If you are a nonresident shareholder of an S corporation, you may be entitled to a refundable credit for any Utah income tax paid by the S corporation on your behalf. You are entitled to claim a credit equal to your respective share based on ownership as it relates to other nonresident shareholders and the amount withheld by the S corporation on behalf of the nonresident shareholders.
Nonresident S corporation shareholders may be entitled to a credit for the amount of tax paid by the S corporation on their behalf. To claim the credit, the shareholder must file a Utah income tax return for the taxable year. A nonresident shareholder who has no other Utah source income may elect to forego the credit and not file a Utah income tax return. However, nonresident shareholders with income or loss from other Utah sources must file a Utah income tax return. A nonresident shareholder who is eligible for Utah tax credits, in addition to the apportioned tax paid, may claim those credits by filing a Utah income tax return.
To claim the Nonresident Shareholder's Withholding Tax Credit, you must attach a copy of the federal schedule K-1 issued by the corporation indicating your share of amounts paid. Schedule K-1 equivalents are not acceptable. Enter the nonresident shareholder's withheld Utah taxes on TC-40S, Part 5, using code 43. The federal identification number of the S corporation must be entered in the space provided on the TC-40S. If claiming a credit from more than one S corporation, enter the federal identification number of the S corporation for which you are claiming the largest amount of withholding.
Keep all personal records, forms and worksheets to support this credit. If you have multiple S corporations, partnerships, etc., maintain a schedule showing all sources of Utah income/deductions.
When calculating the Utah portion of the S corporation's income for a nonresident shareholder, the nonresident shareholder should transfer their pro rata share of the S corporation's Utah taxable income/loss. See TC-20S, Schedule A, Line 11. The nonresident shareholder should not use their pro rata share of the S Corporation's Net Taxable Income reported on TC-20S, Schedule A, Line 13.
