Understanding the Vermont Tax Extension: Key Details You Need to Know

Tax deadlines can feel like a sprint, especially for taxpayers navigating federal income tax returns and Vermont returns. Sometimes, a personal tax extension can save the day—offering you more time to file without risking penalties.

But here's the catch: While a tax extension gives you additional time to file, it doesn't give you more time to pay taxes. Payments are due by the original deadline, or you could face penalties and interest.

Let’s break down how Vermont tax extensions work, why they’re helpful, and how you can stay penalty-free.

What is a Tax Extension?

A tax extension is an official request for more time to complete your tax filing, whether for a federal income tax return or a Vermont return. It’s like hitting the pause button to ensure accuracy and avoid last-minute mistakes.

The Internal Revenue Service (IRS) and the Vermont Department of Taxes offer extensions for individual taxpayers and businesses, including S corporations. However, while filing gets a grace period, payments don’t. You'll still need to pay taxes by the original deadline.

Why File a Tax Extension?

Here are some solid reasons why taxpayers might choose to file a personal tax extension:

• Avoid Penalties: Filing an extension helps avoid late-filing penalties and interest.
• Extra Time for Accuracy: Need more time to gather tax documents? An extension lets you file accurately and avoid mistakes.
• Business Flexibility: Business owners, including calendar-year filers and S corporations, can use extensions to organize complex finances.

Vermont State Income Tax Extension

Form IN-151: Vermont Individual Income Tax Extension

When is Form IN-151 Required?

• If you are not filing a federal extension or need to make an extension payment to Vermont, you must file Form IN-151.
• It must be filed by the original due date, typically April 15.
• Vermont generally grants a six-month extension, extending the filing deadline to mid-October.

Important Note: This extension does not apply to Form HS-122 (Vermont Homestead Declaration or Property Tax Credit Claim). Form HS-122 is still due by April 15, and late filings may incur a penalty of up to 8% of the corrected education tax.

Federal Tax Extension

Don’t forget—filing a Vermont extension doesn’t automatically extend your federal income tax return. You’ll need to:

• Submit IRS Form 4868 for individual extensions.
• Submit IRS Form 7004 for business extensions.

Business Tax Return Extension

• Business owners must submit Form IN-152 for Vermont business tax extensions.
• This applies to S corporations, partnerships, and sole proprietors.
• If you're a calendar-year filer, the extension deadline remains April 15.

Payment and Filing Deadlines

Due Date for Vermont State Income Tax

• The original deadline for Vermont tax returns is April 15.
• If this date falls on a weekend or holiday, the next business day becomes the deadline.

Payment Deadlines

• Taxpayers must pay taxes owed by the original deadline, even if an extension is filed.
• Late payments may incur penalties and interest, so it's smart to pay any estimated taxes upfront.

How to File a Vermont Tax Extension

File Form IN-151 or IN-152

• Form IN-151: For individual income tax extensions.
• Form IN-152: For business income tax extensions.

How to File:

• Online through the Vermont Department of Taxes website.
• By Mail to the address below.
• Vermont Department of Taxes, PO Box 1881, Montpelier, VT 05601-1881

Penalties and Interest

Penalty for Late Payment

• A 5% penalty applies to unpaid tax not settled by the original deadline.
• You can request a waiver if you have a valid reason for being late.

Interest on Late Payment

• Interest is charged on unpaid taxes.
• The rate aligns with the IRS's current interest rates and may vary yearly.

Common Mistakes to Avoid When Filing a Vermont Tax Extension

Even seasoned taxpayers can slip up. Here are common mistakes to dodge:

1. Missing the Original Deadline: Extensions must be filed by April 15 (or the next business day).
2. Assuming More Time to Pay: An extension gives you more time to file, but taxes must still be paid by the original deadline.
3. Forgetting Federal Extensions: Filing a Vermont extension doesn’t automatically cover your federal income tax return.
4. Skipping Estimated Payments: Not paying estimated taxes can lead to penalties and interest.
5. Ignoring Record-Keeping: Always keep documentation of your extension and payments.

FAQs about Vermont Tax Extensions

Do I need to file a separate extension for my federal income tax return?

Does filing an extension give me more time to pay taxes?

What if I’m an S corporation—do I file a different extension form?

Do calendar-year filers have a different deadline?

What happens if I miss the original deadline for the extension?

Can penalties be waived if I have a valid reason?

Does Form IN-151 cover my Homestead Declaration (Form HS-122)?

Penalty and Interest Calculation for Late Vermont Tax Payments

Assumptions for Example:

• Tax Amount Due: $5,000
• Penalty Rate: 5% (one-time penalty on unpaid tax)
• Interest Rate: 8% annual interest (calculated daily)
• Interest Formula: Interest=Tax Due × Interest Rate × (Days Late/365)

Unclaimed Property: Millions Still Waiting to Be Claimed

Did you know millions of dollars in unclaimed property are waiting to be returned to Vermonters? Unclaimed property can include forgotten bank accounts, uncashed checks, security deposits, and more.

In Fiscal Year 2024, the State of Vermont collected over $18 million in unclaimed property. However, only $5.8 million was successfully returned to the rightful owners. This means over $12 million is still waiting to be claimed. Check out the 2024 Vermont Annual Report for more details.

Unclaimed Property Collected vs. Returned (FY2024)

Insert Chart Here

This chart highlights the gap between funds collected and funds returned. If you’ve lived, worked, or done business in Vermont, it’s worth checking if some of this unclaimed money belongs to you.

How to Check for Unclaimed Property

1. Visit the Vermont Treasurer's Office website.
2. Search using your name or business name.
3. If you find a match, submit a claim to get your money back.

Don't leave your money on the table—check today!

Final Thoughts: Take Control of Your Tax Timeline

Filing a Vermont tax extension doesn’t have to be complicated. By staying informed and organized, you can avoid penalties and keep your tax process smooth and stress-free.

Need help filing your Vermont tax extension? Contact our experts for hassle-free assistance—and say goodbye to tax-time stress!