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1099 Contractor in Kentucky with a Vermont Client: Where Do You File?

Home state, plus the client state if you work thereNo withholding — 1099

Answer

Pay Kentucky by instalments, and watch your Vermont days. Reciprocity agreements do not help here: every one of them covers wage withholding, and a 1099 has no withholding to switch off. Kentucky taxes the full profit, Vermont taxes the on-site share, and the Kentucky credit reconciles them.

Last verified

Reciprocity agreements are the first thing contractors ask about and the first thing that does not apply to them. Every agreement in the country is a wage-withholding arrangement, and a 1099 has no withholding to switch off.

Vermont publishes no de minimis day count or dollar floor for nonresidents. Any Vermont-source wage income above the state's general filing threshold requires a nonresident return, and that threshold is reset each year — check the current figure on the Vermont Department of Taxes nonresident instructions before filing.

What you file

  1. 1Quarterly estimated payments · Kentucky

    Make quarterly estimated payments to Kentucky Department of Revenue on your full self-employment income — nothing is withheld from a 1099.

  2. 2Nonresident return · VermontForm IN-111 with Schedule IN-113

    File a Vermont nonresident return only if you performed services inside Vermont. Vermont publishes no de minimis day count or dollar floor for nonresidents. Any Vermont-source wage income above the state's general filing threshold requires a nonresident return, and that threshold is reset each year — check the current figure on the Vermont Department of Taxes nonresident instructions before filing.

  3. 3Resident return · KentuckySchedule ITC

    File the Kentucky resident return last and claim the credit for any tax paid to Vermont.

The two states, side by side

 KentuckyVermont
Taxes wagesYes — flatYes — graduated
Reciprocity partners7 (Form 42A809)None
Convenience ruleNoNo
Nonresident returnForm 740-NPForm IN-111 with Schedule IN-113
Credit for other-state taxSchedule ITCSchedule IN-117
Nonresident safe harbourNone publishedNone published
Local income taxYesNo
Revenue departmentKentucky Department of RevenueVermont Department of Taxes
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Vermont and working in Kentucky gives:Home state, plus the client state if you work there.

Vermont to Kentucky →

Same two states, different situation

The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.

Other Kentucky pairs

Questions people actually ask

I live in Kentucky and my client is in Vermont. Do I have to file a Vermont tax return?

Pay Kentucky by instalments, and watch your Vermont days. Reciprocity agreements do not help here: every one of them covers wage withholding, and a 1099 has no withholding to switch off. Kentucky taxes the full profit, Vermont taxes the on-site share, and the Kentucky credit reconciles them.

Do reciprocity agreements help a 1099 contractor?

No. Every state reciprocity agreement in the country is an arrangement about wage withholding between two revenue departments, and a 1099 has no withholding to switch off. Whether Kentucky and Vermont hold an agreement makes no difference to a self-employed filer — sourcing rules decide the answer instead.

How current is this?

The Kentucky and Vermont rules on this page were last checked against Kentucky Department of Revenue and Vermont Department of Taxes on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.

Sources

Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.