Nonresidents and Part-Year Residents
A nonresident is a person who was not domiciled in Utah or was in Utah for temporary purposes for less than 183 days during the taxable year or does not maintain a place of abode in Utah. Income received by a nonresident from Utah sources is taxable in Utah. In determining whether a person spends 183 or more days in Utah, a “day” means a day in which the person spends more time in Utah than in any other state.
Income that a nonresident receives from Utah sources is taxable in Utah. A nonresident with any Utah sources of income must file a Utah return if they are required to file a federal return. Exception: if you are a nonresident and your only source of Utah income is from a K-1 you received from a partnership, LLC, S-corporation, or trust with Utah income, you may not be required to file a Utah return. See Who Must File a Utah Income Tax Return.
If you are a nonresident, you must:
- Report all income earned or received from all sources on Utah form TC-40, line 4.
- Report what portion of your total income was from Utah sources on your Utah TC-40B, Non and Part-year Resident Utah 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.
A California resident works in Utah on a construction project. His yearly income is:
$ 10,000 – Income from renting his California home while in Utah
$ 10,000 – Income earned in California
$ 30,000 – Income earned in Utah
$ 50,000 – Total Income
He completes the Utah return as follows:
- He enters the entire income, $50,000 on Utah form TC-40, line 4.
- He calculates his initial Utah tax as if everything was earned and taxed in Utah.
- He uses form TC-40B to compute the ratio of Utah income to total income – 0.6000 (30,000 divided by 50,000).
- He multiplies the “as is” total Utah tax by the ratio – 0.6000.
- 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 paid to Utah.
A part-year resident is a person who is a Utah resident for part of the year and a nonresident for part of the year. All income received during the period of Utah residency is taxable in Utah, regardless of where that income is earned, unless specifically exempted. Income from Utah sources is taxable in Utah during the period of nonresidency.
A person living in Oregon for the first half of the year moves to Utah on July 1. Her yearly income is:
$ 28,000 – Income earned in Oregon from January 1 through June 30
$ 32,000 – Income earned in Utah from July 1 through December 31
$ 60,000 – Total Income
She completes the Utah return as follows:
- She enters the entire income, $60,000 on form TC-40, line 4.
- She calculates her initial Utah tax as if everything was earned and taxed in Utah.
- She uses form TC-40B to compute the ratio of Utah income to total income – 0.5333 (32,000 divided by 60,000).
- She multiplies the “as is” total Utah tax by the ratio – 0.5333.
- She files an Oregon part-year resident return, calculating and reporting Oregon tax on her Oregon income.