AK, FL, NV, SD, TX, WA WY

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1 Table of Contents Alabama Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina Tennessee Utah Vermont Virginia West Virginia Wisconsin No Income Tax States AK, FL, NV, SD, TX, WA WY Copyright 2006 by ATX II, LLC

2 Utah Changes for 2005 Organ Donation Credit. A credit is now allowed of up to $10,000 for qualified expenses incurred and not reimbursed to a living donor who donates certain live organs for transplanting in another individual. Special Needs Adoption Credit. To claim this credit, the adoption must now be in Utah. Permanent custody being awarded to the Utah Division of Child and Family Services is no longer required. National Guard and Reserves Military Pay. For 2005 only, the first $2,200 of military pay received by reservists assigned to a unit located in Utah and by Utah Army and Air National Guard members is exempt from Utah tax. New Schedule S. Schedule TC-40S is now provided for reporting additions to income, other deductions, non-refundable credits, and refundable credits. The schedule must be attached to Form TC-40 in order to report any of these items. Increase in Personal Exemption Deduction. The personal exemption deduction increased from $2,325 to $2,400. Forms and Schedules Form TC-40, Utah Individual Income Tax Return. For use by all taxpayers. Schedule TC-40A, Credit for Tax Paid to Another State. Schedule TC-40B, Retirement Income Exemption/Deduction. Schedule TC-40C, Non or Part Year Resident Utah Income Schedule. Form TC-40D, Disabled Exemption Verifi cation. Form TC-40LIC, Utah Low-Income Housing Tax Credit Carryback and/or Carryforward. Schedule TC-40S, Income Tax Supplemental Schedule. Form TC-546, Income Tax Prepayment. Form TC-547, Income Tax Payment Coupon. Who Must File a Return Residents An individual is a resident if he: (1) Is domiciled in Utah for the entire year, even if temporarily outside Utah for an extended period of time. (2) Is domiciled in Utah for any period of time during the taxable year, but only for the duration of that period. (3) Even though domiciled outside Utah, maintains a permanent place of abode within the state and spends at least 183 days of the taxable year within Utah. This does not apply to military personnel or their spouses who are in Utah on military assignment, unless they are Utah residents. A resident is required to file a Utah income tax return if he: (1) Is required to file a federal income tax return; (2) Requests a refund of any overpayment of income tax regardless of the amount of gross income; or (3) Meets the gross income thresholds in the Filing Requirements table. Copyright 2006 by ATX II, LLC Marital status at the end of 2005: Filing Requirements Filing status: At end of 2005 the taxpayer was: Single Single Under or older HOH Under or Older QW Under or Older Married with dependent child, living apart from spouse during last 6 months of 2005 Married living with spouse at end of 2005 or up to the date spouse died Married, not living with spouse at end of 2005 or up to the date spouse died HOH Under or Older MFJ Under 65 (both) 65 or older (one spouse) Gross income is at least: $8,200 $9,450 $10,500 $11,750 $13,200 $14,200 $10,500 $11,750 $16,400 $17, or older (both spouses) $18,400 MFS Any Age $3,200 MFS or Any Age $3,200 MFJ Part-Year Residents An individual is a part-year resident if he is domiciled in Utah for part of the year and is domiciled outside Utah for part of the year. A part-year resident must file an income tax return if he: UT-1

3 (1) Is required to file a federal return, and he has received Utah source income; (2) Requests a refund of any overpayment of income tax, regardless of the amount of gross income; or (3) Meets the gross income thresholds in the Filing Requirements table on p. UT-1, even if he did not file a federal return. Non-Residents A non-resident is an individual who was not in Utah or was in Utah for temporary purposes for less than 183 days during the taxable year. A non-resident is subject to the same filing requirements as a part-year resident. Military Personnel Utah residents who enter military service retain their Utah residency and still must file a resident income tax return in Utah on all income, regardless of the source. Non-residents stationed in Utah solely due to military orders are not subject to Utah tax on their military pay. All non-residents, however, are required to file a Utah income tax return if they have earned income from Utah sources. The spouse of a person in active military service is generally considered to have the military person s domicile and is subject to the same income tax laws and rules that apply to the military person. Native Americans Residents. Native Americans who are domiciled and earn income in Utah must file a Utah income tax return, unless they are: (1) Enrolled members of a Native American tribe or nation in Utah, who live and work on the reservation on which they are enrolled; or (2) Enrolled members of the Ute Tribe who work on the Uintah and Ouray Reservation and live on land removed from that reservation under Hagen v. Utah, 510 U.S. 399 (1994). Non-Residents. Non-resident Native Americans who are not domiciled on a reservation within Utah, but earn income from Utah sources, must file a Utah income tax return. Students A Utah resident who is a student at a non-utah school (full or part-time) is required to file a Utah return and pay tax on income regardless of the source. A non-resident student who is attending a Utah school is required to file a Utah state income tax return and pay Utah tax on income such as wages, rental income, business income, etc., earned from Utah sources. Filing Status Utah generally requires that taxpayers use the same filing status as they used on their federal return (i.e., single, married filing jointly (MFJ), married filing separately (MFS), head of household (HOH), or qualifying widow(er) (QW)). However, if one spouse is a resident of Utah and the other spouse is a non-resident, the taxpayer may file as MFS even if he filed MFJ for federal purposes. Residents, Part-Year Residents, and Non-Residents (Form TC-40) All income received during a period of Utah residency is taxable in Utah, regardless of the source of that income. In addition, income from Utah sources is taxable in Utah during any period of non-residency. All taxpayers must use Form TC-40, Utah Individual Income Tax Return. Income Utah begins the taxable income calculation with federal AGI. Adjustments to Income Additions to Federal AGI. The following additions to federal AGI are required for Utah purposes. (1) State income tax itemized on 2005 federal Schedule A. If the taxpayer filed federal Form 1040 and claimed any income tax paid to Utah, another state, the District of Columbia, or a possession of the United States as an itemized deduction on line 5 of federal Schedule A, one of the following amounts is added to federal AGI: If federal AGI is less than or equal to $145,950 (or $72,975 if MFS), enter the state income tax itemized from the taxpayer s federal Schedule A, line 5. If federal AGI is greater than $145,950 (or $72,975 if MFS), the taxpayer must complete the State Income Tax Worksheet to determine the amount to enter. State Income Tax Worksheet 1. Add lines 4, 9, 14, 18, 19, 26, and 27 from federal Schedule A... $ 2. Add lines 4, 13, and 19, plus any gambling losses included on line 27 of federal Schedule A... $ 3. Subtract worksheet line 2 from line 1. If the answer is zero, stop here. Enter the amount from federal Schedule A, line 5 on line 5 of the taxpayer s Utah return... $ 4. Enter the amount from line 28 on federal Schedule A... $ 5. Subtract line 4 from line 1... $ 6. Subtract line 5 from line 3... $ 7. Divide line 6 by line 3 (decimal rate)... $ 8. Multiply the amount on line 5 of federal Schedule A by the rate on line 7. Enter amount here and on line 5 of the taxpayer s Utah return... $ (2) Lump sum distribution (Code 51). Taxpayers must include lump sum distributions reported on federal Form 4972, Part II, line 6 and Part III, line 10. (3) State taxes allocated from an estate or trust (Code 52). If state taxes were allocated to the taxpayer by the fiduciary, include that amount. If a state tax refund was allocated to the taxpayer by the fiduciary, include that amount as a negative number. UT-2

4 (4) Medical Savings Accounts (Code 53). Include the sum of lines 8 and 9 from Form TC-675M, Statement of Withholding for Utah Medical Savings Account. This addition is only required for Utah residents. (5) Utah Educational Savings Plan (Code 54). Any amount of principal refunded to the account holder for which the account holder received a prior tax deduction must be added back to income. This amount is shown in box 2 of Form TC-675H, Statement of Contribution for Utah Education Savings Plan. (6) Adoption expense reimbursements (Code 55). Include any adoption expense previously deducted from income for which the taxpayer received reimbursement from his insurance company, a public welfare agency, or a private charitable organization. (7) Child s income excluded from parent s return (Code 56). A parent who elects to report a child s interest and dividends on his federal return must add to his Utah income any child s income that was excluded from his federal AGI. The Worksheet for Child s Income Excluded From Parent s Return is used to determine the addition. Worksheet for Child s Income Excluded From Parent s Return 1. Enter $1,600 or the sum of the child s taxable interest, ordinary dividends, and capital gains distributions (federal Form 8814, line 4), whichever is less... $ 2. Federal amount not taxed... $ Subtract line 2 from line 1. If less than zero, enter zero. Add this amount to Utah income... $ (8) Municipal bond interest (Code 57). Interest from certain bonds, notes, and other evidences of indebtedness issued by non-federal governmental entities outside Utah will be subject to Utah s income tax if acquired after January 1, Interest earned on non-utah municipal bonds, however, will not be subject to Utah tax if the state (or political subdivision) issuing the bonds does not impose an income tax on bonds issued by Utah. (9) Untaxed income of a resident trust (Code 60). Include any distribution received by a resident beneficiary of a resident trust of income that was taxed at the trust level for federal tax purposes, but was subtracted from state taxable income of the trust. (10) Untaxed income of a non-resident trust (Code 61). Include any distribution received by a resident beneficiary of a non-resident trust of income that was taxed at the trust level for federal tax purposes, but was not taxed at the trust level by any state. Deductions Itemized or Standard Deduction. Taxpayers must use the same deduction (itemized or standard) for Utah as they used on their federal return. One-Half of the Federal Tax. Taxpayers may deduct on-half of the amounts on federal Form 1040, Lines 57 and 60. If any recapture taxes were reported on federal form 1040, they must be added to the total of lines 57 and 60. State Tax Refund Included in Federal Income. Taxpayers may deduct any state income tax refund they were required to report on line 10 of federal Form Retirement Income Exemption/Deduction. Schedule TC- 40B, Retirement Income Exemption/Deduction, is used to determine the amount of the deduction. (1) Taxpayers age 65 and older. Each individual (the taxpayer and/or the taxpayer s spouse, if MFJ) who was 65 or older at the end of the tax year is entitled to an income exemption of $7,500. This exemption is limited by the amount of the taxpayer s adjusted gross income plus certain interest income. (2) Taxpayers under age 65. Each individual (the taxpayer and/or the taxpayer s spouse, if MFJ) who was under 65 at the end of the tax year and received retirement income may qualify for a deduction up to $4,800, but not in excess of the qualifying income. COMPLIANCE TIP: The taxpayer must attach copies of all Forms 1099R, SSA-1099, TC-40B, and other documentation to support this deduction. For purposes of determining this deduction, retirement income includes pensions, annuities, and taxable retirement social security benefits that meet the following criteria: Paid from an annuity contract purchased under a plan that has been contributed to by the taxpayer s employer and is not revocable by the taxpayer, as provided under IRC Section 404(a)(2); Purchased by an employee under a plan that meets the requirements of IRC Section 408 (an IRA plan); Paid by the United States, a state thereof, or the District of Columbia; Taxable retirement social security benefits (excluding disability and survivor benefits), but only if included in the taxpayer s federal AGI. The following are examples of income that does not qualify for the retirement deduction: Disbursements from deferred compensation plans, such as 401K and 457 plans; Social security survivors benefits received by a child on behalf of a deceased employee. Interest from U.S. Government Obligations (Code 71). Interest on U.S. government obligations issued by an agency or instrumentality of the United States is exempt from tax. U.S. government obligations include treasury bills, treasury notes, and E, EE, H, HH, and I bonds. They do not include interest or dividends from Fannie Mae and Ginnie Mae, or interest on refunds from the IRS or any federal agency. The interest or dividends must have been included in the taxpayer s federal AGI to be eligible for the deduction. Medical Savings Accounts (Code 72). Only Utah residents may claim this deduction. MSA amounts are reported to the taxpayer on Form TC-675M, Statement of Withholding For Utah Medical Savings Account (MSA). The taxpayer may deduct the sum of lines 5 and 6 from Form TC-675M. However, if the taxpayer claimed MSA amounts on federal Form 1040, UT-3

5 he cannot claim MSA amounts as a deduction on his Utah return. Utah Educational Savings Plan (UESP) Contributions (Code 73). Each Utah taxpayer is entitled to an income tax deduction of up to $1,510 per beneficiary for contributions to an UESP account during the tax year. Married couples may deduct up to $3,020 per beneficiary on a MFJ return. Contributions are reported to the taxpayer on Form TC-675H, Statement of Contribution for Utah Educational Savings Plan. Health Care Insurance Premiums (Code 74). A taxpayer may deduct the premiums paid by the taxpayer for health care insurance during the taxable year for the taxpayer, spouse, and dependents. Premiums that were itemized or otherwise deducted in determining federal taxable income on the federal return cannot be deducted on the Utah income tax return. To qualify, the taxpayer or his spouse must not be eligible to participate in a plan fully or partially funded by an employer or former employer. The deduction my be limited if the premiums are fully or partially reimbursed or funded by the federal, state, or an agency, excluding Medicare, or were previously deducted on the federal return under IRC Sections 125, 162, or 213. Long-Term Care Insurance Premiums (Code 75). Taxpayers may deduct amounts paid for long-term care insurance policies during 2005 to the extent the premiums were not deducted on their federal return. Adoption Expenses (Code 76). Taxpayers may subtract qualifying adoption expenses in one of three ways: (a) the year in which the expenses are paid or incurred; (b) the year in which the adoption is finalized; or (c) a year in which the taxpayer may claim the federal adoption credit. Native American Income (Code 77). An enrolled member of a Native American tribe in Utah who lives and works on the reservation on which he is an enrolled member is exempt from Utah income tax on the reservation income. An enrolled member of the Ute tribe who works on the Uintah and Ouray Reservation and lives on land removed from that reservation under Hagen v. Utah, 510 U.S. 399 (1994), is exempt from Utah income tax on income earned on the reservation. Such taxpayers may deduct the amount of reservation income included in their federal AGI. Railroad Retirement Income (Code 78). Utah does not tax railroad retirement or disability income received from the Railroad Retirement Board on Form RRB-1099, unemployment benefits, and sickness benefits. If railroad retirement income is deducted under the Retirement Income Exemption/Deduction (see p. UT-3), it cannot be deducted again on Form TC-40S. Only railroad retirement income included on lines 16b and/or 20b of federal Form 1040 can be deducted. Equitable Adjustments (Code 79). Taxpayers must attach a schedule or explanation of any other deductions claimed. Gains on Capital Transactions (Code 81). A qualified taxpayer may deduct the long-term and short-term capital gain on a transaction if: (1) The gain occurs on or after January 1, 2003; (2) At least 70 percent of the proceeds of the capital gain transaction are used to purchase qualifying stock in a Utah small business corporation within 12 months from when the gain was recognized; and (3) The individual did not have an ownership interest in the Utah small business corporation that issued the qualifying stock. Non-Resident Active Duty Military Pay (Code 82). Active duty military service pay received by a non-resident is not taxable on the Utah return. Deduct the amount of active duty military pay included in federal AGI. National Guard and Reserves Military Pay (Code 83). If the taxpayer is a member of a U.S. military reserve unit located in Utah, or a member of the Utah Army National Guard, he can deduct the first $2,200 of military pay included in his 2005 federal AGI. If the taxpayer is a member of the reserves, the deduction is limited to the first $2,200 earned while assigned to a unit in Utah. CAUTION: If the taxpayer deducts military pay under Code 82, he cannot not also claim the same deduction under Code 83. Exemptions The Personal Exemptions table is used to determine the taxpayer s exemptions. Exemption Taxpayer and spouse* Dependents Personal Exemptions Qualified disabled dependents** Amount $2,400 each $2,400 each $2,400 each * This cannot be claimed if either the taxpayer or spouse is claimed as a dependent on someone else s federal return. ** Taxpayers must complete Form TC-40D, Disabled Exemption Verifi cation. If the taxpayer s federal AGI on line 4 of Form TC-40, Utah Individual Income Tax Return, exceeds the AGI thresholds in the Exemption Limitations table, the taxpayer is subject to a reduced personal exemption amount. If a reduction is required, the taxpayer must multiply his federal exemption amount from line 42 on federal Form 1040 by 0.75 to determine his Utah exemption amount. Filing Status MFS SINGLE HOH MJF or QW Exemption Limitations AGI $109,475 $145,950 $182,450 $218,950 If the taxpayer s federal AGI exceeds the AGI thresholds based on filing status in the Exemption Limitation table and he claims a special disabled exemption (line 2d, Form TC- 40), he must complete the High Income Worksheet for Disabled Exemption to determine his Utah exemption amount. UT-4

6 High Income Worksheet for Disabled Exemption 1. Federal form 1040 line =... $ 2. Number of exemptions from federal Form 1040, line 6d, or 1040NR, line 7d Divide line 1 by line 2... $ 4. Number of state exemptions Multiply line 3 by line 4. This is the taxpayer s Utah personal exemption amount.... $ Tax Computation Residents Exempt from Tax. If the taxpayer s federal AGI is less than or equal to the sum of the federal standard deduction and federal exemption(s), he is exempt from Utah income tax. The Qualifi cation Worksheet for Exemption From Utah Income Tax is used to determine if the taxpayer qualifies. Qualifi cation Worksheet for Exemption From Utah Income Tax 1. Enter the federal AGI from the federal return Enter the standard or itemized deductions taken on the federal return Enter the standard deduction for the filing status: Single enter $5,000; HOH enter $7,300; MFJ and QW enter $10,000; MFS enter $5, Enter the smaller of line 2 or line Enter the exemption amount taken on the federal return (Form 1040, line 41) Add lines 4 and Subtract line 6 from line 1. If the amount is less than zero, enter zero If the amount on line 7 is greater than 0 (zero), calculate the tax following the instructions for line 16b of Form TC-40. If the amount on line 7 is 0 (zero), the taxpayer is exempt from paying Utah income tax. Residents Subject to Income Tax. Utah tax is based on Utah taxable income. All taxpayers must use the Tax Rate Schedules to determine income tax liability. Part-Year Residents and Non-Residents. Part-year residents and non-residents must use Schedule TC-40C, Non or Part Year Resident Utah Income Schedule, to calculate tax liability. Schedule TC-40C is used to determine the portion of federal income and adjustments attributable to Utah income and adjustments. The taxpayer reports Utah income and adjustments in Column A The taxpayer must include all income/loss (1) earned or received from Utah sources while a non-resident, and (2) received while a Utah resident. Each adjustment applicable to Utah income is included. The taxpayer reports federal income and adjustments in Column B. Tax Rate Schedules Single or MFS Taxable income Tax is Of amount over $0 - $ % $0 $864 - $1,726 $ % $863 $1,727 - $2,588 $ % $1,726 $2,589 - $3,450 $ % $2,588 $3,451 - $4,313 $ % $3,450 $4,314 - and over $ % $4,313 MFJ, HOH, or QW Taxable income Tax is Of amount over $0 - $1, % $0 $1,727 - $3,450 $ % $1,726 $3,451 - $5,176 $ % $3,450 $5,177 - $6,900 $ % $5,176 $6,901 - $8,626 $ % $6,900 $8,627 - and over $ % $8,626 The Utah income tax ratio is determined by dividing Utah AGI (from Form TC-40C, line 32, Column A) by federal AGI (from Form TC-40C, line 32, Column B). The taxpayer determines Utah income tax in the same manner as a full-year resident, and then multiplies that amount by the Utah income tax ratio to determine part-year resident or non-resident income tax liability. Credits Non-Refundable Credits. Utah allows the following nonrefundable credits: (1) At-Home Parent Tax Credit (Code 01). An at-home parent may claim a non-refundable credit of $100 for each child who is not more than 12 months old on the last day of the taxable year for which the credit is claimed. For purposes of this credit, at-home parent includes: biological mother or father; stepmother or stepfather; adoptive parents; foster parents; legal guardian; or individuals in whose home the child is placed by a child placing agency for the purpose of legal adoption. To qualify for the credit the following criteria must be met: The child must be 12 months or younger on the last day of the taxable year for which the credit is claimed. The at-home parent must provide full-time care in the at-home parent s residence. The child must be claimed as a dependent by the athome parent. The sum of the at-home parent s total wages, tips and compensation listed on federal W-2 forms and the gross income on federal Schedule C, Profit or Loss From Business, line 7, must be $3,000 or less for the taxable year. UT-5

7 If the at-home parent files a joint return with another taxpayer, the federal adjusted gross income of both taxpayers must be $50,000 or less. (2) Qualified Shelter Workshop Cash Contribution Credit (Code 02). Cash contributions made within the tax year to a qualified non-profit rehabilitation sheltered workshop facility operating in Utah for persons with disabilities are eligible for a credit equal to 50 percent of the total cash contributions, not to exceed $200. Contributions claimed as a credit may not also be claimed as a charitable deduction. (3) Renewable Energy Systems Tax Credit (Code 03). To qualify for this credit, the taxpayer must have installed or upgraded a renewable energy system, such as solar or wind generated power system, during the tax period. Energy savings devices, such as insulation, siding, thermal windows, and high efficiency furnaces do not qualify. (4) Clean Fuel Vehicle Credit (Code 05). To qualify for this credit the taxpayer must (a) have purchased a vehicle that is registered in Utah, had not previously used to take the credit, and manufactured to use propane, natural gas, or electricity; or (b) purchased and installed equipment to convert a vehicle registered in Utah to use propane, natural gas, or electricity. A hybrid vehicle qualifies only if the same vehicle model is manufactured without the clean-fuel fueling system and the hybrid vehicle otherwise meets the requirements for a clean fuel vehicle. (5) Historic Preservation Credit (Code 06). Only Utah residents are allowed this credit. The credit is for costs incurred in connection with qualified rehabilitation of any residential certified historic building. Unused credits may be carried forward five years as a credit against Utah tax due. (6) Enterprise Zone Credit (Code 07). This credit is available for certain businesses that hire new full-time employees, rehabilitate buildings, or meet certain other requirements in a designated zone. Taxpayers may not claim this credit or carry this credit forward into a year that he has claimed the recycling market development zone (Code 10) or the targeted business income tax credit (Code 40). (7) Low-Income Housing Credit (Code 08). This credit is an amount, determined by the Utah Housing Corporation, for the owners of a low-income housing project who have also received an allocation of the federal lowincome housing tax credit. Unused credits may be carried back three years or carried forward five years. (8) Credit for Employers Who Hire Persons with Disabilities (Code 09). This credit is for employers hiring individuals with disabilities who (a) worked in this state for at least six months in a taxable year for that employer, and (b) are paid at least minimum wage by that employer. (9) Recycling Market Development Zones (Code 10). This credit is for taxpayers operating in a designated recycling market development zone. A Taxpayer may not claim this credit or carry this credit forward into a year that he has claimed the enterprise zone credit (Code 07) or the targeted business income tax credit (Code 40). (10) Tutoring Credit for Disabled Dependents (Code 11). The credit is equal to 25 percent, up to $100, of the costs paid by the taxpayer for tutoring each disabled dependent. (11) Tax Credit for Increasing Research Activities (Code 12). This credit is for expenses incurred for increasing qualified research activities in Utah. A qualifying taxpayer may claim the credit in the taxable year immediately following the taxable year for which he qualifies for the credit. (12) Tax Credit for Machinery and Equipment Used to Conduct Research (Code 13). The credit is for machinery, equipment, or both used primarily for conducting qualified research or basic research in Utah for a time period of not less than 12 consecutive months. A qualifying taxpayer may claim the credit in the taxable year immediately following the taxable year for which he qualifies for the credit. (13) Credit for Income Tax Paid to Another State (Code 17). Residents and part-year residents whose income is taxed by Utah and another state, the District of Columbia, or a possession of the United States are entitled to a credit against Utah income tax for the amount of tax paid to the other state(s). Non-residents are not eligible for this credit. Full-year residents and part-year residents must attach Schedule TC-40A, Credit for Tax Paid to Another State. The credit is the lesser of actual income tax paid to another state or Utah income tax multiplied by the ratio of federal AGI taxed in the other state over federal AGI from the federal return. OBSERVATION: Part-year residents will rarely qualify for this credit, as Utah and other states apportion income and only tax the income earned while a resident of that state. (14) Live Organ Donation Expense Credit (Code 19). A living donor may claim a credit of up to $10,000 for expenses incurred for the donation of human bone marrow, or any part of an intestine, kidney, liver, lung, or pancreas for transplanting in another individual. Refundable Credits. Utah allows the following refundable credits: (1) Targeted Business Income Tax Credit (Code 40). Taxpayers must obtain a certified copy of Form TC-40TB, Targeted Business Tax Credit. If an individual claims this credit, the individual may not claim or carry forward an enterprise zone tax credit or recycling market development zone tax credit. (2) Special Needs Adoption Credit (Code 41). A taxpayer who adopts a child with special needs may claim a refundable credit of $1,000 for each child adopted. This credit may only be claimed in the tax year the court issues the order granting the adoption and may not be carried forward or back. To claim this credit, permanent custody of the child must have been awarded to the Utah Division of Child and Family Services, and the child must meet one of the following conditions: Be five years of age or older; Be under the age of 18 with physical, emotional, or mental disability; or UT-6

8 Be a member of a sibling group (two or more persons) placed together for adoption. (3) Non-Resident Shareholder s Withholding Tax Credit (Code 43). This credit is available to part-year residents and non-residents only. If the taxpayer is non-resident shareholder of an S corporation, he is entitled to a credit for the Utah income tax withheld and paid by the S corporation on his behalf. The credit is equal to the taxpayer s respective share based on ownership as it relates to other non-resident shareholders and the amount withheld by the S corporation on behalf of the non-resident shareholders. (4) Mineral Production Withholding Tax Credit (Code 46). The credit is equal to the total mineral production tax withheld as shown on Form TC-675R, Statement of Utah Tax Withheld on Mineral Production, or federal Schedule K-1(s) for (5) Agricultural Off-Highway Gas/Undyed Diesel Tax Credit (Code 47). The credit is 24.5 cents per gallon only for motor fuel and undyed diesel fuel purchased in Utah to operate stationary farm engines and self propelled farm machinery used solely for commercial nonhighway agricultural use that was taxed at the time of purchase. (6) Farm Operation Hand Tools (Code 48). A credit is allowed for sales and use tax paid on the purchase of hand tools that are used or consumed primarily and directly in a farming operation in Utah. The credit only applies if the purchase price of a tool is more than $250. Other Taxes Tax From Recapture of Credits. Owners of low-income housing project and other taxpayers, who have taken the lowincome housing credit and disposed of the building or an ownership interest, must recapture any credits that have reduced their tax liability in a previous year. Form TC-40LIC, Utah Low-Income Housing Tax Credit Carryback and/or Carryforward, is used to calculate the tax. Use Tax. Taxpayers must complete the Worksheet for Computing Use Tax to determine the amount of use tax due. If the use tax owed exceeds $400, the taxpayer is required to obtain a sales and use tax license and to pay the use tax on a sales and use tax return. Assembly and Mailing of Return Attachments Forms W-2, 1099, Etc. Withholding forms must be attached to middle of the first page of the return on the left hand side. Utah Schedules. Copies of Forms TC-40A, TC-40B, TC- 40C, and/or TC-40S must be enclosed (as required). Federal K-1. If the non-resident shareholder s tax credit is claimed, attach a copy of the federal Schedule K-1. No other federal attachments are required. Native American Income Deduction. If the Native American income deduction is claimed, the taxpayer must attach a statement giving the name of the nation or tribe and the enrolled or census number. Worksheet For Computing Use Tax 1. Total amount of purchases subject to use tax... $ 2. Use tax rate (decimal from Use Tax Rate Chart below) Use tax (multiply line 1 by line 2)... $ 4. Credit for sales tax paid to another state $ 5. Use tax due (subtract line 4 from line 3). Enter zero if less than zero... $ Use Tax Rate Chart (Effective Dec. 31, 2005).0600 Beaver County.0700 Beaver City.0600 Box Elder County.0625 Brigham City, Perry, Willard.0700 Snowville.0610 Cache County.0635 Cache Valley Transit, Hyde Park, Hyrum, Logan, Millville, Nibley, N.Logan, Providence, Richmond, River Heights, Smithfield.0600 Carbon County.0625 Price, Wellington.0600 Daggett County.0650 Davis County.0600 Duchesne County.0625 Roosevelt.0575 Emery County.0750 Green River.0700 Garfield County.0800 Boulder, Panguitch, Tropic.0600 Grand County.0775 Moab.0600 Iron County.0775 Brian Head.0600 Juab County.0625 Nephi.0675 Kane County.0775 Kanab, Orderville.0575 Millard County.0600 Morgan County.0600 Piute County.0600 Rich County.0700 Garden City.0660 Salt Lake County.0810 Alta.0600 San Juan County.0650 Monticello.0600 Sanpete County.0625 Ephraim, Gunnison.0600 Sevier County.0625 Richfield, Salina.0610 Summit County.0735 Park City.0635 Snyderville Basin Transit.0600 Tooele County.0625 Erda, Grantsville, Lakepoint, Lincoln, Stansbury Park.0635 Tooele City.0650 Uintah County.0675 Vernal.0600 Utah County.0625 Alpine, American Fork, Cedar Hills, Highland, Lehi, Lindon, Mapleton, Orem, Payson, Pleasant Grove, Provo, Provo Canyon, Salem, Spanish Fork, Springville.0600 Wasatch County.0625 Heber.0725 Park City East.0600 Washington County.0625 Hurricane, Ivins, La Verkin, St. George, Santa Clara, Washington City.0750 Springdale.0600 Wayne County.0660 Weber County Other Attachments. If any other adjustments are deducted, the taxpayer must attach a schedule or an explanation. Taxpayers do not have to attach a copy of the other state s income tax return if the credit for income taxes paid to another state is claimed. The taxpayer, however, must keep a copy of the other state s return and all related documents. UT-7

9 Payment Check or Money Order. Checks or money orders must be made payable to the Utah State Tax Commission. Taxpayers must write their social security number, daytime telephone number, and 2005 TC-40 on the check. Online. Taxpayers may pay any tax due online with a credit card or with an electronic check (ACH debit) from a checking account. The taxpayer may pay in full or make partial payments throughout the year. Each online payment is subject to a service fee. To pay online, access PaymentExpress at paymentexpress.utah.gov. Mailing Addresses for Returns If the taxpayer is due a refund, mail the return to: Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah If the taxpayer is making a payment, mail the return to: Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah Mandatory E-Filing Income tax return preparers who prepare 101 or more Utah individual income tax returns in any calendar year must file returns electronically or with 2-D bar codes. Due Date and Extensions (Form TC-546) Utah tax returns are due April 17, Utah automatically grants taxpayers a six-month filing extension (i.e., to October 16, 2006). However, taxpayers must make a prepayment of tax liability by April 17, 2006, equal to: (1) 90 percent of the tax due for 2005; or (2) 100 percent of the taxpayer s 2004 Utah tax liability. A prepayment may be in the form of withholding, tax credits, and/or payment made by April 17, 2006, using Form TC-546, Income Tax Prepayment. Interest will be assessed on unpaid tax from the filing due date until the tax is paid in full. Penalties may also be assessed. Form TC-546 must be mailed or delivered to: Utah State Tax Commission 210 North 1950 West Salt Lake City, UT Checks must be made payable to the Utah State Tax Commission. Estimated Tax Payments in 2006 (Form TC-546) Utah does not require quarterly estimated tax payments from self-employed workers or individuals who receive other taxable income from which taxes are not withheld. However, to avoid a penalty during a filing extension period in 2007 (for the 2006 tax year), see the prepayment rules in Due Date and Extensions above. State Tax Commission Contact Information Website taxmaster@utah.gov Taxpayer Assistance (Salt Lake City area) (outside Salt Lake City area) Forms Request (Salt Lake City area) ; ext (outside Salt Lake City area) General Taxpayer Mailing Address Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah UT-8