Vermont Tax Form IN-111 - Income Tax Return Instructions

General Informations

NOTE: Forms HS-122 or PR-141 are not required to be filed with the VT income tax return.

PLEASE do not make marks in boxes that you intend to leave blank.

Section 1 Taxpayer Information REQUIRED entries. 

If you have a label, put the label in the "Place Label Here" space. Enter Social Security Number(s). If you do not have a label or the label information is incorrect, print your name(s), address and Social Security number(s) on the form.

Amended Return. Check here ONLY if you are filing an AMENDED 2008 income tax return. See AMENDING OR CORRECTING VT RETURN INFORMATION on page 5.

Deceased Taxpayer. Check the applicable box if the taxpayer or spouse/civil union partner died during 2008. Administrator or Executor: Use Form IN-111 to report the decedent's income from the beginning of 2008 to the time of death. To claim an income tax refund on behalf of the deceased, attach one of the following documents to Form IN-111: the court certificate showing your appointment as administrator or executor (this is not needed if you are a surviving spouse); a completed Form 176 (Statement of Claimant to Refund Due on Behalf of Deceased Taxpayer), or a copy of completed Federal Form 1310. Form FI-161, VT Fiduciary Return of Income, should be filed to report the income of an estate or trust. Call 802-828-2548 for information.

Line 1 VT School District Code: REQUIRED entry.

For school district codes, go to Use the http://tax.vermont.gov or page 13 of this booklet.

 VT Residents: Use the 3-digit school district code for your residence on December 31, 2008.

 Nonresidents: Enter 999 as your school district code.

Line 2 City/Town of Legal Residence REQUIRED entry

Enter your legal residence as of December 31, 2008. If you live where there is both a city and town with the same name, specify city or town. For example: Rutland City or Rutland Town.

Section 2 Tax Filing Information

Filing Status REQUIRED entry. Check your VT filing status box. The VT filing status is the same as your Federal filing status except for the following two situations that require recomputing Federal information for VT purposes:

• CIVIL UNION (available to same sex couples holding a valid civil union or marriage license): Recomputed Federal income tax information required. Use the applicable VT filing status of Civil Union Filing Jointly or Civil Union Filing Separately. Complete a Federal return (for VT purposes only) using the exemptions, deductions and rules allowed by the IRS as if you filed Married Filing Jointly or Married Filing Separately. Exemptions and deductions must be reasonably allocated if filing separately. For instance, one taxpayer cannot claim all exemptions and deductions. Mark this return as "Recomputed for VT purposes" and attach a copy of the recomputed return along with a copy of the Federal return actually filed with the IRS. Use the recomputed Federal return information where VT requires Federal information. If filing as Civil Union Filing Separately, enter the other person's name and Social Security number in the space provided in Section 2 at Line 7. Because VT and IRS routinely share information, using the civil union status alerts the Department to expect differences between the IRS filing and VT filing. 6
• NON-VT RESIDENT SPOUSE WITH NO VT INCOME: Recomputed Federal income tax information required. If your spouse is a nonresident of VT and has no VT income, you can file Married Filing Separately for VT income tax purposes even though you filed jointly with the Internal Revenue Service. Complete a Federal return (for VT purposes only) using the exemptions, deductions and rules allowed by the IRS as if you filed Married Filing Separately. Exemptions and deductions must be reasonably allocated if filing separately. For instance, one taxpayer cannot claim all exemptions and deductions. Mark this return as "Recomputed for VT purposes" and attach a copy of the recomputed return along with a copy of the Federal return actually filed with the IRS. Use the recomputed Federal return information where VT requires Federal information. Enter your spouse's name and Social Security number in the space provided in Section 2 at Line 7.

Line 9 Exemptions

Enter the number of exemptions claimed on your Federal return or your Recomputed Federal return.

NOTE: Federal Forms 1040EZ and 1040NR-EZ only, enter zero if you are claimed as a dependent by another taxpayer in 2008. Enter 1 if you are Single. Enter 2 if you are Married Filing Jointly or Civil Union Filing Jointly.

Line 10 Adjusted Gross Income

Enter the amount from your Federal return or, if applicable, from the Recomputed Federal return.

Section 3 Taxable Income

Line 11 Federal Taxable Income

Enter the amount from your Federal return or, if applicable, from the Recomputed Federal return..

NOTE: If Federal Taxable Income is zero because of a loss and you have an entry for Line 12a or Line 12b, calculate the loss amount. For Federal Form 1040, subtract Line 42 from Line 41. For Federal Form 1040A, subtract Line 26 from Line 25. Enter result on Line 11. . Check the box to the left of the entry box to show a loss amount.

Additions to Federal Taxable Income

Line 12a

Enter the calculation of Non-VT State and Local Obligations from Schedule IN-112, VT Calculation A, Part I, Line 3.

Line 12b Federal Additional 50% Bonus Depreciation

The bonus depreciation is not allowed for Vermont income tax purposes. Depreciation must be calculated using the standard methods for federal income tax purposes prior to the enactment of the Economic Stimulus Act of 2008, regardless of when the asset(s) placed in service. The K-1 or income statement must be recalculated to exclude this depreciation. Attach a copy of the original and recalculated K-1 or income statement.

Line 13 Federal Taxable Income with Additions

Add Lines 11, 12a and 12b and enter result. To show loss amount, . check the box to the left of the entry box.

Subtractions from Federal Taxable Income

Line 14a Interest Income from U.S. Obligations

Interest income from U.S. government obligations (such as U.S. Treasury Bonds, Bills, and Notes) is exempt from VT tax under the laws of the United States. Enter the amount of interest income from U.S. Obligations on this line to reduce your VT taxable income.

Interest income is exempt when received directly from the U.S. Treasury or from a trust, partnership, or mutual fund that invests in direct obligations of the U.S. government.

Income from the sale of U.S. government obligations is taxable in VT. Income from repurchase agreements, securities of FNMA, FHMC, or GNMA or other investments that are not direct obligations of the U.S. government are also taxable. See Technical Bulletin 24 for more information.

Supporting Documentation Required: No attachment to return required. However, obtain statements for your tax records in the event the Department requests such documentation. Acceptable statements are Federal Schedule B or other listing with amount and description. Summary information from a K-1 or just a statement “U.S. government securities” without further identification is not acceptable.

Line 14b Capital Gains Deduction from VT Taxable Income from Long-Term Capital Gains

If you used the Federal Qualified Dividends and Capital Gain Tax Worksheet to calculate your federal tax liability, enter the amount from Federal Form 1040, Line 13 or Federal Form 1040A, Line 10 or if applicable, from Recomputed Federal return.

Line 14c

Multiply the entry on Line 14b by 40% and enter result here.

Line 14d

Enter the amount from Form IN-111, Line 11. If Line 11 is a loss amount, enter "0".

Line 14e

Multiply the entry on Line 14d by 40% and enter result here.

Line 14f

Add Lines 14a and the smaller of Line 14c or 14e. The deduction for capital gains cannot exceed 40% of Federal Taxable Income.

Line 15 VT Taxable Income

Subtract Line 14f from Line 13 and enter amount. If the result is zero or negative, enter “0”. EXCEPTION: You have a loss on Line 11, entry on Lines 12a or 12b resulting in a loss on Line 13, subtract Lines 14a and 14f from Line 13. Enter that amount and check the box to the left of the entry to show a loss.

Section 4 VT Income Tax

Line 16 VT Income Tax from Tax Table or Tax Rate Schedule

Using the VT Taxable Income amount from Line 15, calculate your VT tax using the applicable table or schedule and enter result.

• If Line 15 is a loss, tax is $0.
• If Line 15 amount is less than $75,000 - Use VT Tax Tables.
• If Line 15 amount is $75,000 or more - Use VT Rate Schedules.

Line 17 Additions to VT Income Tax

Complete VT Schedule IN-112, VT Calculation A, Part II. Additions to VT Income Tax are:

• recapture of a VT tax credit; or
• additional Federal tax on the following:
  • - Qualified Retirement Plans including IRA & MSA
  • - Recapture of Federal Investment Tax Credit
  • - Lump-sum Distribution from Federal Form 4972

Line 18 VT Income Tax with Additions

Add Lines 16 and 17 and enter result.

Line 19 Subtractions from VT Income Tax

Complete VT Schedule IN-112, VT Calculation A, Part II if you filed Federally for:

• Credit for Child and Dependent Care Expenses (See page 9 for Low- Income Child and Dependent Care Credit.)
• Credit for the Elderly or the Disabled
• Investment Tax Credit (as defined in IRC Section 46)
• Farm Income Averaging Credit
• Additional credit for VT-based solar energy investment

Line 20 VT Income Tax

Subtract Line 19 from Line 18 and enter result. If Line 19 is more than Line 18, enter zero.

Line 21 Income Adjustment

Enter 100.00% or percent from Schedule IN-113, Line 43. $ Entry of less than 100.00% requires filing Schedule IN-113.

Examples of income adjustment less than 100.00%:

• You were a nonresident or part-year resident in 2008.
• You received exempt income as defined under VT Income of Residents on page 6.
• You claimed wages or expenses required to be added back to AGI under IRC Sections 280C or 44.

Line 22 Adjusted VT Income Tax

Multiply Line 20 by the percentage on Line 21. If Line 21 is 100.00%, Line 22 will be the same as Line 20.

Section 5 Credits and Use Tax

Line 23 Credit for Income Tax Paid To Other State or Canadian Province

(FOR FULL-YEAR AND PART-YEAR RESIDENTS) Complete Schedule IN-112, VT Calculation B and enter result from Line 6. Attach to Form IN-111.

Line 24 VT Tax Credits

Enter the amount from Schedule IN-112, VT Calculation D OR Schedule IN-119.

Line 25 Total VT Credits

Add Lines 23 and 24 and enter result.

Line 26 VT Income Tax After Credits

Subtract Line 25 from Line 22. If Line 25 is more than Line 22, enter zero.

Line 27 Use Tax

(FOR FULL-YEAR AND PART-YEAR RESIDENTS) Use this line to report Use Tax except as noted below. Use Tax applies to taxable purchases on which sales tax has not been charged. This includes purchases from a mail-order house or catalog, over the Internet, from an out-of-state retailer, or from any retailer who did not charge sales tax. No Use Tax is due on purchases of food, clothing, prescriptions, or newspapers. Tax applies to most other products including, but not limited to, magazine subscriptions, computers, computer software, furniture, jewelry, audio, video and electronic equipment. Examples: In May 2008, you paid $200 for software delivered through a download to your computer. The company charged no sales tax. You need to report $12.00 Use Tax ($200 x 6%). In July 2008, you paid $100 for books purchased from a mail-order company that shipped the books to your VT home. The company charged $7.50 shipping. The company charged no sales tax. You owe $6.45 Use Tax [($100 + $7.50) x 6%].

You may use the Use Tax Reporting Table if you do not have receipts to calculate the actual Use Tax. The option to use the reporting table applies only to purchases less than $1,000. NOTE: For each purchase with a total invoice amount of $1,000 or more, you must calculate the use tax and, if also using the reporting table, add that amount to the tax from the table.

Because proof of tax payment is required to register an ATV, dirt bike, boat or snowmobile, use Form SU-452. Form SU-452 is available on the Department web site or by calling 802-828-2515. For more information or assistance, call the Department at 802-828-2551.

• If you use the Use Tax Reporting Table, the Department will not assess additional Use Tax unless the total invoice amount of the purchase is $1,000 or more and is unreported.
• Use Tax on items purchased for a business must be reported on Forms SU-451 or SU-452 instead of this form. You cannot use the optional Use Tax Reporting Table.

Line 28 Total VT Taxes

Add Lines 26 and 27 and enter result.

Section 6 Voluntary Contributions

Enter the amount on the line(s) for the fund(s) to which you wish to contribute. Your refund will be reduced, or your payment increased, by this amount.

• Your refund or payment must cover all contribution amounts or no contribution is made. Example: Your return calculations show a $60 refund and you make a $30 contribution - $10 to each fund. Upon processing, the Department discovers a math error and your refund is now $25. The refund is less than the $30 contribution. You will receive the $25 as an income tax refund and no contributions are made.

Line 29a VT Nongame Wildlife Fund Contribution

The Nongame Wildlife Fund was created to preserve VT's natural wildlife heritage for ourselves and our culture. Many species benefit from your gift, including loons, songbirds, frogs, turtles, bald eagles, butterflies, and peregrine falcons.

This is a convenient way to select wildlife for charitable giving. This gift is deductible on next year's Federal tax return as a charitable contribution. Thank you for caring and giving a "voice" to many of VT's rarest creatures.

To receive a loon decal and annual newsletter featuring projects sponsored by the Nongame Wildlife Fund, contact: Nongame and Natural Heritage Program, VT Fish & Wildlife Department, 103 South Main Street, Waterbury, VT 05671-0501 or call 802-241-3700.

Line 29b Children's Trust Fund (VCTF) Contribution

This fund aims to improve the lives of children and youths by sponsoring programs such as parenting education classes, youth leadership programs, out-of-school time activities, mentoring programs and literacy projects. These programs work to prevent juvenile delinquency, child abuse, and other potential problems children and families face. Funds collected are distributed to VT community organizations. The programs are voluntary and open to the general public. All donations are tax- deductible. Information on VCTF's income and expenses is available on its web site in the newsletter financial update section.

To learn more, go to the VCTF web site at www.vtchildrenstrust.org or write to VCTF, 19 Marble Avenue, Burlington, VT 05401; or call 888-475-5437.

Line 29c VT Campaign Fund Contribution

This fund makes finance grants to the campaigns of governor and lieutenant governor candidates. The Office of VT Secretary of State administers the revenues for the fund that come from your contributions, a portion of the fees for corporate and annual reports, and any penalties or fines for violations of campaign finance laws. For more information, go to its web site at www.sec.state.vt.us or write to Secretary of State, 109 State Street, Montpelier, VT 05609-1103 or call 802-828-2363.

Section 7 Payments and Credits

Line 31a VT Income Tax Withheld

Enter the amount of VT income tax withheld. Attach the state copy of your W-2, Form 1099 or other payment To get credit for statements to verify the amount. Failure ! your VT withholding, to enter the withholding on this line and you must enter the to attach the payment statement(s) will amount on Line 31a. delay processing of your return or you may not receive credit for the withholding against your VT tax. To claim tax withheld on a real estate sale, use Line 31e. Nonresident partners, members or shareholder use Line 31f for estimated taxes paid on your behalf by a business entity.

Line 31b 2008 Estimated Tax or Extension Payments

Enter the amount of 2008 VT estimated income taxes you paid and/or the amount paid with Form IN-151, Extension of Time to File the 2008 return. Remember to include any 2007 VT refund credited towards 2008 taxes. Call 866-828-2865 (toll-free in VT) or 802-828-2865 (local or out-ofstate) or go to our web site for the amount of 2008 tax payments the Department has on record.

Line 31c VT Earned Income Tax Credit

(FOR FULL-YEAR AND PARTYEAR VT RESIDENTS) Enter the amount from Schedule IN-112, VT Calculation C. Attach the completed Schedule IN-112 to Form IN-111.

Line 31d Renter Rebate

(FOR FULL-YEAR VT RESIDENTS ONLY) If you are filing the Renter Rebate Claim with the income tax return, enter the renter rebate amount from Form PR-141, Line 9. NOTE: The Renter Rebate Claim does not have to be filed with the income tax form.

Line 31e VT Real Estate Withholding

If you sold real estate in VT during 2008 and the buyer withheld VT income tax from the sales price, enter the amount withheld shown on Form RW-171, VT Withholding Tax Return for Transfer of Real Property, Schedule A, Line 12. Include a copy of the first two pages of your Federal income tax return and any Federal schedule that documents the income or loss from the VT sale.

NOTE: It is the Tax Department's practice to allocate real estate withholding in proportion to each seller's share of the proceeds. If you claim a credit of Vermont real estate withholding on your Vermont Income Tax return that is not proportionate to your share of the proceeds as reported on your Federal Income Tax Return, the Department may adjust the amount of real estate withholding claimed on your Vermont Income Tax Return. If you believe you are entitled to claim real estate withholding in an amount that is not proportionate to your share of the proceeds, please provide supporting documentation.

For installment sales: You must report the balance of your gain to VT on future returns or elect to pay VT 6% tax on the entire gain in the year of the sale. If you choose the 6% tax, include a letter with the return asking for the "6% Tax Elect Out for VT Purposes", attach a copy of Federal Form 6252, and do not include the gain from the sale on Schedule IN-113, Line 7. Call 802-828-2776 if you need assistance completing this portion of the VT return.

Line 31f Business Entity Payments for Nonresident Partner, Member, or Shareholder

(NONRESIDENTS ONLY) Enter the estimated income tax payments made on your behalf by a partnership, limited liability company, or S corporation toward your 2008 VT income tax. The entity would have made these payments on Form WH-435. If the payments exceed your VT income tax liability, you may be entitled to a refund. Title 32 V.S.A. §§5914 and 5920 allow the entity, at its option, to recover any excess payment from you. Call 802-828-5723 if you need information on WH-435 payments. See Technical Bulletins 5 & 6.

Line 31g Low Income Child & Dependent Care Credit

(FULL YEAR VT RESIDENTS ONLY) Eligible taxpayers receive 50% of the Federal Child and Dependent Care Credit as a VT income tax credit instead of the 24% credit on Schedule IN-112. Taxpayers must meet the following requirements:

• Income of
  • less than $30,000 Federal Adjusted Gross Income for taxpayers filing as Single, Head of Household, Married Filing Separately, Civil Union Filing Separately, or,
  • less than $40,000 Federal Adjusted Gross Income for taxpayers filing as Married Filing Jointly, Civil Union Filing Jointly, Qualified Widow(er) and
• Care in 2008 provided by a home or facility accredited by the VT Agency of Human Services. Include a copy of your Federal Form 2441. To determine if your care provider is accredited, go to the Department's web site at http://tax.vermont.gov or call 800-540-7942.

1. Accredited care provider amount								1. ______
2. Total care amount								2. ______
3. Divide Line 1 by Line 2								3. ______
$________	x	________	=	$________	x	50%	=	$________
Federal Credit (1040, Line 48; 1040A, Line 29)		Line 3 above		Eligible Credit				Low Income Credit IN-111, Section 7,Line 31g.
You may wish to also calculate your VT tax credit using 24% of the full Federal credit and compare to the credit calculated on this worksheet to determine which credit is best for you. You cannot take both credits.

Line 31h Total Payments and Credits

Add Lines 31a through 31g and enter result.

Section 8 Refund

Line 32 Overpayment

If Line 30 is less than Line 31h, you have a refund. Subtract Line 30 from Line 31h and enter result here. This is the amount by which your payments and credits exceed your income tax, use tax and voluntary contribution entries.

Line 33a Credit to 2009 Estimated Tax Payment

Enter the amount of refund from Line 32 you want credited toward your 2009 income tax. Your income refund will be reduced by this amount..

Line 33b Credit to 2009 Homestead Property Tax Bill

If you filed a 2009 VT Homestead Declaration on Form HS-122 and you filed the 2008 income tax return on or before September 1, 2009, you may elect to use all or part of your refund to pay your homestead property tax bill. Your income refund will be reduced by this amount. The State will include an additional 1% to the refund credited to your property taxes.

Line 34 Refund Amount

Subtract Lines 33a and 33b from Line 32 and enter the result. This is the amount of your refund.

Section 9 Amount You Owe

Line 35

If Line 30 is more than Line 31h, this is the amount you owe. Subtract Line 31h from Line 30 and enter result.

Line 36 Interest and Penalty on Underpayment of or Failure to Make Estimated Tax Payments Paying charges at the time of filing may reduce the amount of charges that would be billed later. Use Worksheet IN-152 or IN-152A, available on our website, to calculate the charges. The paper worksheets can be obtained by calling 802-828-2515. If you have a refund, the interest and penalty will be deducted. See page 3 for more information and examples.

Line 37 Total

Add Lines 35 and 36. Enter amount. This is the amount you owe. See Payment Options on page 4. If you are unable to pay all your taxes and want to request a payment plan, see page 4.

Section 10 Signatures

Signature. REQUIRED entry. Sign the return in the space provided. If filing this form jointly, both filers must sign.

Date. Write the date on which the form was signed.

Occupation. Enter your occupation. If filing jointly, enter both filers' occupations.

Age. Check this box at the applicable signature line if age 65 or older on December 31, 2008.

Disclosure Authorization. If you wish to give the Department authorization to discuss your 2008 VT income tax return with your tax preparer, . check this box and include the preparer's name.

Preparer. If you are a paid preparer, you must also sign the return, enter your Social Security Number or PTIN and, if employed by a business, the EIN of the business. If someone other than the filer(s) prepared the return without charging a fee, then that preparer’s signature is optional.