Vermont Tax SPECIAL ALERT: Tuition and Fees no Longer Deductible on HI-144

The following statement has been issued by the Vermont Department of Taxes:

In years past, allowed tuition and fees were federally deductible on line 34 of Form 1040. This deduction is not available after calendar year 2016. The deduction was allowed as a reduction to Household Income for purposes of Vermont’s income sensitivity property tax adjustment. 32 V.S.A. §§6061(4),(5) (Household Income is modified adjusted gross income as reduced by deductions from adjusted gross income for tuition and fees, among other deductions).

However, because this deduction is not available federally, it is not available on the 2017 HI-144. It was not known at the time the 2017 forms were developed whether the federal deduction would be extended by law. For this reason, there is a line on the HI-144 (line q3) for the deduction, and the instructions discuss such a deduction. However, it was not extended and is not available for tax year 2017, so no adjustment to Household Income should be claimed on line q3.

Please contact Davis & Hodgdon Associates in Williston (802.878.1963) or Rutland (802.775.7132) if you have questions about this information or if would like to schedule a strategy session to reduce your overall tax burden.