Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what's the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they're all constructed differently. What follows is a breakdown of Form In-111, the Vermont Individual Income Tax Return. If you don't live in Vermont, not to worry, we'll be tackling the other 34 states soon enough.
I love Vermont. It's clean, crisp, and a place I frequently visit. It also is the home of the easiest tax form in the country. Seriously, I've worked through states from Maine to Colorado and back to Connecticut and I'm telling you it doesn't get any easier than this. It's brief but complete and won't cause you much trouble.
At 2 pages and only 36 lines, this form was built to be convenient. Not surprisingly, Vermont also provides for a free state e-file, which will speed up the processing of your return and will limit any mathematical mistakes. Therefore, we're giving it a 9 of 10 on our user-friendly meter, which is the highest in the country. Kudos!
Start by recording your name, Social Security number, address, district code, and city of legal residence at the top of the form. Now you're able to work through your filing status and exemptions on the next couple of lines. On Line 10 record your adjusted gross income; you can get this from Line 37 of your Federal 1040 Form, Line 27 from your 1040A, or Line 4 from your 1040EZ.
On Line 11 record your federal taxable income. On Line 12 enter any state-specific additions before adding Lines 11 and 12 to get your federal income plus additions, which goes on Line 13. On Lines 14a through 14d, you're tasked with recording all your subtractions to your federal income, when set, subtract Line 14d from Line 13 and put the balance on Line 15. This is your Vermont taxable income.
Enter your Vermont income tax on Line 16; you'll get this from the tax table in the instruction booklet. If a Schedule In-112 applies, record the amounts from Line 10 and Line 18 of that form, here on Lines 17 and 19 respectively. The purpose of these lines is to give you an opportunity to make further adjustments to your income. Subtract Line 19 from Line 18 on Line 20. If you're due another income adjustment from Schedule IN-113, record it on Line 21. Now multiply Line 20 by Line 21 to get your adjusted Vermont Income Tax, which goes on Line 22.
If you're due a credit for income tax paid to another state, record it on Line 23. If any Vermont tax credits apply, enter those amounts on Line 24 before adding Lines 23 and 24 on Line 25. Now subtract Line 25 from Line 22 to get your income tax after net of credits. If you bought stuff outside of the state and didn't pay tax on it, you'll have to account for the use tax on Line 27. Now add Lines 26 and 27 on Line 28 to get your total Vermont tax. If you feel like donating to children or veterans, feel free to work through lines 29 and 30.
Jot down your withholdings on Line 31a, you'll get this from your W-2, 1099, etc. If you made any estimated tax payments, record those amounts on Line 31b. If you earned an income tax credit (or a renters rebate), work through Lines 31c and d. If you've paid into a business entity (or were subject to real estate withholdings), enter those amounts on the next couple of lines. If you've earned a low-income child- and dependent-care credit, record that amount on Line 31g. Now add Lines 31a through 31g on Line 31h to get your total payments and credits.
If Line 30 is less than Line 31h, subtract and put your overpayment on Line 32. If you want a portion of this overpayment credited to next year (or to a property tax bill) work through Line 33. Otherwise, record your total refund on Line 34. But if Line 30 is more than Line 31h, enter the difference on Line 35; this is the amount you owe. If you've been hit with any penalties or interest those figures go on Line 36. Now add Lines 35 and 36 on Line 37 to get the total amount you owe your state of Vermont.
All that's left is to sign, date, and declare your age and occupation, along with your telephone number, at the bottom of the form. If you needed a tax pro to help you they will do the same.
This form has earned the Vermont Department of Revenue the mantle of best in class. Its flawless design and ease of use is sure to delight residents. So the next time you see your State Tax Commissioner, give him or her a hug, they deserve it.