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Preparing the Utah Individual Income Tax Return
Lesson 1: Abbreviated instructions for completing the Utah return
See also: Complete
instructions for TC-40 and Utah State Tax Commission Income Tax website.
This document offers step-by-step
instructions for completing the Utah Individual Income Tax Return,
Form TC-40. The instructions only cover information needed to complete
the case studies in this lesson. The complete TC-40 instructions are available should you desire to expand your experience. When you have completed this training, you will be able
to prepare and file your own tax return.
What you will need
Students will need the following items in addition to the instructions
to complete the returns for the case studies presented in this
training:
- W-2 Wage and Tax Statement from each company you worked for
during the year. Employers are required by law to mail W-2s to
their employees by January 31.
- All 1099-INT forms. Financial institutions are required to
issue a 1099-INT form to each customer who has received interest
(credit unions call it dividends) on savings and checking accounts.
Some financial institutions include a statement with the last
reconciliation statement for the year. The statement is in lieu
of a 1099-INT and the amount is still reported to the Internal
Revenue Service.
- Completed federal income tax return form 1040, 1040EZ or 1040A for 2006.
- A blank federal 1040 Income Tax Return, with a Schedule C and
Schedule SE
- Blank 2006 Utah Individual Income Tax Return, Form TC-40, and
a qualified tax exempt worksheet and/or tax calculation worksheet.
Completing the return
Step 1: Name and Address
- Carefully print your name, social security number, and address
in the spaces provided.
- Returns and instruction booklets mailed to you have a peel-off label; do not apply the label until you have
completed and checked your return for errors.
- If any information on the peel-off label is incorrect do not
use the label. Carefully print your name, social security number,
address and ZIP code on the return.
- Verify your name and social security number (SSN). If your
name has changed due to a marriage, it must be corrected with
the Social Security Administration before filing your return.
Your name and SSN must agree with the information the SSA provides
to the Internal Revenue Service (IRS) and with the Tax Commission's
master file. If they do not agree, your return will not be processed
until the mismatch is corrected.
- Enter your daytime and evening telephone numbers. This is optional.
However, if there is a problem with your return and a phone
number is not provided, processing the return will be delayed
until a response is received through the mail.
- Section 1, Fling status. Enter the code in the box with the same filing
status you claimed on your federal income tax return. For example, if the filing status on your federal return
is single, the filing status on your Utah return must also be
single.
- Section 2, Exemptions. Enter the number of exemptions in each box and the total exemptions; the total must match the number of exemptions you claimed
on your federal return. Enter zero if someone else, such as a
parent, is claiming you as a dependent on their federal return.
An extra exemption is allowed for each disabled dependent you
claim (each year you must have an approved form TC-40D, Disabled
Exemption Verification for each disabled exemption claimed.
You or your spouse cannot be claimed as a disabled dependent).
- Section 3, Election campaign fund. You may designate $2 or more
of your tax liability be distributed to an election campaign fund by
entering a code for the political party of your
choice. This will not increase your tax liability or affect the
amount of your refund.
Step 2: Determining total Utah adjusted income, Lines 4
through 7
Line 4. Federal adjusted gross income. Enter the amount
of the federal adjusted gross income (FAGI) from your federal
return. The FAGI may be found on:
1040, line 37 |
1040EZ, line 6 |
1040A, line 21 |
1040NR-EZ, line 10 |
1040NR, line 35 |
|
Line 5. State income tax itemized on 2006 federal schedule
A. If you file a federal form 1040 and claimed any income tax
paid to Utah, another state, the District of Columbia, or possession
of the United States as an itemized deduction on line 5 of the
federal schedule A, enter the amount claimed on this line. High
income individuals must complete a worksheet to determine the
amount to enter.
Line 6. Additions to income from TC-40S, Schedule S. If you had any income from retirement
disbursements, estates or trusts, medical and educational savings
programs, reimbursements of adoption expenses, municipal bond
interest or trust income, enter the code and amount on Part 1 of Schedule S, total all entries in Part 1, and transfer the total to line 6.
Line 7. Total adjusted income. Add the amounts from lines
4 through 6. This is your Utah adjusted income.
Step 3: Determining total deductions from income, Lines
8 through 14
Line 8. Standard or itemized deduction. Enter the amount
of the deduction you claimed on your federal return. The standard
or itemized deduction may be found on the following lines of
your federal return:
- 1040EZ on Line 5. If you are single or married and no one can claim you or your spouse on their federal return, the amount on line 5 will include your standard deduction and personal
exemptions. You must subtract the amount of your personal exemptions
from this amount. The personal exemption amount is $3,200 per
exemption claimed. For example:
- The amount on line 5 for a single individual would
be $8,200. The standard deduction would be $5,000 ($8,200
- $3,200 = $5,000).
- If you mark "yes" that your parents or someone
else can claim you on their return, your standard deduction
amount is on line E on the back of your return.
- 1040A on Line 2
- 1040 on Line 40
- 1040NR on line 37, Itemized deductions
- 1040NR-EZ on line 11, Itemized deductions
Line 9. Personal exemptions. If you are single and filed
a 1040EZ and checked "yes" that someone else could claim you
as a dependent, you cannot claim an exemption. Enter zero. If
you are married and both you and your spouse can be claimed on
a parent's return you cannot claim an exemption, enter zero. Otherwise,
multiply the number of total exemptions claimed on line 2e by $2,400
($2,400 is 75 percent of the $3,200 federal personal exemption).
Line 10. One-half of the federal tax. Enter one-half
of your federal income tax. Your federal income tax may be found
on:
1040EZ, line 11 |
1040A, line 37 |
1040, add lines 57 and 60, plus any recapture taxes |
1040NR, add lines 52 and 55 |
1040NR-EZ, line 15 |
Line 11. State tax refund. This line only applies to
taxpayers who were required to report any state income tax refund
on line 10 of their federal form 1040. Enter any amount reported
on this line.
Line 12. Retirement deduction. The simulated case modules
will not require the use of this line.
Line 13. Other deductions from TC-40S, Schedule S. Each deduction that may be
claimed is assigned a code. Enter the code and amount
of the deduction claimed on Part 2 of Schedule S, total all entries in Part 2, and transfer the total to line 13. The only deduction from this list will
be the health care insurance premium deduction. The specific
qualifications and restrictions for claiming this deduction will
be explained in the appropriate module.
| Codes for Other Deductions from TC-40S, Part 2 |
| 71 |
Interest from U.S. Government
Obligations |
| 72 |
Medical Savings Account (MSA) |
| 73 |
Utah Educational Savings Account (UESP) |
| 74 |
Health Care Insurance Premiums |
| 75 |
Long-term Care Insurance Premium |
| 76 |
Adoption Expenses |
| 77 |
Native American Income |
| 78 |
Railroad Retirement income |
| 79 |
Equitable Adjustments (other) |
| 81 |
Gains on Capital Transactions |
| 82 |
Nonresident Active Duty Military Pay |
| 85 |
State tax refund distributed to trust beneficiary |
Line 14. Total deductions. This is the sum of lines 8
through 13.
Step 4: Calculating Your Tax
Line 15. This is your Utah taxable income for 2006. Subtract
your total deductions on line 14 from your total adjusted income on
line 7 and enter the difference. If the amount is less than zero,
enter zero.
Line 16. Enter "x" if you are a qualified exempt taxpayer (prepare worksheet to determine status). The Utah taxable income on line 15
is used to calculate the amount of your income tax. The first
thing you must do is determine if you are exempt from paying
Utah income taxes. Complete the following worksheet to determine
if you qualify.
Qualification Worksheet
for line 16a |
| 1. Enter the federal adjusted gross income
from your federal return |
1) |
|
1040, line 37 |
1040EZ, line 4 |
|
|
1040A, line 21 |
1040NR-EZ, line 10 |
|
 |
1040NR, line 35 |
 |
|
| 2. Enter the standard or itemized deductions
taken on your federal return |
2) |
| |
1040, line 40 |
1040NR-EZ, line 11 |
|
| |
1040A, line 24 |
1040NR, line 37 |
|
| |
1040EZ, If you checked either box on
line 5, enter the amount from line D on the back of your
1040EZ return. If you are single and did not check a box on
line 5, enter $5,000. If you are married filing joint and
did not check a box on line 5, enter $10,000 |
|
| 3. Enter the exemption amount taken on your
federal return |
3) |
| 4. Add lines 2 and line 3 |
4) |
| 5. Subtract line 4 from line 1. If the amount
is less than zero, enter zero. |
5) |
| If the amount on worksheet line 5 is greater
than 0 (zero), leave box 16 blank and calculate your
tax following the instructions for line 17. |
|
| If the amount on worksheet line 5 is 0 (zero),
you are exempt from paying Utah income tax. Enter "x" in box on line 16 and enter 0 (zero) on line 17. |
|
Line 17, Calculate Income Tax. Complete the Tax Calculation on page 17 of the instruction booklet 2006 Taxable Income on line 15. Use WORKSHEET A
if you filed as Single or Married Filing Separately. Use
WORKSHEET B if you are Married Filing Jointly, Head of
Household, or Qualifying Widow(er).
Line 18, Non-Year or Part-Year Residents Only. If you were a non-resident or part-year resident
in 2006 you must calculate the amount of tax that applies to Utah
on line 17. Use the worksheet on form TC-40C, Non
or Part Year Resident Utah Income Schedule as the
first step in determining your Utah tax liability. Enter all
income received from Utah sources in column A while a resident
of Utah, or while not a Utah resident. Subtract the total adjustments
on line 31 from the total income line 16 and enter the answer
on line 32. Enter the amount from Column A on line 32 in box a, on line 18
of the return. In column B enter all sources of income and adjustments
from the federal return. Column B must equal the federal adjusted
gross income. Enter the amount from line 32 of Column B in box b on line
18 of your return.
Line 19. Enter tax (full-year Utah resident enter line 17; non-year or part-year resident enter line 18).
Step 5. Non-refundable Credits, Contributions, Additions to Tax
Line 20. Nonrefundable credits from TC-40S, Schedule S. Each credit that may be
claimed is assigned a code. Enter the code and amount
of the nonrefundable credit on Part 3 of Schedule S, total all entries in Part 3, and transfer the total to line 20. The codes and credits
are:
Codes for Nonrefundable Credits from TC-40S, Part 3 |
| 01 |
At-home parent |
09 |
Hiring Disabled |
| 02 |
Qualified sheltered workshop |
10 |
Recycling market |
| 03 |
Renewable energy systems |
11 |
Tutoring disabled |
| 05 |
Clean fuel vehicle |
12 |
Research activities |
| 06 |
Historic preservation |
13 |
Research machinery/equipment |
| 07 |
Enterprise zone |
17 |
Tax paid to another state |
08 |
Low-income housing |
19 |
Live organ donation expenses |
Line 21. Subtract line 20 from 19.
Line 22. Contributions. Enter the code and any contribution you would
like to make on lines 22a through 22f. The SCH/TECH CODE is an additional code used only if contributing to codes 05 and/or 06. Any amount entered on
these lines will increase the amount you owe and reduce the amount
of your refund accordingly.
| Contribution Codes |
01 |
Utah Nongame Wildlife Fund |
Minimum contribution $1 |
02 |
Pamela Atkinson Homeless Trust Fund |
Minimum contribution $2 |
03 |
Kurt Oscarson Children's Organ Transplant Fund |
Minimum contribution $1 |
05 |
School District & Nonprofit School District Foundation* |
Minimum contribution $1 |
06 |
Utah College of Applied Technology** |
Minimum contribution $1 |
07 |
Uniform School Fund |
Minimum contribution $1 |
08 |
Wolf Depredation Fund |
Minimum contribution $1 |
| 09 |
Cat & Dog Community Spay and Neuter Program |
Minimum contribution $1 |
*Contributions to a Nonprofit School District Foundation
requires you to designate a specific school district. You do
this by entering one of the SCH/TECH codes listed on page 13 of the
instructions.
**Contributions to Utah College of Applied Technology requires you to designate a specific location. You do
this by entering one of the SCH/TECH codes listed on page 12 of the
instructions.
Line 23. This line only applies to amended returns with
a previous refund. If you are amending a return enter the amount
of any refunds, credits or offsets of state income tax for the
tax year being amended.
Line 24. Enter any tax from recapture of low-income housing credits.
Line 25. Use tax is required on
all taxable items purchased for storage, use or consumption in
Utah during the taxable year, if sales and use tax was not paid
at the time of purchase.
This includes purchases over the internet or through catalogs.
If the tax is over $400 the purchaser must obtain a sales and
use tax license, and pay the tax on a sales and use tax return.
Sales and use tax rates vary throughout Utah. Use the Utah Sales and Use Tax Rates chart
to find the tax rate that applies to the location where the merchandise
was delivered in Utah, and compute the use tax in the
worksheet:
| Worksheet
for Computing Utah Use Tax |
| 1 |
Total amount of purchases subject to use
tax |
$ |
| 2 |
Use tax rate (decimal from chart) |
$ |
| 3 |
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 |
$ |
Line 26. Total tax, use tax and additions to tax. Add lines 21 through 25.
Step 6. Withholding and Credits
Line 27. Enter the sum of the Utah taxes withheld from
W-2 forms and 1099 forms.
Line 28. Enter the amounts of any Utah income tax prepayments. Prior
year refund applied to this tax year or prepayment coupons,
form TC-546.
Line 29. This line only applies to amended returns. If
you mailed a tax payment with the original return, enter the
amount here.
Line 30 . Refundable credits from TC-40S, Schedule S. Each credit that may be claimed is assigned a code. Enter the code and amount of the refundable credit on Part 4 of Schedule S, total all entries in Part 4, and transfer the total to line 30. The codes and credits are:
| Codes for Refundable Credits from TC-40S, Part 4 |
| 40 |
Targeted business tax credit |
| 41 |
Special needs adoption credit |
| 43 |
Nonresident shareholder's withholding |
| 46 |
Mineral production withholding |
| 47 |
Agricultural off-highway/gas/undyed diesel |
| 48 |
Farm operation hand tools |
Line 31. Add lines 27 through 30 to get the total withholding and credits.
Step 7. Tax Due
Line 32. If the amount on line 26 is greater
than line 31, subtract line 31 from line 26. This
is the amount you owe.
Line 33, Penalty and interest. If return is filed late, preparer must include penalty and interest amount and add to line 32.
Step 8. Refund
Line 34. If the amount on line 31 is greater
than line 26, subtract line 26 from line 31. This
is your refund.
Line 35. If you want any amount of your refund applied
to the next year's tax liability, enter the amount here. Your
refund will be reduced by the amount entered.
Step 9. Direct Deposit and Signatures
Line 36. To have your refund deposited directly into
your savings or checking account, enter the financial institution's
routing number and your account number. Make sure to indicate whether the deposit should go in a checking or savings account.
The last step is for each taxpayer to sign and
date the return.
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