- Individual Income Taxes
- Business Taxes
- COVID-19 Grants and Loans Included in AGI, Subtraction from Income
- Changes Regarding Paycheck Protection Program (PPP) Loans
- Tax Status of Forgiven PPP Loans for Non-Profit Entities
- Tax Status of Forgiven Federal Loans Unrelated to PPP Used to Pay for Deductible Expenses
- Tax Status of Forgiven Payments, Interest, & Fees from PPP Loans Used to Pay for Deductible Expenses
- Tax Status of Loans Paid For with Government Grants
- Tax Status of Loans Used to Pay for Deductible Expenses
- Tax Status of Forgiven PPP Loans Used to Pay for Deductible Expenses
- Impact of the Federal Partnership Audit Regime on Utah income tax
Individual Income Taxes
The individual income tax filing and payment deadlines were extended to May 17th, will this affect the Utah extension filing date?
No. Although the original filing and paying deadlines were extended to May 17th, the extension filing deadline for individuals remains October 15th.
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.
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: If you have already filed a tax return that includes the full amount of your unemployment compensation, and are waiting for the IRS to automatically correct the federal return, you can still file a Utah amended return. You will need to figure out your correct AGI (adjusted gross income), taking into account the unemployment compensation exempt from federal income tax, in order to correctly calculate the tax on your amended Utah return. Please file a paper form TC-40 and use the amended code 06. You may be able to amend your return electronically. Contact your software provider to find out if their software supports this change. Also see Update: 2020 Unemployment Compensation for the latest changes to filing requirements.
Business Taxes
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.
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:
- TC-20 – Utah Corporation Franchise and Income Tax Return
- TC-20S – Utah S Corporation Return
- TC-41 – Utah Fiduciary Income Tax Return
- TC-65 – Utah Partnership/LLP/LLC Return of Income
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 2020 Utah tax status for forgiven payments, interest, and loan fees associated with a PPP loan or similar loan if the taxpayer uses the forgiven amounts to pay for federally deductible expenses?
Any forgiven amounts (including payments, interest, or loan fees) related to a PPP loan or similar loan are taxable in Utah, if:
- the amount is forgiven during the 2020 tax year;
- the forgiven amount is not subject to federal income tax; and
- the forgiven amount is used for expenses that are deductible for federal income tax purposes.
The total forgiven amount relating to any PPP loan or similar 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 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.
How does the new federal partnership audit regime impact my Utah income tax?
Partnerships may be audited by the IRS under the new federal partnership audit regime enacted within Bipartisan Budget Act of 2015. If a partnership has Utah business activity and the partnership’s federal tax attributes are changed as a result of an IRS audit, the partnership must report the change to the Utah Tax Commission within 90 days. (See Utah Code Sections 59-10-536 and 59-7-519) The partnership must report this change by filing an amended Utah partnership return. This amended return would require the payment of withholding tax for the increased income allocated to all nonresidents, and non-individual partners. Utah resident partners must file an amended Utah return for the years that were changed by the IRS and pay any additional tax to avoid potential penalties and interest.