COVID-19 Coronavirus Crisis and Your Taxes

Interested in property taxes? Follow this link for information on property taxes.

Video: Second Round of COVID Economic Impact Payments/Stimulus Checks and Taxes. Watch the video on Facebook. Attorney Zachary Lees of Vermont Legal Aid's Low-Income Taxpayer Clinic discussed who is eligible to get the stimulus payments and how they will be sent out. He also answered COVID-related tax questions.

Updated 1/6/2021 10:15 a.m.

2020 Tax Year

Here are some things to know about filing and paying your 2020 taxes (which are due April 15, 2021).

  1. At this time, available information indicates that Federal and Vermont state tax returns are due April 15, 2021.
  2. We recommend that you e-file your return if at all possible.
  3. File your taxes for free online. See our Tax Filing Help page for details.
  4. Get help filing your taxes. Do you have a low or moderate income? You may qualify for free help to file your federal tax return and apply for a property tax adjustment or renter rebate. Learn about the VITA, TCE and AARP tax preparer programs on our Tax Filing Help page. They will operate differently than in past years because of the COVID-19 pandemic. In mid-January, call a site near you to find out how to make an appointment. Plans may change at the sites during the tax season. It depends on local conditions, the health and well-being of volunteers, and agency policies.
  5. If you are a low-income Vermonter, contact us at the Vermont Low-Income Taxpayer Clinic (LITC) by filling out our form or calling 1-800-889-2047 if:
    • you are having a hard time managing or paying on an existing tax debt, or
    • you are expecting to owe a tax debt in the near future.
  6. Read about the federal government's Economic Impact Payments / stimulus checks. If you did not get the stimulus payments by January 15, 2021, and you think you were supposed to get them, you can claim the "recovery rebate" on your tax return. Learn more about the recovery rebate. Ask for advice about this process before you send in your return.
  7. A note about renter rebates and landlord certificates. Money directly paid to the landlord from the Rental Housing Stabilization Program or the RHSP Money to Move Program should not be entered as subsidy from the government or as rent paid by the tenant. Landlords should not include rent received from these programs on the landlord certificate, LC-142, line 3 - total rent paid for the calendar year. See the Vermont Department of Taxes website for details. Follow this link for Renter Rebate information.
  8. File your tax return as soon as possible. This is because:
  • If you are getting a refund, you will get it in your hands faster.
  • With identity theft a constant problem, it's a good idea to file your tax return before the “bad guy” tries to.

2019 Tax Year

Here are some things to know about filing and paying your 2019 taxes (which were due in 2020).

  1. While the IRS and State of Vermont both extended the filing and payment deadline to July 15, 2020, remember this: Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020.
  2. If you are a low-income Vermonter, contact us at the Vermont Low-Income Taxpayer Clinic (LITC) by filling out our form or calling 1-800-889-2047 if:
    • you are having a hard time managing or paying on an existing tax debt, or
    • you are expecting to owe a tax debt in the near future.
  3. Read about the federal government's Economic Impact Payments / stimulus checks and possible scams
  4. The last day to file a Vermont renter rebate claim is October 15.
  5. The IRS is posting updates at www.irs.gov/coronavirus. The Vermont Department of Taxes is posting updates at tax.vermont.gov/coronavirus.
  6. If your income is $69,000 or less, you can save time and money by using one of the Free File tax prep products offered by 10 commercial software companies on the Internal Revenue Service website, IRS.gov/freefile. The Free File site lets you do your federal tax returns either using brand-name software or online fillable forms. Free File is for federal returns, but most companies also offer state tax return preparation. Some offer state return preparation for free.
  7. File your tax return as soon as possible. This is because:
  • If you are getting a refund, you will get it in your hands faster.
  • With identity theft a constant problem, it's a good idea to file your tax return before the “bad guy” tries to.

To file an extension

File an extension with the IRS.

File an extension in Vermont.

Both forms will ask two questions that you can answer based on last year's return, the current filing year's W-2, or your estimated payment record for schedule SE filers (self-employed people).

The first question is: What is your estimated tax liability? You can write in the amount of tax owed based on your previous year's return if your income and tax rate remained the same.

The second question is: How much have you previously paid in estimated tax? This can be found on their W-2 or can be estimated based on last year's return. Schedule SE filers should be keeping track of their estimated quarterly payments.

It’s important to understand the limitations of an extension, and how the new IRS announcement affects extensions.

Generally, if you file a tax return that shows you owe tax (what we call a "deficiency") you will be be subject to penalties and interest from the earlier deadline instead of the October 15 extension deadline. This means that while you would avoid the failure to file penalty (a late filing penalty), there is still:

  • a "failure to pay penalty" of one-half of one percent for each month, or part of a month, up to a maximum of 25% of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full.

  • interest which generally accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily. Right now it is 5%.

Updated: Jan 15, 2021