Residency Issues and Definitions

See also Credit for "Taxes Paid to Another State"

• Domicile Defined
• Utah Resident
• Utah Residents Working in Other States
• Utah Residents Working Out of State for Extended Periods

Domicile

"Domicile" is the place where an individual has a permanent home and to which he intends to return after being absent. It is the place at which an individual has voluntarily fixed his habitation, not for a special or temporary purpose, but with the intent of making a permanent home.

A domicile, once established, is not lost until all of the following three elements are met:

1. A specific intent to abandon the former domicile;
2. The actual physical presence in a new domicile; and
3. The intent to remain in the new domicile permanently.

For more information on determining residency, see Tax Commission rules R865-9I-2 and R884-24P-52.

Utah Resident

A Utah resident is an individual who:

1. Is domiciled in Utah for the entire year, even if temporarily outside of Utah for an extended period of time – even years in certain situations;
2. Is domiciled in Utah for any period of time during the taxable year, but only for the duration of that period; or
3. Even though domiciled outside Utah, maintains a permanent place of abode within the state and spends a total of 183 days or more of the taxable year within Utah. This does not apply to military personnel or their spouses who are in Utah on military assignment (see Tax Commission Rule R865-9I-2) unless they are Utah residents.

All income received during the period of Utah residency is taxable in Utah, regardless of the source of that income.

Utah Residents Working in Other States

Utah residents who derive income from other states must pay taxes to Utah on both income from Utah and income earned in the other states. Utah residents who work in other states do not lose their residency solely by being absent from Utah. They are still required to file resident income tax returns in Utah on all income, regardless of source.

If a Utah resident pays an income tax to another state on income derived from the other state, Utah will allow a credit for taxes paid to the other state. For detailed information and examples of how to calculate the credit for tax paid to another state, click here.

Utah residents, who earn income in a state without an income tax, must pay tax to Utah for the income earned in the other state. No credit is allowed, because no tax is paid to the other state.

Example

A Utah resident, a tenured college professor, teaches summer sessions at a university in Nevada. The professor's annual income is:

$25,000 – Summer stipend from university in Nevada
$70,000 – Salary from a college in Utah
$95,000 – Total Income

The professor would file a Utah tax return (form TC-40) and pay Utah tax on the full $95,000. All income earned by a Utah resident is taxable. In this case, the professor would not be allowed a credit for taxes paid to Nevada, because Nevada does not have a state income tax.

Similarly, a Nevada resident who derives income from Utah would be subject to Utah tax on 100 percent of the Utah earnings, because Nevada does not have an income tax.

Utah Residents Working Out of State for Extended Periods

Utah residents who travel abroad to work or who work out of state for extended periods, but leave their families in Utah, are likely subject to the Utah income tax on all income earned domestically and/or abroad.

A domicile, once established, is not lost until all of the following three elements are met:

1. A specific intent to abandon the former domicile;
2. The actual physical presence in a new domicile; and
3. The intent to remain in the new domicile permanently.

The mere intention to abandon a domicile, once established, is not sufficient to create a new domicile. Before a person can be said to have changed his domicile, even though he manifests an intention to abandon the old domicile, a new domicile must be shown. For more information on determining primary residence, Tax Commission rules R865-9I-2 and R884-24P-52.

Examples

1. A Utah family moves to Japan to teach English and lives there for four years. They retain ownership of their Utah home and rent it out during the time they are gone. They return to Utah and resume living in their home. Utah income tax is due on all earnings during their absence from Utah, because they still maintained a home in Utah to which they planned to return.
2. An airline pilot maintains an apartment in Florida (a state that does not have an income tax) and regularly visits his family in Utah. His children attend Utah public schools, his daughter attends the University of Utah as a resident student, the family finances are conducted through Utah banks and the pilot has a Utah fishing license. Because his family is affixed in Utah, avails itself of the privileges of residency and he regularly returns to Utah, the acquisition of an out-of-state apartment does not negate his Utah domicile. He is a Utah resident and his income is subject to the Utah income tax.