax due, up to a maximum of 25% (minimum $50)
• Late payment penalty:1% per month of unpaid tax, up to 25%
• Interest on unpaid tax: Accrues at rates set annually by the Vermont Department of Taxes
• Filing extensions: Automatic six-month extension until October 15; payment still due by April 15

9. Common Federal and Vermont Tax Forms

1. EIN (Employer Identification Number)

An Employer Identification Number (EIN) is issued by the Internal Revenue Service and is used to identify a business for federal and state tax reporting, including Vermont state income tax filing for businesses and self-employed individuals.

2. Federal Partnership Return (Form 1065)

Multi-member LLCs file a federal informational return using Form 1065 . Income reported on Schedule K-1 is used to complete Vermont state income tax returns for individual partners.

3. Federal Corporate Return (Form 1120)

US C-Corporations file Form 1120 at the federal level. Corporate income figures are used to determine Vermont tax obligations when applicable.

4. Vermont Individual Income Tax Forms

• Form IN-111: Vermont resident and part-year resident individual income tax return.
• Form IN-113: Vermont nonresident individual income tax return.

5. Owner Individual Filing (when applicable)

• Individuals report Vermont income using Form IN-111 (residents/part-year residents) or Form IN-113 (nonresidents) based on residency
• Partners use Schedule K-1 information to complete Vermont individual returns
• Federal ITIN or SSN may be required for individual Vermont tax filing

10. Conclusion

Vermont state income tax filing is a yearly responsibility for individuals and businesses with income connected to Vermont. Filing accurately and on time helps avoid penalties, interest, and unnecessary correspondence from the Vermont Department of Taxes.

By understanding Vermont filing requirements, deadlines, and forms, taxpayers can complete their state returns with confidence. FormLLC provides clear guidance to help streamline the Vermont state income tax filing process.