VERMONT
separate property state

 

Military Income:  Military pay is not taxable when stationed outside of Vermont.  If taxes were withheld, military member can file a resident return.  Subtract the military pay from the federal gross income and put the amount in Section 2 of IN-113. 

Military Filing Requirement:  No, if no tax withheld a return does not have to be filed to maintain residency.

Military Spouse Residency Relief Act: Service member in state in compliance with military orders. Spouse in state solely to be with service member. May file adjusted W4-VT with employer.

Forms Used:            

Filing Status:  Same as federal.  NOTE:  If spouse is not a resident and has no Vermont income, the Vermont resident can file a separate return.

Attach Copy of Federal Return:  Yes

Not Taxed:

Other State Tax Credit:  Available.  Attach Vermont Schedule B and copy of other state return.

Where to Mail:
Refunds: Tax Due:
Department of Taxes
PO Box 1881
Montpelier, VT  05601-1881

Department of Taxes
PO Box 1779
Montpelier, VT 05601-1779

Forms:  (802) 828-2515 Refund Inquiry:  (866) 828-2865
General Information(802) 828-2865 Electronic Filing:  (802) 828-5563
Other Info: Website: http://tax.vermont.gov

Vermont Department  of Taxes
Taxpayer Services Division
109 State St.
Montpelier, VT  05609-1401

 
E-filing Info:
Tax Form Instructions:
Resident Instructions Non-Resident Instructions

 

Filing Status Scenarios

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer)
2.  Taxpayer and Spouse Different States of Residence
3.  Taxpayer and Spouse Non-Residents
4.  Taxpayer Non-Resident - Spouse Part-Year Resident
5.  Taxpayer Married or Single - Resident but Income from Other State
6.  Amended Return

 

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer) - Taxpayer and spouse are both Vermont residents, lived at their present location all year, and one or both had income.

Main Info Screen.

W-2 Form.  Vermont does not tax military income when stationed outside the state.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Vermont IN-111 Form.  A joint resident Vermont income tax return is prepared.  You must enter the Vermont School Code and City/Town of Residence. Answer the remainder of the residence questions.

 

Vermont IN-113 Page 2 - Income Adjustment Schedules.  Schedule II - Adjustment for Vermont Exempt Income.  Review this form to ensure that the military income is exempted on line 34 and enter the number of months on Active Duty.

Complete all other fields and forms with red or required information.

2.  Taxpayer and Spouse - Different States of Residence - Taxpayer or spouse is a resident of Vermont, while the other member is a resident of a different state.  A Vermont income tax return must be prepared due to the taxpayer or spouse having Vermont earned income.

Main Info Screen.  If spouse is not a resident and has no Vermont income, the Vermont resident can file a separate return.  If this option is chosen, the taxpayer must submit a complete separate federal return (yes, a phony return if they filed jointly) and attach a copy of this fake return along with a copy of the original federal return filed.    For this example, the taxpayer is a resident of Vermont while the spouse is a resident of North Dakota.

W-2 Form.  Vermont does not tax military income when stationed outside the state.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Vermont IN-111 Form.   A married filing separate resident Vermont income tax return should be prepared.  You must check the box for the Taxpayer to generate a married filing separate return.  Check the box to indicate use of recomputed Federal Return information. You must enter the Vermont School Code and City/Town of Residence. Answer the remainder of the residence questions.


When filing a joint federal form, but Married Filing Separate for Vermont, a special VT 1040 Form will be created.  This is necessary to divide income.  If applicable, you must fill in any dependent information.

Vermont IN-113 Page 2 - Income Adjustment Schedules.  Schedule II - Adjustment for Vermont Exempt Income.  Review this form to ensure that the military income is exempted on line 34 and enter the number of months on Active Duty.

Review the remainder of the Vermont Form IN-111 and IN-113 to ensure the income is being subtracted correctly.  Complete all other fields and forms with red or required information.

3.  Taxpayer and Spouse Non-Residents - Taxpayer and spouse are residents of a different state.  The spouse and taxpayer must file a Vermont tax return due to one or both having Vermont earned income.

Main Info Screen.  If both members are residents of another state, the parties should file as nonresidents.  For this example, the taxpayer and spouse are both residents of Wisconsin but must file a Vermont income tax return because the spouse worked in Vermont.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Vermont Form IN-111.   A joint non-resident Vermont income tax return should be prepared. Enter 999 for the Vermont School Code and City/Town and enter the State of Legal Residence.

Vermont IN-113 Page 2 - Adjustments to Income.  You must enter the name of resident states during the period of non-residency in Vermont.

In order to comply with the Military Spouses Residency Relief Act, the nonresident military spouses income is subtracted from the return by entering the amount on line 34 of VT-IN113 Page 2. You can link to a scratch pad from the indicated field.

Using the example, enter the nonresident spouse's wages on the scratch pad

Review the remainder of the Vermont Form IN-111 and IN-113 to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

4.  Taxpayer Non-Resident - Spouse Part-Year Resident - Taxpayer and spouse moved to or from Vermont during the tax year.  The taxpayer is a resident of a different state.  The Spouse is a part-year resident of Vermont.  The Spouse and taxpayer must file a Vermont tax return due to one or both of them having Vermont earned income and possibly income from another state.

Main Info Screen.  For this example, the taxpayer is in the military and a resident of Indiana.  The taxpayer and spouse moved from Vermont to North Dakota during the year.  The spouse was a resident of Vermont but is now changing their residency to North Dakota for tax purposes.  The spouse therefore was a part-year resident of both Vermont and North Dakota and must file a Vermont income tax return because the spouse worked in Vermont.

Part Year Resident States Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Vermont Form IN-111.   A joint part-year resident Vermont income tax return should be prepared.  Enter 999 for the Vermont School Code and City/Town and enter the State of Legal Residence.

Vermont Form IN-113, Page 2 - Income Adjustment Schedules.   You must enter the dates and residence information, as in the example.

Review the remainder of the Vermont Form IN-111 and IN-113 to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

5.  Married or Single Military Resident of Vermont with Income from Another State  - Taxpayer is single.  The taxpayer must file a Vermont tax return due to him or her having Vermont earned income.

Main Info Screen.  For this example the taxpayer is a military member stationed in North Dakota but a resident of Vermont.  The taxpayer had a job in North Dakota therefore having North Dakota earned income.

W-2 Form.  Vermont does not tax military income when stationed outside the state.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Vermont Form IN-111.  A resident Vermont income tax return is prepared.  Vermont taxes residents on income from all sources, even income earned while living in another state (North Dakota as in this example).  You must enter the Vermont School Code and City/Town and State of Legal Residence.

Vermont IN-112 Form - Tax Adjustments Credits.  Schedule B - Credit for tax paid to another state or Canadian province for residents and part-year residents only must be prepared to give a credit for taxes paid to another state (North Dakota). You must complete the other states tax return first, then enter the amount of tax from the other states tax return.  This is not the amount the taxpayer had withheld from his or her pay but the amount of tax imposed on them.  Line 1a is the amount of income earned in the other state (North Dakota).  Line 5 is the amount of income tax liability on the (North Dakota) tax return.  A copy of the other state's return must be attached to the Vermont return if not e-filed.

Vermont IN-113 Page 2 - Income Adjustment Schedules.  Schedule II - Adjustment for Vermont Exempt Income.  Review this form to ensure that the military income is exempted on line 34 and enter the number of months on Active Duty.

Complete all other fields and forms with red or required information.

6.  Amended Return  - An amended Vermont return must be filed because the taxpayer received new tax information after their Vermont return was filed.
Federal 1040X Form.  Before making any changes to the tax return add the US 1040X form to the tax return.  You must check the box under Income and Deductions to lock in the entries in Column A - Original amount or as previously adjusted.

Vermont IN-111 - Vermont Income Tax.  The same Vermont IN-111 Form that was used to file the return is used to amend the return.  Answer the questions as in the example.  You must check the box to lock in the original refund or balance due before making any changes to the return.

Make whatever changes are required to the federal tax return.  For this example, a new W-2 was received.

Vermont IN-111 - Vermont Income Tax.  Return to the Vermont IN-111 form to determine if the taxpayer is receiving an additional refund or owes money.

Amended returns can not be e-filed.  The taxpayer must mail the federal 1040X and any state amended returns if required to be filed.