Students

Nonresident Students in Utah

Income that a nonresident student receives from Utah sources (wages, rental income, business income, etc.) is taxable in Utah. A nonresident with any Utah sources of income must file a Utah return if they were required to file a federal return.

If you are a nonresident student required to file a Utah return you must:

  • Report all income earned or received from all sources on your Utah form TC-40, line 4.
  • Report the portions of your total income you earned from Utah sources on your Utah form TC-40B, Non and Part-year Resident Schedule.
  • Compute the Utah income ratio (percentage) on Utah form TC-40B. Then use that percentage to calculate the Utah tax due.
  • If the state where you are a resident also taxes your Utah source income your resident state may give you credit for the taxes you paid to Utah.

Example 1

A California resident attends the University of Utah. His yearly income is:

$ 2,000 – Part-time job in Utah
$ 5,000 – Earned in California during summer break
$ 3,000 – Federal taxable portion of University of Utah scholarship
$10,000 – Total taxable income (1/2 Utah, 1/2 California)

His income is divided as follows:

$5,000 – California
$5,000 – Utah (2,000 plus 3,000)

The student completes the Utah return as follows:

  1. He enters the entire income, $10,000, on TC-40, line 4.
  2. He calculates his initial Utah tax as if everything was earned and taxed in Utah.
  3. He uses form TC-40B to compute the ratio of Utah income to total income – 0.5000 (5,000 divided by 10,000).
  4. He multiplies the “as is” total Utah tax by the ratio – 0.5000.
  5. To avoid double taxation, he files a California resident return, reporting and calculating California tax on all of his income, and then claiming a credit for the income tax he paid to Utah.

Example 2

An Oregon resident attends the University of Utah. Her yearly earnings are:

$ 2,000 – Part-time job in Utah
$ 5,000 – Earned in Oregon during summer break
$ 3,000 – Taxable portion of Oregon Elks Lodge scholarship
$10,000 – Total income

Her income is divided as follows:

$8,000 – Oregon (5,000 plus 3,000)
$2,000 – Utah

The $3,000 taxable portion of the scholarship is considered Oregon income. In this case, she completes her Utah return as follows:

  1. She enters the entire income, $10,000 on TC-40, line 4.
  2. She calculates her initial Utah tax as if everything was earned and taxed in Utah.
  3. She uses form TC-40B to compute the ratio of Utah income to total income – 0.2000 (2,000 divided by 10,000).
  4. She multiplies the "as is" total Utah tax by the ratio – 0.2000.
  5. To avoid double taxation, she files an Oregon resident return, reporting and calculating Oregon tax on all of her income, and then claiming a credit for the income tax she paid to Utah.

Utah Residents Attending School Out of State

Utah residents who attend an out-of-state school (full or part-time) must pay Utah taxes on all income earned or received from Utah and from the other state where they attend school. Utah residents attending non-Utah schools do not lose their residency by being absent from Utah to attend school. They must file a Utah income tax return reporting all income, regardless of the source.

You may have to pay tax to another state on income received while attending a school in the other state; however, Utah may allow a credit for the tax paid to the other state.

Example 1

A Utah resident attends the University of Arizona. Her income is:

$2,000 – Part-time job in Arizona
$5,000 – Earned in Utah during summer break
$1,500 – Taxable portion of scholarship from Univ. of AZ
$8,500 – Total income

Her income is divided as follows:

$3,500 – Arizona (2,000 plus 1,500)
$5,000 – Utah

She must file a full-year Utah resident return reporting all income (8,500).

If she pays taxes to Arizona on the income earned there, she may get a credit on her Utah return for those taxes (see TC-40S, Credit for Income Tax Paid Another State). The ratio of Arizona income to total income is 0.4118. She files a Utah tax return computing tax on the full $8,500. On form TC-40S, she multiplies the Utah tax by 0.4118 (the Arizona portion of her income) to compute her allowable credit.

She must file an Arizona return to qualify for the credit.

Example 2

A Utah resident attends school at Idaho State University. His income is:

$ 3,000 – Part-time job in Idaho
$ 5,000 – Earned in Utah during summer break
$ 2,000 – Taxable portion of scholarship from Utah Elks Lodge
$10,000 – Total income

His income is divided as follows:

$3,000 – Idaho portion
$7,000 – Utah portion (5,000 plus 2,000)

He must file a full-year Utah resident return reporting all income (10,000).

He must file and pay taxes to Idaho on the $3,000 wages he earned there. In this case, the $2,000 taxable portion of the scholarship is not taxed by Idaho because it is from a non-Idaho source.

He may get a credit on his Utah return for taxes paid to Idaho (see TC-40S, Credit for Income Tax Paid Another State). The ratio of Idaho income to total income is 0.3000. He files a Utah tax return computing the tax on the full $10,000. On TC-40S, he multiplies the Utah tax by 0.3000 (the Idaho portion of his income) to compute his allowable credit.

He must file an Idaho return to qualify for the credit.

Example 3

A Utah resident attends the University of Nevada. His income is:

$2,000 – Part-time job in Nevada
$5,000 – Earned in Utah during summer break
$7,000 – Total income

He must file a full-year Utah resident return reporting all income (7,000).

On the Utah return he must pay tax on the full $7,000 of income. The student does not get a credit for taxes paid to Nevada because Nevada does not have a state income tax.