Registration Requirements in Utah
Businesses in Utah may have to register with the Utah State Tax Commission and other state agencies. To determine which agencies you may need to register with, Utah has an online business registration system to determine your registration needs. A link to the system can be found here:
S Corporation Tax
Utah recognizes the federal S-election, and Utah S corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income. S corporations are still required to file Form TC-20S S Corporation.
LLCs and partnerships are not required to pay income tax to Utah. Instead, income from the business is distributed to individual LLC members or partners, who then pay Utah income tax on that amount with their personal return. Partnerships are still required to file Form TC-65 Partnership/LLC.
Composite tax returns are no longer an option effective for tax years beginning in 2009.
Individual Income Tax
Utah generally conforms to the Internal Revenue Code on a rolling basis, and therefore adopts most federal provisions, unless otherwise specified.
As of August 2020, Utah retroactively approved the CARES Act, also known as the Coronavirus Aid, Relief, and Economic Security Act, which was created in response to the pandemic, provision for NOL deductions for tax years beginning on or after 2018. The 80% limitation will be reinstated for tax years starting on and after 2021. After January 1, 2020, Utah exempts the amount of a forgiven Paycheck Protection Program loan from state corporate franchise and income tax.
Utah uses the federal adjusted gross income as a starting point when calculating the income tax. They use the federal standard or itemized deduction amount, whichever you claimed on your federal return. They do allow an exemption in the amount of $579 per dependent you were allowed to claim on your federal return for the federal tax credit. You may not claim yourself or your spouse as other dependents.
Utah does not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.
Shareholders and partners with income assignable to Utah may be required to file an individual income tax return with the state of Utah. Individual income tax in Utah is taxed at a flat rate of 4.95%. Taxpayers use Form TC-40 Individual Income Tax Return.
Returns are due on the 15th day of the 4th month following the end of the fiscal year. For calendar filers, the due date is generally April 15th. If the due date falls on a weekend or holiday, the due date becomes the next business day.
Filing An Extension
Utah automatically grants a 6 month extension for s corporations and a 5 month extension for partnerships. Individuals are granted an automatic 6 month extension. For a business or individual to avoid penalties, the prepayment requirements must be met by the original return due date.
Corporations with a tax liability of $3,000 or more in the current or previous tax year must make quarterly estimated payments. S corporations and partnerships can make quarterly estimated, return and extension payments on Form TC-559 found below.
Utah does not require individuals to pay quarterly estimated payments. Taxpayers can make prepayments at any time online or by using Form TC-546 found below.
Utah may assess a late filing penalty for returns not filed or not filed by the due date (with extension). The penalty depends on how many days late the return is filed and are as follows:
More information on penalties can be found on Publication 58 found here:
If your business was formed or is located in another state, but generates income in Utah, it may be subject to Utah taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Utah State Tax Commission