Individual Income

ESTATE TAX

Vermont imposes a tax on the transfer of the Vermont estate of resident and nonresident decedents.  Vermont Estate Tax Return (Form E-1) must be filed if the decedent’s estate is required to file a U.S. Estate Tax Return (Federal Form 706) or for deaths occurring after December 31, 2008 regardless of whether the estate is required to file a federal return and, the decedent’s estate exceeds the following specified gross estate values:

Gross estate value includes the value at the time of death of all assets in which the deceased retained an interest whether located in Vermont or out-of-state. Examples of assets included in the valuation of the estate are jointly owned assets, individually owned assets, insurance policies and trust assets. In addition, the gross estate value includes adjusted taxable gifts as reported on Line 4 of Federal Form 706 (see below if federal pro-forma return must be prepared).
In order to determine the estate value for filing the Vermont Form E-1, estates of Vermont decedents and out-of-state decedents with real estate or income producing assets in Vermont should complete a pro-forma Federal Form 706 even if no federal estate tax is due.
To determine when the specified gross estate value has been met requiring the filing of Vermont Form E-1, a pro-forma Federal Form 706 must be completed, even if no federal estate tax return is required.

PROBATE ESTATE and TAX CLEARANCE

When a decedent owns assets in his or her individual name, an estate must be opened in a Vermont probate court.

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The probate court requires a tax clearance from the Vermont Department of Taxes to close the estate.  Vermont Form E-2A, Vermont Estate Tax Information and Application for Tax Clearance, should be completed for this purpose.

The Department will not issue a tax clearance until all required Vermont tax returns are filed, which may include one or more of the following:

• Income Tax Return for current and (if applicable) prior year

• Fiduciary Tax Return (except final return)

• Estate Tax Return

For More Information Call:
(802) 828-6820