A nonresident individual is one who was not in Utah or was in Utah for temporary purposes for less than 183 days during the taxable year. Income received by a nonresident from Utah sources is taxable in Utah.
A nonresident income earner generally must file two state returns – one to Utah and one to the state of residence. On the Utah return, the income earner must report ALL income earned, not just income from Utah. On form TC-40C, Non or Part-year Resident Utah Income Schedule, the earner computes the Utah income and the total income to determine the Utah income ratio (percentage) for the Utah return, TC-40. The earner then uses the Utah income ratio (percentage) to calculate tax due to Utah.
To avoid double-taxation, the taxpayer's resident state will generally give the taxpayer credit for taxes paid to Utah on income that is taxed in both states.
A California resident works in Utah on a construction project. Here is his income for the year:
$ 10,000 - Income from renting his California home
$ 10,000 - Income earned in California
$ 30,000 - Income earned in Utah
$ 50,000 - Total Income
In this case, on the Utah TC-40 tax return, the earner would start with the entire income, $50,000. The earner would take his applicable deductions and exemptions and calculate his Utah tax as if everything was earned in Utah. He would then use form TC-40C to compute the portion of income actually earned in Utah, 60 percent (30,000 divided by 50,000).
Because 60 percent of the income is from Utah, he would multiply the tax amount by 60 percent. To avoid double taxation for the income taxed in both states, the nonresident individual would then file a California resident return claiming all of the income, and claim a credit on the California return for the income tax paid to Utah.
A part-year resident is an individual who is domiciled in Utah for part of the year and is domiciled outside Utah for part of the year. All income received during the period of Utah residency by a part-year resident is taxable in Utah, regardless of the source of that income. Income from Utah sources is also taxable in Utah during the period of nonresidency.