Filing season opened on January 28 when the IRS and the Vermont Department of Taxes began accepting tax returns. The 2019 due date is April 15 to file the Vermont personal income tax return, an extension to file the Vermont personal income tax return, Homestead Declaration, Property Tax Adjustment Claim, and Renter Rebate Claim.
New for Tax Year 2018
Taxpayers will see a number of changes to the Vermont tax forms this year. Many of the changes come as a result of Act 11, Vermont’s response to the 2017 federal Tax Cuts and Jobs Act (TCJA), which became law during the 2018 special legislative session.
If action had not been taken, it is estimated that Vermonters would have paid an additional $30 million in personal income taxes for calendar year 2018. Act 11 was designed to result in most Vermonters paying a similar amount of personal income tax to what they would have paid prior to the TCJA with a structure that is no longer closely tied to federal changes.
Here are a few significant changes that are new for tax year 2018:
- Vermont now starts with federal adjusted gross income (AGI) and has defined a new Vermont personal exemption of $4,150 for tax year 2018. The Vermont personal exemption functions exactly like the federal personal exemption did prior to the TCJA, which reduced the exemption to zero.
- Act 11 added a Vermont Standard Deduction of $12,000 for Married Filing Jointly or Qualifying Widow(er), $6,000 for Single or Married Filing Separately, or $9,000 for Head of Household.
- Vermont now offers a Tax-Deductible Charitable Contribution of 5% of the first $20,000 of contributions.
- A new exemption is the Social Security Benefit Exemption for eligible Vermonters (see the worksheet in instructions for Schedule IN-112, Vermont Tax Adjustments and Credits).
- Schedule IN-155, Federal Itemized Deductions Addback, has been retired as it is no longer needed.
The Department continuously makes changes and improvements to our refund processing, and we expect better turnaround times for e-filed returns this year. Vermonters may improve their own refund turnaround time by e-filing in February and March as soon as all W-2s and 1099s have been received, choosing direct deposit of their refund to an existing bank account, and using a tax professional or tax preparation software to reduce the chance of errors. On average, taxpayers who e-file receive their refunds almost two weeks faster than paper filers.
Continued Focus on Fraud Prevention
Because fraudsters work hard to devise new ways to steal identities and money, the Department continues to experience attempted tax refund fraud. The Vermont Department of Taxes works with the IRS, other state revenue departments, and companies and trade associations in the tax and financial services industries to develop and implement new procedures to help protect taxpayer money.
Submitting false W-2 information is a favorite tactic of fraudsters. Because of this, the Department continues efforts to validate wage withholding information with filings and payments by employers. The Department has emphasized the Jan. 31 due date for employers to file W-2 information. Filing this information electronically with the Department, by the due date, prevents a frequent source of refund delay. Learn more about identity theft and fraud.
Request for Identity Verification or Additional Information
After you submit your return, you may receive a letter from the Department requesting additional identification. Please respond as soon as possible to avoid a delay of your refund. You may provide additional information, including requested documents, online through myVTax (click "Respond to correspondence"). If we ask you to verify that the return the Department has received is truly your return, you also may respond through myVTax (click "Return filing verification").
Taxpayers should be aware that the Department's measures to combat personal income tax fraud for the 2019 tax filing season may cause delays in receiving their refunds.
The most efficient and secure way to file Vermont tax returns continues to be electronic filing, and direct deposit to an existing bank account is the fastest way to receive a refund. The Department began processing returns the first week of February. Taxpayers who e-file generally receive their refunds more quickly than those who file paper returns. For e-filers, nearly 75% of refunds last year were issued within 30 days. Because paper filings must be scanned, paper filers will not receive their refunds until at least 8-12 weeks after their returns are received by the Department.
Are you curious to know the status of your refund? After you file your return, you may learn the status by visiting myVTax and clicking "Check the status of your return” (see [A] on graphic below). Once you transmit your e-filed return it may take up to 72 hours for your information to become available. For those who paper file, the information regarding the status of a return can take 4 weeks or more to become available on myVTax.
Return Verification Letters and Paper Checks
Previously, the Department might have issued you a paper check, even if you selected to receive your refund by direct deposit or prepaid debit card. This protection helped the Department avoid sending your money to an account or debit card that is controlled by a criminal.
While the Department honors taxpayer requests to issue a refund electronically, there may be situations in which we will determine it’s safer to issue a paper check. In some cases, we may send a letter requesting verification of taxpayer identity instead of automatically changing your request to a paper check. The letter instructs you to go to myVTax, click “Return filing verification” (see [B] on graphic above), and enter the verification code included on the letter. This verifies your request and allow us to proceed with processing your refund.
Free Tax Assistance to Eligible Vermont Taxpayers
Last year, about 65% of Vermont taxpayers qualified to file their federal and state income taxes through Free File, but only about 3% of those eligible used this free online filing service. Taxpayers with low to moderate incomes and elderly taxpayers may also take advantage of free assistance though the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, the AARP Foundation Tax-Aide Program, and the MyFreeTaxes Partnership. To find out more about these free programs and to see if you're eligible, see Free File and Free Tax Preparation Assistance.
Tips to Get Your Refund More Quickly
The Department offers tips to help you get your tax refund in a timely manner. See Where’s My Vermont Income Tax Refund?
Here are some quick tips:
- Before you file, make sure you have all of your form(s) W-2 and any form(s) 1099 and include copies with your return if you paper file.
- Use current forms for the tax year. This is particularly important for tax year 2018 as the forms have been significantly modified to meet requirements of new Vermont tax law.
- Provide your correct mailing address.
- Provide correct banking information if you want direct deposit.
- Double check your entries into forms and math calculations (e-filing minimizes math errors).
- Be sure all filers sign the return.
Making Online Filing Easier through myVTax
About 84% of all returns filed in Vermont are e-filed. Electronic filing through a commercial software vendor or your tax preparer is a secure way to file federal and Vermont returns. On average, e-filers get their refunds about two weeks faster than filers using paper forms because returns transmitted electronically get to the department more quickly, with fewer errors, and are more easily processed.
The Department continues to make improvements to make online filing easier for all taxpayers. You may use commercial tax software or a tax preparer to e-file Vermont personal income tax, but some filings may be made for free through myVTax as follows:
- Homestead Declaration
- Property Tax Adjustment
- Renter Rebate
- Landlord Certificate
- An extension to file personal income tax (NOTE: This is filing a return only. You must make payment by the April 15 due date to avoid penalties and interest.)