Utah Income and Losses
- Federal Adjusted Gross Income
- Utah Taxable Income
- Utah Source Income
- Income from Other States
- Income from Other Countries
- Income from Utah Sources for Foreign Nationals & Expatriates
- Federal Tax Credits
- Utah Losses and Loss Carries
The Utah income tax calculation begins with your federal adjusted gross income (FAGI) from your federal income tax return. Report the FAGI exactly as it appears on the federal return. If you are a nonresident or part-year resident, you will adjust it elsewhere on your return. If you or your spouse is in the military, see Pub 57, Utah Military Personnel Instructions.
The FAGI is entered on your Utah TC-40, line 4, as reported on the following:
- 1040, line 7
- 1040NR, line 35
- 1040NR-EZ, line 10
Certain types of income that are not included in your federal adjusted gross income (FAGI) are still taxable in Utah and must be added to your FAGI when determining your Utah taxable income. Likewise, certain types of income included in your FAGI are not taxable in Utah and must be subtracted from your FAGI when determining your Utah taxable income. You make these adjustments on lines 5 through 9 of the Utah individual income tax return. Except for state tax refunds being taxed on the federal return, all additions or subtractions used in calculating your Utah Taxable Income must also be reported on TC-40A, Income Tax Supplemental Schedule. If you use this schedule, you must attach it to your Utah individual income tax return. See Additions to Income and Subtractions from Income.
A nonresident of Utah filing a Utah return first calculates the Utah tax on all of their taxable income and then may prorate the Utah tax so it is based solely on income received from Utah sources.
A part-year resident may also prorate the Utah tax based on income earned during the period of Utah residency and income received from Utah sources while not a Utah resident.
Utah source income (and loss) includes:
- All income or loss earned while a Utah resident regardless of source.
- Income or loss from ownership in real or tangible personal property located in Utah.
- Income or loss from intangible personal property (such as annuities, dividends, interest, etc.) if it is from property used to conduct business in Utah.
- Income or loss from carrying on a trade or business in Utah.
- Instances where an individual took a subtraction from Utah taxable income in a previous year for a Utah my529 (UESP), and is required to include that subtraction back as an addition to income for this year.
- A person’s share of any gain, loss, interest, or deduction derived from or connected with Utah sources that has been allocated to them as a beneficiary of a trust, real estate investment trust, or a pass-through entity (an entity taxed as a partnership or S-corporation).
Note: Individuals with business income derived both within and outside Utah must follow the rules in UC §59-10-118 for determining which income is considered allocated or apportioned to Utah.
A person filing a Utah income tax return must report all of their federal adjusted gross income, regardless of where it was earned. If you are a Utah nonresident or part-year resident, you can account for your non-Utah income from other states as described in Utah Source Income above.
If you are a Utah resident and earned income in another state, you must pay Utah taxes on that income as well as your Utah income. You are still considered a Utah resident even if you work in another state, and must file a Utah income tax return reporting all income, regardless of source. See Residency and Domicile.
Utah residents that have paid taxes on income earned in another state may claim a credit for taxes paid to the other state if the state where the income was earned also taxes the income. For more information, see Credit for Taxes Paid to Another State. Utah residents earning income in a state without an income tax must pay tax to Utah on that income with no credit allowed because no tax is paid to the other state.
A tenured college professor is a Utah resident and teaches summer sessions at a Nevada university. The professor’s annual income is:
$25,000 – Summer stipend from Nevada university
$70,000 – Salary from a Utah college
$95,000 – Total Income
The professor would file a TC-40, Utah Individual Income Tax Return and pay Utah tax on the full $95,000 with no other state credit because Nevada does not have a state income tax.
Note: A Nevada resident earning income in Utah must pay Utah tax on the Utah earnings as a nonresident.
Utah residents living and working abroad may continue to be Utah residents while abroad. Income earned in foreign countries is taxable by Utah if it was included in your federal adjusted gross income on your federal return. Utah does not provide a credit for taxes paid to another country. See Federal Tax Credits below.
Utah does not have any tax treaties with other countries. Any income earned from Utah sources included in your federal adjusted gross income on your federal return is taxable in Utah. If federal tax treaties cause Utah source income to be excluded from your federal adjusted gross income on your federal return, it remains excluded on your Utah return.
Utah residency and domicile laws do not consider the citizenship of the individual. A non United States citizen who meets Utah domicile and residency requirements is considered a Utah resident for tax purposes. See Residency and Domicile.
Credits used on your federal income tax return to reduce your federal income tax may not be used in calculating your Utah tax.
Occasionally, individuals are allowed to choose on their federal income tax return between excluding certain income from their federal adjusted gross income or taking an itemized deduction or a federal tax credit. Examples include:
- Foreign earned income exclusion or foreign tax credit
- Tuition deductions or life-long tax credit
- IRC 1341 claim of right deduction or tax credit
Utah does not allow individuals to modify the federal adjusted gross income or itemized deductions reported on the Utah return from the amounts calculated on the federal return or to claim any subtractions from Utah taxable income in an effort to apply a federal tax credit against their Utah taxable income or Utah income tax. If an individual could have, but did not, use an exclusion or deduction on their federal income tax return they lose any equivalent Utah tax benefit.
A person who reports federal net operating losses on their federal income tax return must treat those losses in the same manner on their Utah income tax return.
For example: if you have a $30,000 loss on your 2017 federal income tax return that you carried forward to your 2018 federal income tax return, it reduces your Federal Adjusted Gross Income for the year. Since the Utah return uses the Federal Adjusted Gross Income calculated on the federal return, you gain the same benefit on your Utah return. See Amending an Income Tax Return. For Utah purposes, you may not carry the federal net operating loss to a tax year other than what you did on your federal returns.
Utah losses may not be separately carried. If a Utah non-resident or part-year resident has an overall Utah loss but not a federal net operating loss, the Utah tax for the loss year is apportioned to zero on TC-40B Non or Part-Year Resident Schedule, but the remaining loss cannot be carried forward or back to other years.