Filing season opened on January 27 when the IRS and the Vermont Department of Taxes began accepting tax returns. The 2020 due date is April 15* to file the Vermont personal income tax return, an extension to file the Vermont personal income tax return, as well as the Homestead Declaration, Property Tax Credit, and Renter Rebate Claim.
Updates and Reminders for Tax Year 2019
The Vermont personal exemption increases from $4,150 in tax year 2018 to $4,250 for tax year 2019.
The Vermont Standard Deductions increases an average of $193. For tax year 2019, it is $12,300 for Married Filing Jointly or Qualifying Widow(er), $6,150 for Single or Married Filing Separately, and $9,200 for Head of Household.
Vermont Charitable Contribution Tax Credit
Vermont’s Charitable Contribution Tax Credit is available to all filers regardless of whether they itemize on their federal tax returns. You may take a nonrefundable credit of 5% of the first $20,000 of eligible charitable contributions made in tax year 2019. To file, use Form IN-111, Individual Income Tax Return.
Medical Expenses Deduction
Beginning this year, some medical expenses may be deductible for Vermont taxpayers. It is based on the federal deduction minus the Vermont Standard Deduction and Personal Exemption. Use the Medical Deduction Worksheet to determine the amount you may deduct. To file, use Schedule IN-112, Vermont Tax Adjustments and Credits.
Social Security Benefits Exemption
Social Security benefits are exempt from income tax depending on your filing status and adjusted gross income. Use the Social Security Exemption Worksheet to determine if you qualify for a full or partial exemption. To file, use Schedule IN-112, Vermont Tax Adjustments and Credits.
Property Tax Credit
Under a change to the law passed during the 2019 legislative session, the “property tax adjustment” is now the “property tax credit.” Only the name has changed. To file, use Form HS-122, Homestead Declaration and Property Tax Credit Claim, and Schedule HI-144, Vermont Household Income.
- The definition of “homestead” includes the principal dwelling of a widow or widower when the dwelling is owned by the estate of the deceased spouse, and it is likely that the dwelling will pass to the widow or widower on settlement of the estate.
- Two new exclusions to household income for the purposes of claiming the property tax credit go into effect this year:
- You do not need to include the income of your spouse or civil union partner if: a) you were legally separated or divorced by court order during the taxable year, and the spouse is not living in the same household with you, or b) your spouse is subject to a protection (restraining) order.
- You do not need to include income resulting from a cancellation of debt.
When to File Your 2019 Tax Returns
The Department continuously makes changes and improvements to our refund processing. Our goal is to improve turnaround times for e-filed returns again this year. You may improve your refund turnaround time by e-filing in February and March after you have received all W-2s and 1099s. Filing too early without the proper supporting documents may delay processing of the return.
Turnaround times may also be improved by choosing direct deposit for your refund to an existing bank account and by 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.
Withholding the Right Amount of Taxes
The Department recommends reviewing federal and state Form W-4s at the beginning of the year or when your status changes (marriage, divorce, number of dependents, etc.). All Vermont employees should complete the W-4VT to make sure the right amount of Vermont tax is withheld from each paycheck. Completing only the federal Form W-4 may result in the wrong amount of Vermont tax being withheld.
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 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 January 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 (select "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 (select "Return filing verification").
Taxpayers should be aware that the Department's measures to combat personal income tax fraud during the 2020 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. Processing returns begins after January 27. Taxpayers who e-file generally receive their refunds more quickly than those who file paper returns. For e-filers, nearly 80% of refunds last year were issued within 30 days. Because paper filings must be scanned, paper filers will generally 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, select Check the status of your return (see [A] on the 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, select Return filing verification (see [B] on the 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 5% of those eligible used this free online filing service. Taxpayers with low to moderate incomes and elderly taxpayers may also take advantage of free tax 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.
Here are some quick tips:
- Consider using a tax preparer or tax preparation software to help you prepare your 2019 tax return.
- 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.
- 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 86% 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 Credit
- Renter Rebate
- Landlord Certificate
- An extension to file personal income tax (NOTE: Extensions only extend the time to file the return, they do not extend the time to pay taxes. You must pay all taxes due by the April 15th due date to avoid late payment penalties and interest.)