Hello indywalton:
Actually this tax treatment is correct. As a Utah resident, you are taxed (by Utah) on all of your income, worldwide, no matter where you earn it. That would include income earned, for example, in Utah, Alaska, New York, or even Berlin, Germany.
Let's say that you also worked in a state that has an income tax of it's own, like Colorado. In such an instance, you would owe income taxes to both Utah and Colorado on that same wage income. But, in an effort to promote fairness in the tax code, you would be entitled to a further "tax credit" on this "double-taxed" income . . . which would have the net, ending effect, of you actually paying only taxes to one state.
But, since your state of summer employment is Alaska, you don't have any of that to worry about (i.e., double-taxed income or state tax credits), as Alaska is one of those few states without an income tax.
However, and instead, your Alaska income is still taxable by your home state of Utah, as that is your state of legal domicile (residency).
The state tax output result you describe that you see in TurboTax (for Utah) is, in fact, correct . . . provided that you've input your earnings data properly on the federal side of the program.
We are sorry if this information is something other than what you were hoping to hear; but at least now you know the facts.
Thank you for asking this important question, and good luck with your future academic studies.
