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 of time during the year and who may or may not be related to you.
- 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 and Renter Rebate 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 s/he resided with you
Members of Your Household
- 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.
- Family members, including children, even if they file their own income tax returns and are not considered dependents
The Social Security Number of all household members is required.
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 (the person filing the claim) 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.
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.
- 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 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, director’s 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 in excess of $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
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