If you are a nonresident shareholder of an S corporation, you may claim a refundable credit for any Utah income tax the S corporation paid on your behalf. The credit is the total Utah withholding tax paid multiplied by your share of corporate ownership.
If you do not have Utah income from another source, you may give up the credit and not file a Utah income tax return. However, you must file a Utah return if you have other Utah income, losses or credits.
The nonresident shareholder withholding tax credit is claimed on form TC-40W, Part 3. You must also enter the S corporation name and employer identification number. The total nonresident shareholder withholding tax is carried over to form TC-40, Utah Individual Income Tax Return, and entered on line 34. You must attach the TC-40W to your return.
Failing to complete the TC-40W, Part 3 may result in processing delays or the withholding tax credit being disallowed.
Keep the federal Schedule K-1 issued by the S corporation and all other related documents with your records. Do not attach them to your Utah return.
Note: You may claim only one nonresident shareholding withholding credit when filing electronically. You must file on paper if you have more than one of these credits.
