What’s New & PPP Loan FAQs

What’s New for This Year

The IRS extended the 2020 federal income tax filing and payment deadlines for individuals from April 15th to May 17th, will Utah be extending the 2020 state income tax filing and payment deadlines for individuals?

Yes, Utah law states that the due date for the state individual income tax return is the later of:

  • the 15th day of the 4th month following the end of the taxable year (April 15th for most individuals), or
  • the federal due date.

The due date for Utah individual income tax for tax year 2020 is May 17th. The extension of the individual filing due date has the effect of also postponing the payment due date to May 17th. Interest and penalties will not accrue if payment requirements are met by this new due date. At this time, the extension filing deadline for individuals remains October 15th.

It should be noted that the filing and payment due dates for corporations, partnerships, and trusts have not been extended.

Solar Energy Systems Phase-out

The maximum Renewable Residential Energy Systems Credit (credit 21) for solar power systems installed in 2020 is $1,600.

Qualified Retirement Plan Distribution, Subtraction from Income

The 2020 legislature passed HB 3003, creating a subtraction from income for certain distributions from a qualified retirement plan. See Qualified Retirement Plan Distributions.

COVID-19 Grants and Loans Included in AGI, Subtraction from Income

The 2020 legislature passed SB 6005, creating a subtraction from income for federally-funded COVID-19 grant funds and forgiven loans that are included in adjusted gross income. See COVID-19 Utah Grant Funds Included in AGI.

FAQs – Frequent Questions and Information

Changes Regarding Paycheck Protection Program (PPP) Loans

Recent legislation and decisions on the federal and state levels have required changes to some of our annual filing instructions. Please see TC-40 – Utah Individual Income Tax Return Instructions for information. The instructions found below and elsewhere within this website also reflect the most current changes. Also see the instructions in these forms for PPP information on other taxes:

What is the Utah tax status of forgiven PPP loan amounts that were used by non-profit entities to pay for expenses that are deductible against unrelated business income?

Non-profit organizations are taxed in Utah on Utah unrelated business income. Non-profit entities will be treated consistently with for-profit entities to the extent the non-profit entity has unrelated business income.

PPP loan amounts forgiven by the federal government are taxable in Utah, if:

  • the loan was forgiven during the 2020 tax year
  • the value of the loan is not subject to federal income tax, and
  • the loan is used for expenses that are deductible for federal income tax purposes

If forgiven PPP loan amounts were used to pay for expenses that are deductible against unrelated business income, these forgiven amounts should be included as unadjusted income, and any appropriate subsequent deductions would flow from the federal form 990-T to the Utah form TC-20MC.

What is the Utah tax status of forgiven federal loans that are unrelated to the Paycheck Protection Program if the forgiven amounts are used to pay expenses that are deductible for federal tax purposes?

Utah requires a PPP Loan or a similar paycheck protection loan that is authorized by the federal government in response to COVID-19 to be added to unadjusted income and therefore taxable in Utah, if:

  • the loan was forgiven during the 2020 tax year
  • the value of the loan is not subject to federal income tax, and
  • the loan is used for expenses that are deductible for federal income tax purposes

Federal loans unrelated to the paycheck protection program (PPP) are not subject to the addback requirement. If a forgiven loan is not related to paycheck protection and/or COVID-19, the Utah tax treatment will follow the federal treatment for the specific forgiven loan. Generally, forgiven federal loans are considered part of federal unadjusted income and are taxable in Utah.

What is the Utah tax status of a PPP loan or similar loan that is not forgiven by the federal government but where the loan amount is paid by a grant from the state or a local government?

For a taxable year beginning on or after January 1, 2020, but beginning on or before December 31, 2020, any federally funded grant funds or forgiven loans that the taxpayer receives from the state of Utah, a county within the state, or a municipality within the state in response to COVID-19 shall be subtracted from unadjusted income if the amount of the grant or forgiven loan is included in unadjusted income.

Therefore, a PPP loan that is not forgiven by the federal government but where the loan amount is paid by certain eligible grants from the state of Utah or a local government would not be taxable in Utah.

Please seek professional tax advice regarding the federal taxability of such state and local grants.

What is the Utah tax status of a PPP loan or similar loan that is not forgiven by the federal government if the taxpayer uses it to pay for federally deductible expenses?

Utah requires PPP loans or a similar paycheck protection loan that is authorized by the federal government in response to COVID-19 to be added to unadjusted income and taxable in Utah if:

  • the loan was forgiven during the 2020 tax year
  • the value of the loan is not subject to federal income tax, and
  • the loan is used for expenses that are deductible for federal income tax purposes

Therefore, if the loan itself was not forgiven, it would not be included in unadjusted income and would not be taxable in Utah. Federally deductible expenses would flow through to the Utah tax return normally.

What is the Utah tax status of a forgiven PPP loan if the forgiven amount was used to pay deductible expenses in other states?

The total forgiven amount of a PPP loan that is not subject to federal income tax and for which expenses are deductible for federal income tax purposes must be reported as an addition to income on the taxpayer’s Utah return. A taxpayer’s total adjusted income, including the forgiven amount of any PPP loan, is subject to apportionment in Utah based on the taxpayer’s business activities in the state.

What to do if you received unemployment compensation in Utah during 2020

Under the American Rescue Plan enacted on March 11, 2021, unemployment compensation up to $10,200 paid in 2020 is excluded from federal adjusted gross income. This exclusion applies for those with a federal adjusted gross income which is less than $150,000. Utah law generally conforms to the federal treatment of unemployment compensation. If you received unemployment compensation in Utah during 2020 please do the following:

If you have not yet filed your federal and Utah returns: First, ensure you have the most updated forms and instructions and file your returns as normal. The unemployment compensation that is excluded for federal tax purposes will automatically be excluded for Utah tax purposes.

If you have already filed your federal and Utah returns: Do not file an amended Utah return to exclude any unemployment compensation at this time. The Utah State Tax Commission is exploring options to obtain the necessary information directly from the Internal Revenue Service to adjust your return and process a refund automatically. If it becomes necessary for you to take any action related to the exclusion of your unemployment compensation, additional instruction will be provided here after August 1, 2021.