Utah taxable income is based on the federal adjusted gross income (FAGI). However, because Utah tax laws differ somewhat from federal laws, certain items must be added to the FAGI in determining Utah taxable income.
Utah law does not allow a deduction against Utah income for state and municipal income taxes. If you itemized deductions on your federal return (Schedule A) and included any state or municipal income tax (not sales tax) on line 5, you must make an adjustment (addback) on your Utah return.
The adjustment required does not result in double-taxation of any income because the amount added back in the additions section offsets the state and municipal income taxes deducted as part of the itemized deductions on the Utah return.
For example: A taxpayer included $2,500 of state income taxes on line 5 of their federal Schedule A. The total itemized deductions on Schedule A are $15,000. The taxpayer's FAGI was $50,000. The entire $2,500 of state taxes must be entered as an addition on the Utah return, and the entire $15,000 of itemized deductions, including state income taxes, is deducted on the Utah return. These adjustments offset each other and do not result in any additional income. The net itemized deduction on the Utah return is $12,500 ($15,000 – $2,500 = $12,500).
Information on the following additions is located in the TC-40 Utah Individual Income Tax booklet, page 6. When entering additions on the return, you must enter the 2-digit code (to the left of the description) and the amount.
51 Lump Sum Distribution
52 State Taxes Allocated from an Estate or Trust
53 Medical Savings Account (MSA)
54 Utah Educational Savings Plan (UESP)
55 Reimbursed Adoption Expenses
56 Child's Income Excluded from Parent's Return
57 Municipal Bond Interest
60 Untaxed Income of a Resident Trust
61 Untaxed Income of a Nonresident Trust
69 Equitable Adjustments
