Each employee will need to complete a W-4VT, Employee’s Withholding Allowance Certificate in order to calculate their Vermont Income Tax Withholding. The form will help them determine the number of allowances to take. Form W-4VT was updated in January of 2019 and even employees who have recently updated their W-4s should make sure that they have completed the most recent version of the W-4VT. Here are some frequently asked questions about Vermont employee's withholding allowance certificates.
Relocated and Remote Workers
If you live and work remotely in Vermont, then income earned during the entire period of time that you live in Vermont is subject to Vermont income tax. This is true even if you claim another state as your domicile, or even if you perform the remote work for a company that is not located in Vermont. We recommend that you speak with your employer(s) so that the correct amount of Vermont income tax can be withheld.
Payments for Tax Withheld
- Generally, your payment frequency will mirror your Federal payment frequency; for example, if you are required to pay your Federal Withholding Tax semiweekly, you are required to pay the Vermont Withholding Tax semiweekly.
Quarterly Payment frequency
- You should pay the tax when you file Form WHT-436, Quarterly Withholding Reconciliation (see below):
Monthly Payment Frequency
- You must pay withholding tax for the month by the 25th day of the following month. (Exception: January’s payment is due the 23rd day of February, but extended to the following Monday if the 23rd occurs on a weekend). For example, withholding tax for the month of June must be paid by July 25. You should pay the first and second months by their due dates as stated above. The third payments should be made when you file Form WHT-436, Quarterly Withholding Reconciliation.
Semiweekly Payment Frequency
- Tax withheld for pay dates on Wednesday, Thursday, or Friday is due the following Wednesday. Tax withheld for all other pay dates is due the following Friday. The due date for payments will not usually coincide with the due date for Form WHT-436, Quarterly Withholding Reconciliation.
Hiring Remote Employees
Although all income earned in Vermont is considered Vermont income, employers are not required to begin withholding Vermont Income Tax until an employee has been working from a Vermont location for thirty days. This applies to your employees working from a home, a rental property, a co-work space, or any other location within Vermont. The Department recommends that employers conduct a review of their employees’ work locations to ensure that income tax is withheld and remitted in the correct state where the tax will be due.
What if my business is located outside of Vermont but my employee lives in Vermont?
- If the work is performed in Vermont, Vermont Income Tax must be withheld regardless of whether the employer is located inside or outside of Vermont.
Do I need to register my business in Vermont to withhold taxes for my employee?
- You must register for an employer withholding account. When you register for a Vermont business tax account, be sure to answer the question about hiring employees. If you answer "Yes," then that will prompt the Department to open an employer withholding account for your business.
All taxpayers (Semiweekly, Monthly, and Quarterly) are required to file Form WHT-436, Quarterly Withholding Reconciliation, at the close of each quarter.
All taxpayers (Semiweekly, Monthly, and Quarterly) are now required to file Form WHT-434, Annual Withholding Reconciliation, due the last day of January. This form serves as the transmittal for forms W-2 or 1099 and reconciles the amount of Vermont income tax withholding reported during the year to the amount of withholding tax shown on the W-2 and/or 1099 forms.