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Tax obligation for remote internship

I have a question about my state tax return. I am a student in Virginia and had a remote internship during summer 2024. However, I was physically located in Utah while working. My company withheld taxes for Virginia, as shown on my W-2 form.

Could you clarify whether I need to pay state taxes to Utah and advise me on how to proceed?

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3 Replies
ThomasM125
Employee Tax Expert

Tax obligation for remote internship

If you worked for more than 20 days in Utah, you would be required to file a non-resident tax return there if you were required to file a federal tax return. If you end up owing taxes to Utah, you can apply for a credit for taxes paid to another state on your Virginia return to get a credit for those taxes so you don't end up being double taxed.

 

Assuming you need to file the Utah return, you should complete a non-resident Utah return in TurboTax before you complete your Virginia return, as you will need the tax paid to Utah for the credit on your Virginia return. When you work on your Virginia return, look for the credit for taxes paid to another state in the deductions and credits section on the Virginia return.

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Tax obligation for remote internship

Hi I just wanted to reclarify. The Utah state income website states that a non resident needs to file return if income is from Utah sources. My income was not from Utah sources, instead it was from Virginia source (as shown on my W-2). I just went to Utah to visit friend during summer. Do I still need to pay Utah State Tax?

https://incometax.utah.gov/instructions/who-must-file#nonresidents-working

You must file a TC-40 return if you:

  1. are a Utah resident or part-year resident who must file a federal return,
  2. are a nonresident or part-year resident with income from Utah sources who must file a federal return, or
  3. want a refund of any income tax overpaid.
ThomasM125
Employee Tax Expert

Tax obligation for remote internship

That would be a grey area. If you are performing services in Utah but being paid by a company located in Virginia, then it would be Utah sourced income. Similar to professional athletes who play a game in city away from their home city. They get taxed by the state where the game is played on the money they earn while there, even though they are being paid by the owner in their home state.

 

If you were there simply telecommuting which had nothing to do with being in Utah, then you could make an argument that the work does not have a nexus to Utah. You may need to contact the Utah Department of Revenue for clarification at 1-800-662-4335.

 

Here is an excerpt from the Utah State Legislature mentioning that the carrying on of a profession in the state is Utah sourced income, so some interpretation is required:

 

 

[Edited 1/28/25 at 2:58 PM PST]

@kiritoaxer 

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