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                             2023 FORM FIT-161 Instructions    

                             Fiduciary Return of Income
                                                                                                                         Page 1
                             Please print in BLUE or BLACK ink only.

                             Please do not staple or bind your return.  

                  You may use binder clips, paper clips, or rubber bands.

                             General Information
WHO MUST FILE A 2023 VERMONT FIDUCIARY RETURN OF  INCOME (Form FIT-161)?
           A Form FIT-161 must be filed for every estate and trust required to:
                • File a federal Form 1041, U.S. Income Tax Return for Estates and Trusts and
                • The estate or trust earned or received more than $100 of Vermont income or                             INSTR  (Place at FIRST page)
                                                                                                                         Instr. pages 
                • The estate or trust received $1,000 or more in gross income from the sources listed on 
                  Schedule FIT-166, Vermont Income Adjustment and Tax Computation for Fiduciaries, Part III, 
                  Column B–Vermont Portion.
           The fiduciary of a grantor trust is required to file with the Vermont Department of Taxes an information 
           return, Form FIT-161, along with a Schedule K-1VT-F, Beneficiary Information for Fiduciaries, indicating the  1 - 5
           items of income, deduction, and credits against tax attributable to the trust treated as owned by the grantor/
           owner and send a copy of the Schedule K-1VT-F to the grantor/owner, who is required to report the income, 
           deductions, and credits on their individual Vermont income tax return.
           A Vermont Fiduciary Tax Return must be filed for any Section 468B Designated and Qualified Settlement Funds 
           required to file a federal Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B), 
           that earned or received more than $100 of Vermont income OR that earned or received $1,000 or more in 
           gross income from the sources listed under Schedule FIT-166, Part III, Column B–Vermont Portion.
           A Vermont Fiduciary Tax Return must also be filed for an Electing Small Business Trust required to file a 
           federal Form 1041.
           A Vermont Fiduciary Tax Return filer may be entitled to certain State of Vermont incentives or credits.  
           If you have any questions, contact the Vermont Department of Taxes at (802) 828-6820.
           NOTE:  Use Vermont Form IN-111, Income Tax Return, not this form, to report income of a decedent from 
           the beginning of the tax year to the date of death.  

DEFINITIONS
Resident Estate
           means the estate of a decedent who was domiciled in Vermont at the time of death.
Vermont Income of a Resident Estate or Trust 
           means the adjusted gross income of a resident less income exempted from state taxation under the laws of 
           the United States.

                                                                                 2023 Form FIT-161 Instructions
                                                                                                Page 1 of 5
tax.vermont.gov                                                                                 Rev. 10/23

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Vermont Income of a Nonresident Estate or Trust
             means the sum of the following items, to the extent the items are required to be included in federal adjusted 
             gross income:
                 •     Rents and royalties from ownership of property located in Vermont                                     Page 2
                 •     Gains from the sale or exchange of Vermont property including the sale of timber or timber 
                       rights
                 •     Wages, salaries, commissions, or other income received for services performed in Vermont
                 •     Income from every business, trade, profession or occupation conducted in Vermont, including 
                       money received (1) under an agreement not to compete with a business operation in Vermont, 
                       (2) for goodwill associated with the sale of a Vermont business, or (3) for contractual services 
                       associated with the sale of a Vermont business, unless it is shown that the compensation for 
                       services does not constitute income from the sale of the business
                 •     Vermont income previously deferred under a non-qualified deferred compensation plan and 
                       income derived from such previously deferred income
                 •     Examples of other income: gambling winnings including lotteries, raffles, or a lump-sum payment 
                       from the sale of a right to receive a future lottery annuity.
Vermont Income of Part-Year Resident Estate or Trust 
             means any income described in Vermont Income of a Nonresident Estate or Trust and all items earned or 
             received during the period of Vermont residency described in Vermont Income of a Resident Estate or Trust.
Vermont Taxable Income 
             means federal taxable income with the addition of:
                 •     interest, dividends or other distributions from non-Vermont state and local obligations to the 
                       extent this income is excluded from federal adjusted gross income;
                 •     the capital gain deferral in a previous year for investment in a qualified business upon disposition 
                       of the taxpayer’s interest in the business;
                 •     the difference between depreciation using standard MACRS  on assets qualified for 2023 federal 
                       bonus depreciation and the reported federal depreciation on those qualified assets as a result of 
                       Vermont disallowance of the bonus depreciation;
                 •     state and local income taxes deducted on federal Form 1041, Line 11
             with the subtraction of:
                 •     interest income from U.S. government obligations to the extent such income is included in 
                       federal adjusted gross income; 
                 •     capital gains exclusion; and 
                 •     as a result of Vermont disallowance of the bonus depreciation, the difference between depreciation 
                       using standard MACRS on assets qualified for prior year federal bonus depreciation and the 
                       reported federal depreciation on those qualified assets.
Vermont Trust  
             A trust is a Vermont trust (1) if the settlor was a Vermont resident when the trust  became irrevocable OR 
             (2) if the trust is still revocable and the settlor was a Vermont resident when the trust was created OR (3) if 
             the settlor was domiciled in Vermont at the time of their death.

                                                                                    2023 Form FIT-161 Instructions
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tax.vermont.gov                                                                                                    Rev. 10/23

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 EXTENSION TO FILE THE VERMONT FIDUCIARY TAX RETURN
        For tax year 2021 and beyond, Vermont will accept the federal extension filed for a Fiduciary return to receive 
        a five and a half month extension of time to file.  You no longer need to file our Form FIT-168, Application 
        for Extension of Time to File Vermont Fiduciary Tax Return, for an extension, unless you need to send in a 
                                                                                                                           Page 3
        payment.  Please use our Form FIT-168 if you are remitting an extension payment.  When completing the 
        Vermont Fiduciary return, check the box indicating that the return was extended via a federal extension if 
        it was, in fact, extended.  NOTE:  An extension of time to file the Vermont Fiduciary Tax Return does not 
        extend the due date for the tax payment.  Interest and penalty accrue on any tax owed from the due date to 
        receipt of payment. 

 LATE-FILED RETURNS
        Returns without an extension of time may be filed up to 60 days after the due date without a late file penalty 
        charge.  Returns without an extension filed on the 61st day after the due date or later will be charged a $50 
        late file penalty.  Returns with an extension filed on or before the extended due date are not charged a late file 
        penalty.  However, returns with an extension filed one or more days after the extended due date are charged 
        a $50 late file penalty.  NOTE:  The late file penalty applies even if the return results in a refund or no tax 
        due.

 TAX DUE
        Returns with tax due that are filed after the due date are assessed interest and late payment penalty charges 
        on the unpaid tax.

 AMENDING OR CORRECTING VERMONT FIDUCIARY TAX RETURN INFORMATION 
        Vermont law requires an amended Vermont return be filed within 60 days of knowledge of the change, or 
        receipt of the notice of change by the IRS, or the filing of an amended return with the IRS.  A late file penalty 
        will be assessed if the amended Vermont return is not filed within the 60 days.
                   •  Change to Vermont income  An amended return is due even if the change is not the result of 
                      filing an amended federal tax return or an adjustment made by the IRS; for example, the amount 
                      of income taxable to Vermont is different from the amount originally reported.  The amended 
                      return must be filed within three years of the due date of the return, including extensions.
                   •  Change of federal tax information by IRS  If the IRS adjusted the federal taxable income, 
                      capital gains amount or any other change that affects the Vermont tax, an amended Form FIT-161 
                      must be filed within 60 days of notification by the IRS, even if this is past the three-year limit.  
                      Attach a copy of all federal forms showing changes to the Vermont amended return.  The IRS 
                      and Vermont Department of Taxes routinely share information.  Differences in the information 
                      on file with the IRS and the Vermont Department of Taxes, other than those allowed by Vermont 
                      law, are identified and may be audited.
                   •  Filing an amended federal tax return  Filing an amended Vermont return is required within 
                      60 days of filing an amended return with the IRS if Vermont income is affected. 

 FORM FOR AMENDING VERMONT FIDUCIARY TAX RETURN
                 Check the Amended box in the upper mid-section on Form FIT-161 for the applicable tax year(s).

 NET OPERATING LOSSES 
        No Vermont refund is available for a carryback.  The Vermont carryback or carryforward election for a net 
        operating  loss must be the same as elected for federal purposes.

                                                                         2023 Form FIT-161 Instructions
                                                                                                      Page 3 of 5
 tax.vermont.gov                                                                                      Rev. 10/23

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Line-by-Line Instructions
Line 1 Enter the taxable income amount from federal Form 1041, Line 23. For Qualified Settlement Funds, enter
the amount from federal Form 1120-SF. If reporting Electing Small Business Trust (ESBT) income on
federal Form 1041, include taxable income from the ESBT portion of the return here, adding it to the taxable Page 4
income from federal Form 1041, Line 23. If you had a state and local income tax add back last year AND
you received a refund from the state, deduct the refund amount from this line.
Line 2a Enter the calculation of Non-Vermont State & Local Obligations from Schedule FIT-166, Part I. For
nonresident taxpayers, use Schedule FIT-166, Part II, Line 8, to adjust for Non-Vermont State and Local
Obligations.
Line 2b Federal Bonus Depreciation Vermont does not recognize the bonus depreciation allowed under federal
law for 2023. Enter the difference between the depreciation calculated by standard MACRS methods and
the depreciation calculated using the federal bonus depreciation for assets placed in service in 2023. For
more information on calculating the amount to add back to taxable income, see Technical Bulletin TB-44,
Disallowance of Bonus Depreciation Provisions of Federal Economic Stimulus Act of 2008, on the
Department’s website.
Line 2c State and Local Income Taxes Enter the amount of state and local income taxes which are included on
federal Form 1041, Line 11. If the state and local income taxes are calculated in the distributable net income
and a distribution is MADE from the income and reported on federal Form 1041, Line 18, no add back is
required. If federal Form 1041, Line 11, includes any property taxes, please indicate the break down by
attaching a schedule. Property taxes do not get added back on Line 2c.
Line 4a Interest Income from U.S. Obligations Interest income from U.S. government obligations (such as U.S.
Treasury bonds, bills, and notes) is exempt from Vermont tax under the laws of the United States. Enter the
amount of interest income from U.S. Obligations on this line.
Interest income is exempt when received directly from the U.S. Treasury or from a trust, partnership, or
mutual fund that invests in direct obligations of the U.S. government.
Income from the sale of U.S. government obligations is taxable in Vermont. Income from repurchase
agreements, securities of FNMA, FHLMC or GNMA, or other investments that are not direct obligations
of the U.S. government are also taxable. For more information, see Technical Bulletin TB-24, Exemption
of Income of U.S. Government Obligations on the Department’s website.
Supporting Documentation Required No attachment to return is required. However, obtain statements for
the taxpayer’s records in the event the Department requests such documentation.
Acceptable statements need to show the sources of U.S. government interest income and the percentage from
each source. Summary information from a K-1, or just a statement “U.S. government securities” without
further identification is not acceptable.
NOTE: If U.S. interest is distributed on federal Form 1041, Line 18, the deduction is lost.
Line 4b Capital Gains Exclusion See Schedule FIT-162, Vermont Capital Gains Exclusions for Estates or Trusts,
and instructions to calculate the capital gains exclusion for 2023. See Technical Bulletin TB-60, Taxation
of Gain on the Sale of Capital Assets, on our website under “Tax Law and Guidance.” Schedule FIT-162
is not included here. It may be downloaded at www.tax.vermont.gov in the “Forms” section, or mailed to
you by calling (802) 828-2515.
Line 4c Adjustment for Bonus Depreciation on Prior Year Property Enter the difference between the depreciation
calculated by standard MACRS methods and the depreciation calculated at the federal level. For information
on calculating the amount that can be subtracted from taxable income, see Technical Bulletin TB-44.
Line 5 Subtract Line 4d from Line 3. This is the Vermont taxable income.

2023 Form FIT-161 Instructions
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Line 6 Using the tax rate schedule on Form FIT-161, page 2, compute the tax on the Vermont taxable income and
enter the tax here.
Line 7 Additions to Vermont tax from Schedule FIT-166, Line 1c, enter here.
Line 8 Subtractions from Vermont tax from Schedule FIT-166, Line 2e, enter here. Page 5
Line 10 Most taxpayers should enter 100% on this line. However, a nonresident or part-year resident estate or trust
should first complete Schedule FIT-166, Part III, to determine the income adjustment.
Line 12 Credit for Income Tax Paid to Other State or Canadian Province (for full-year and some part-year
resident estates and trusts) Complete Schedule FIT-167, Vermont Credit for Tax Paid to Other State or
Canadian Province for Fiduciaries, and enter the amount here.
Line 14a From Form 1099. Enter the amount of Vermont income tax withheld. Attach the copy of the Form 1099
or other payment statement(s) to verify the amount.
Line 14b Estimated payments are required to be made for trusts and estates beginning for tax year 2016. The rules
are the same as for individual estimates. Use Form FIT-165, Fiduciary Estimated Tax Payment Vouchers,
to make your estimated payments. Please be sure the correct period is indicated on the voucher for any
estimate submitted.
Line 14c From Form RW-171, Vermont Real Estate Withholding. If Vermont real estate was sold during the
year and the buyer withheld Vermont income tax from the sales price, enter the amount withheld shown on INSTR (Place at LAST page)
Instr. pages
Form RW-171, Vermont Withholding Tax Return for Transfer of Real Property, Schedule A, Line 12, here
less any amounts allocated to beneficiaries via Schedule K-1VT-F.
Installment sales - for information on installment sales, go to www.tax.vermont.gov under “Tax Law and
Guidance.” See Technical Bulletin TB-10, Installment Sales of Real Estate.
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Line 14d Estimated Payments Made on Behalf of a Trust or Estate by a Business Entity for Nonresident
Beneficiary. NONRESIDENTS enter the estimated income tax payments made on behalf of the Trust or
Estate by a partnership, limited liability company, or S corporation toward the annual Vermont Fiduciary
income tax less any amounts allocated to beneficiaries via Schedule K-1VT-F. The entity would have made
these payments on Form WH-435, Estimated Income Tax Payments for Nonresident Shareholders, Partners,
or Members. See Technical Bulletin TB-06, Estimated Payments by Corporations, Partnerships And Limited
Liability Companies On Behalf Of Shareholder on the Department’s website.

Contacting the Department
Mail: Vermont Department of Taxes
PO Box 1700
Montpelier, VT 05601-1700
Phone: (866) 828-2865 (toll-free in Vermont)
Phone: (802) 828-6820 (local and out-of-state)
Fax: (802) 828-2720
Email: tax.estate@vermont.gov

2023 Form FIT-161 Instructions
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tax.vermont.gov Rev. 10/23

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