Tax season can be stressful — and if you find yourself living in Utah and working in another state, you might be unsure how to navigate filing your tax returns this year. Depending on your status as a Utah resident, you may be required to pay tax on any income earned elsewhere.

No matter where you earn an income, you will need to file a tax return. When earning income in one state while living in another, you might find yourself filing a state tax return in your state of employment. While certain states like Alaska, Texas, Wyoming, Florida, New Hampshire, Washington, South Dakota, Nevada, and Tennessee don’t charge income tax, the state of Utah does.

To help you navigate this scenario, AA Tax & Accounting Services has put together a quick guide explaining when you will be required to pay taxes on income earned in another state.

Are you a Utah resident on non-resident?

If you live in Utah and work in another state, your state income tax requirements will be dependent on your Utah state residency.

When your permanent residence is in Utah, and you travel outside of the state for work, how long are you in the other state?

Do you have another residence in the other state?

If you leave your Utah residence for less than half a year, your income in another state is taxable in Utah. However, if you are a non-resident of Utah, which is classified as someone who has property in Utah but lives elsewhere for more than half the year, you aren’t required to pay Utah state income tax on any earnings from the other state since you aren’t legally a Utah resident.

What a non-resident needs to know

If you have earned income in Utah but are considered a non-resident of the state, you must file a Utah state tax return. In most cases, this income is earned while conducting business in the state, and you will need to file a Utah tax form called Form TC 40B.

Am I required to file taxes in both states?

In most situations, you will be required to file state income tax. There are a few scenarios where you might not be required to file taxes in both states.

The first reason is if the state doesn’t charge state income tax, such as Alaska, Texas, Wyoming, Florida, and a few others.

Another situation in which you might not be required to file taxes in both states is when a state has an agreement with bordering states. This agreement, known as a reciprocal tax agreement, allows individuals to live in one state and work in the other without filing two state tax returns.

Because Utah does not have reciprocity, you will likely need to file two separate state tax returns: a permanent resident and another non-resident.

How to claim credits for out of state tax

When filing your tax return as a Utah resident and claiming income that you earned out-of-state, you have the option to claim a credit for any income taxes paid to another state. This rule prevents you from facing double taxation on income earned out-of-state.

Tax consulting services in Cedar City, Utah

If you’re dealing with a unique situation, such as living in Utah and working in another state, we recommend consulting certified public accountants like AA Tax & Accounting Services when filing your tax return.

From one-time tax consulting services to ongoing consulting services, our tax consultants work with many clients as their tax advisor and tax preparer — ensuring that your tax team understands your taxes backward and forwards. You can have peace of mind knowing that our team has the experience to provide you with the most effective strategies for maximizing deductions and tax credits with our tax consulting services.

The AA Tax & Accounting Services team can help navigate tax season smoothly when living and working in separate states. Contact us to schedule an appointment.