How to Determine Household Income

For Vermont tax purposes, Household Income includes all the funds available to support a household, even if you did not receive any financial contribution from the members of the household.

• It includes both taxable and nontaxable income.

• It includes all sources of income of any persons living in your household. This refers to individuals, including children, who lived in your home for any period during the year and who may or may not be related to you. See "Income Sources That Are Not Household Income" below, for exceptions.

• Note that unless you are separated with a final decree signed by a judge or divorced with a final decree signed by a judge, your spouse/civil union partner’s income must be included (unless they were at least 62 years old and permanently residing in a nursing home or other care facility).

• Include income of your spouse/civil union partner, whether or not you were living in the same household. You do not have to include your spouse/civil union partner when the person is not living with you as a member of your household and you are legally separated by court order or previously established protective/restraining order.

How to Determine Household Income

This overview will help you prepare your household income information when filing Schedule HI-144, which must be submitted with Property Tax Adjustment claims. This covers a general overview of common HI-144 factors only.

• Be sure to refer to the instructions for the schedule to get more details, and contact the Department when complex scenarios and questions arise.

• Household Income is Modified Adjusted Gross Income and is not the same as Federal taxable income.

• Household Income includes all income, taxable and nontaxable, of everyone who resided with you at any time during the tax year, including children and non-related individuals. If an individual resided with you for fewer than 12 months, include that individual’s income only for the time they resided with you.

Members of Your Household

• Yourself

• Your spouse or civil union partner

  • Note: You must include a spouse/civil union partner as a member of your household even if your spouse/civil union partner does not live with you in the same home. If, however, your spouse/civil union partner does not live with you and you and your spouse/civil union partner are legally separated by court order, then this person is not considered a household member.

• Roommates/housemates

• Family members, including children, even if they file their income tax returns and are not considered dependents

The Social Security Numbers of all household members are required.

Tip: If a person living with you is planning to move, be sure to get the person’s Social Security Number and income information you’ll need to complete the HI-144 before they move.

Household members do not include:

• A spouse/civil union partner who is at least 62 years of age and who has moved to a nursing home or other care facility with no reasonable prospect of returning to the household

• A person who is not related to any member of the household and who is living in the household under a written home-sharing agreement with a nonprofit home-sharing program authorized by the Vermont Department of Disabilities, Aging and Independent Living

• A person living in the household who is a bona fide employee hired to provide personal care to a member of the household and who is not related to the person for whom the care is provided

• A person who resides with you for the primary reason of providing attendant care services or homemaker or companionship services with or without compensation that allows you to remain in your home or avoid institutionalization. To qualify for this exception, you must be disabled or 62 years of age or older as of December 31 of the tax year.

• A person living in the household who was granted humanitarian parole to enter the United States, and who, under US law is seeking or has been granted asylum, or qualifies as a refugee, provided that person is not eligible to apply for permanent residency

Income Sources That Are Household Income

The sources of income that you are required to report are shown here. Many of these figures can be taken from the Federal Form(s) 1040 and related schedules. Refer to line-by-line instructions on Schedule HI-144 for more details. Consultation with a tax preparer may also be helpful.

Tip: Allow time to collect all the income sources, any proofs of payment, and forms you need for everyone in your household.

• Cash public assistance and public relief*

• Social security/SSI/SSDI/railroad retirement/veteran’s benefits, taxable and nontaxable*

• Unemployment compensation/worker’s compensation

• Wages, salaries, tips, etc.

• Interest and dividends**

• Interest on U.S., state, and municipal obligations, taxable and nontaxable

• Alimony, support money, child support, cash gifts

• Business income***

• Capital gains, taxable and nontaxable. Include nontaxable gains from the sale of primary residence***

• Taxable pensions, annuities, IRA, and other retirement fund distributions. Include ROTH IRA earnings distributions

• Rental and royalty income***

• Income from farms, partnerships, S corporations, LLCs, estates, or trusts***

• Other income including prizes and awards, gambling or lottery winnings, directors' fees, employers' allowances, taxable refunds from Federal return 1040, Line 10, allowances by dependents of armed services personnel and military subsistence payments (BAH, FSA), loss of time insurance, cost of living adjustment (COLA) paid to federal employees

• Income exceeding $6,500 for exceptions involving dependents *

There may be exceptions, so refer to “Income Sources That Are Not Household Income” for more information ** If you are under the age of 65 as of December 31 of the tax year and the total interest and dividend income reported are over $10,000, your household income is increased by the total interest and dividend income greater than $10,000 *** If losses, see instructions for limits.

Income Sources That Are Not Household Income

The following income sources are not considered to be Household Income:

• Foster care payments

• Payments received for the care of eligible persons with developmental disabilities (formerly Difficulty of Care)

• In-kind relief by a government agency, such as fuel assistance

• Food from a governmental agency

• Gifts from nongovernmental sources, such as assistance for fuel, utilities, and rent

• The first $6,500 of cash gifts received by the entire household unless used for support

• The first $6,500 of income received by a person who qualifies as your dependent and who is your parent or adult child with a disability

• The first $6,500 of income earned by a full-time student who qualifies as your dependent

• Income earned by federally-designated asylees or refugees while living temporarily in your home

Allowable Adjustments to Reduce Household Income

• Social Security and Medicare tax withheld on wages

• Self-employment tax

• Child support paid—be prepared to provide proof of payment

• Business expense for Reservists

• Alimony paid

• Tuition and fees deduction

• Self-employed health insurance deduction

• Health Savings Account deduction

Frequently Asked Questions

Household Income for Property Credit Claim

What is Household income?

Household income is basically all positive income figures from your federal Form 1040, lines 7 through 21 or Form 1040A, lines 7 through 14b, plus some nontaxable items, less certain eligible deductions.

What nontaxable items are included in household income?

One item is tax-exempt interest (Box 8b) on your federal Form 1040 and 1040A and the nontaxable portion of Social Security benefits received, the difference between boxes 20a and 20b from your Federal 1040 (1040A difference between boxes 14a and 14b). Some other items are support money received from others, child support received, and cash gifts.

Are there any deductions eligible to reduce household income?

Yes, there are quite a few. You may deduct Social security and Medicare taxes on wages included in household income. Also, there is a deduction for self-employment taxes paid. You may also deduct child support paid (proof of payment is necessary).

The following deductions originate from your federal Form 1040 lines 23 through 35 or 1040a and are the only deductions available:

• Business expenses for reservists

• Alimony paid

• Self-employment health deduction

• Health savings deduction

I contributed money to an IRA account. May I deduct this from household income?

No you may not, this deduction was removed from Household income in 2009.

What if I had someone living with me? Do I include their income?

Yes, you would include their income for the time they spent in the Household. If they lived with you the whole year, you would include all their income. If it was one quarter of the year, you would take 25% and add that to household income.

Note: Beginning with the 2022 tax year, income earned by federally-designated asylees or refugees while living temporarily in your home does not need to be included in household income.

What if the sum of my taxable interest and dividends and nontaxable interest exceed $10,000?

If you were under age 65 on December 31 of the tax year, you would take that sum and subtract it from $10,000 and include that difference as an addition to household income.

What if an income figure from my federal Form 1040/ 1040A is negative?

The short answer is that there is not a deduction for household income. However, depending on the line item sometimes you need to take a look at its composition.

I have several small businesses that I record on different federal Schedule C's. How do I report their income?

This is a great question. For household income purposes, you take a look at each business and include only those that show a net profit for household income purpose. You do not get a deduction for those businesses that show a loss.

What if I used my tuition and fees I paid to get the federal education tax credit can I also deduct it from household income?

No, you may not, since it was not included on your Federal 1040 as a deduction from income you may not use that figure as a deduction for Household income.

I have Medicaid premiums deducted from my Social Security I receive. May I deduct these premiums from household income?

No, you may not.

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