Utah Credit for Taxes Paid to Other States

[wadeo7]

I'm a resident of UT and will be working for a VA based company in VA for less than 6 months but will be in VA for the total duration of the assignment. After doing some research I found that Utah requires a TC-40S to be filed in order to get a credit for taxes paid to another state. Is this something that Turbo Tax does when filing in multiple states? Is there a way to avoid my income being double taxed up front so I don't have to wait for a return to get my credit? My employers New Hire onboarding process had me fill out a W-4 for both UT and VA. Is that really necessary if all my income from that assignment will be earned exclusive in VA?

[TomD8]

Your resident state of UT can tax ALL your income, regardless of where you earn it.

VA can tax you as a non-resident on your earnings from the portion of your work actually (physically) carried out from a location inside VA.

TurboTax can handle this common situation.

You'll file a non-resident VA tax return in addition to your home state UT tax return.

You'll be able to claim a credit on your UT tax return for the taxes you pay to VA, so you won't be double-taxed.

When you actually do your state returns, complete the non-resident state return before you do your home state return, so that the program can calculate and apply the "other state credit" correctly.

[Hal_Al]

Yes, TurboTax (TT) prepares and includes form TC-40S as part of your UT state tax return.

No, there is no way to avoid the hassle of having to file two state (VA & UT) state tax returns.

Q.  Is there a way to avoid my income being double taxed up front so I don't have to wait for a return to get my credit? 

A.  Maybe.  Ask your employer to withhold only VA income tax.  UT withholding is not needed since UT will give you a credit.  But, don't be surprised if they say no.   

[TomD8]

Since UT has a higher income tax rate than VA, and since you're only working in VA part of the year,  you may want to have your employer continue withholding for both states.