Free 2007 Pub 57, Utah Income Tax Military Personnel Instructions - Utah


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Publication 57
Revised 9/07

Military Personnel Instructions
Taxation of military compensation and benefits Nonresident military personnel with Utah non-military income Filing requirements and deadlines
Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah 84134 (801) 297-7705 1-800-662-4335 ext. 7705 www.tax.utah.gov

If you need an accommodation under the Americans with Disabilities Act, contact the Tax Commission at (801) 297-3811, or TDD (801) 297-2020. Please allow three working days for a response.

Randolph Prawitt Contents
General Information ......................................................................... 1 Utah Treatment .......................................................................... 1 Residency Issues ............................................................................ 1 Utah Resident or Nonresident ................................................... 2 When a Non-military Spouse Earns Income in Utah ................. 2 When One Spouse is a Resident and the Other a Nonresident 2 Death Gratuity Tax Refunds............................................................. 2 National Guard and Reserves Active Duty Military Pay 2004....... 2 National Guard and Reserves Military Pay 2005 .......................... 2 Nonresident Military Personnel with Utah Non-military Income....... 3 General Information ................................................................... 3 Single Military Personnel Special Calculation ............................ 3 Married Military Personnel Special Calculation ......................... 3 Filing Returns .................................................................................. 3 Where To File ............................................................................. 3 When To File .............................................................................. 3 Extensions ................................................................................. 3 Service that Qualifies for an Extension of Deadline ............. 3 Signing Returns ......................................................................... 4 Where to Get Help ........................................................................... 4 Examples ......................................................................................... 5 Example for Single Military Personnel ....................................... 5 Example for Married Military Personnel ..................................... 5

General Information
Federal tax laws provide some special benefits for active members of the U.S. Armed Forces, including those serving in combat zones. For federal tax purposes, the U.S. Armed Forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross. However, these and other support personnel may qualify for certain tax deadline extensions because of their service in a combat zone. National Guard members who are called to active service by the President of the United States or the Secretary of Defense for a period of more than 30 consecutive days in response to a national emergency declared by the President and supported by federal funds are also qualified for these benefits. See the IRS Publication 3 on the IRS web site at www.irs. gov for additional federal tax information regarding members of the U.S. Armed Forces.

Utah Treatment
Utah treats military pay and allowances of a resident taxpayer the same as the IRS. If income is included in federal adjusted gross income, it is automatically included in Utah income. Conversely, if income is excluded from federal taxation, it is also excluded for Utah purposes. A special calculation is required when a Utah nonresident military member (or their spouse if filing a joint Utah return) has non-military income from a Utah source. See "Nonresident Military Personnel with Utah Non-military Income" on page 3.

Residency Issues
A military member's domicile (home of record) does not change when they are stationed in another state on military orders.

Utah Resident or Nonresident
Utah residents who enter military service do not lose their Utah residency solely by being absent from Utah due to military orders. Likewise, residents of other states who are in Utah solely due to military orders are considered nonresidents of Utah while stationed in Utah. Utah residents are required to file Utah income tax returns and report all income received during the period of Utah residency regardless of the source of that income. If income tax is paid to another state on nonmilitary income earned in that state, a credit for the tax paid to the other state may be allowed on the Utah return. (See Utah Form TC-40A.) Military pay of nonresidents who are stationed in Utah solely due to their military orders is not subject to Utah income tax. However, nonresident military personnel and members of their family who are residing in Utah and earn income from Utah sources other than active military service pay are required to file a Utah return and pay any Utah tax due.

If you have already filed your tax returns for 2001, 2002 or 2003 showing a death gratuity of $6,000 and paid tax on $3,000 of the gratuity, you may be entitled to a refund. First, complete and file a federal amended return, Form 1040X, Amended U.S. Individual Income Tax Return. Then prepare an amended Utah return, Form TC-40, for the tax year you are amending. Generally, you must file an amended return or claim for refund within three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later. See specific instructions for filing amended Utah returns in the instruction booklet for the applicable year, or the instructions for amended returns on the Tax Commission website at incometax.utah.gov.

National Guard and Reserves Active Duty Military Pay 2004
For tax years beginning on or after Jan. 1, 2004, but before Jan. 1, 2005, Utah law allows a Utah resident a deduction for active duty military pay that was included in federal adjusted gross income for the following military personnel: For active duty in accordance with orders received under Title 10 USC sections 12301, 12302, 12303 or 12304 members of The Army Reserve, The Naval Reserve, The Air Force Reserve, The Marine Corps Reserve, The Coast Guard Reserve, The Army National Guard of the United States, and The Air Force National Guard of the United States, or For service under a call to active service responding to a national emergency in accordance with an order received under Title 32 USC section 502(f) for a period of more than 30 consecutive days members of The Army National Guard of the United States and The Air National Guard of the United States. The deduction applies only to Utah residents who have qualified active duty military pay included in their federal adjusted gross income; it does not apply for military pensions or survivor benefits. The deduction is taken by entering the qualified active duty military pay, which was included in federal adjusted gross income, on the Utah 2004 TC-40, Schedule S, Part 2. Use code "83" to identify this deduction.

When a Non-military Spouse Earns Income in Utah
The spouse of a person in active duty military service is generally considered, for Utah tax purposes, to have the military spouse's domicile and is subject to the same Utah income tax laws and rules that apply to the military person. The following income is taxable by the state of Utah: Any income of a nonmilitary resident spouse; Any income earned from Utah sources by a nonresident spouse, other than active duty military pay. Any income earned by a part-year resident spouse during the period of residency.

When One Spouse is a Resident and the Other a Nonresident
When one spouse is a full-year Utah resident and the other is a full-year nonresident, they may file their Utah returns using the special calculation outlined under "Married Military Personnel Special Calculation" on page 3. If either spouse is a part-year resident, the couple cannot file using this special calculation. The following procedures should be used when one spouse is a full-year resident and the other spouse is a nonresident and they elect to file using the special calculation: 1. If you file separate federal returns, you must file separate Utah returns. 2. If you file a joint federal return, you may choose to either file: a. A joint Utah return you must include all income of both spouses as reported on your federal return; or b. Using the special calculation file separate returns for Utah. (See "Married Military Personnel Special Calculation" on page 3 for instructions.)

National Guard and Reserves Military Pay 2005
For tax years beginning on or after Jan. 1, 2005, but before Jan. 1, 2006, Utah law allows a Utah resident a partial deduction for military pay that was included in federal adjusted gross income for the following "qualified military service members": A deduction for the first $2,200 of military income earned from a unit located in Utah (if assigned to that Utah unit) for a member of: The Army Reserve, The Naval Reserve, The Air Force Reserve, The Marine Corps Reserve, or The Coast Guard Reserve.

Death Gratuity Tax Refunds
Under the federal Military Family Tax Relief Act of 2003, the death gratuity paid to a survivor of a member of the Armed Forces who died after September 10, 2001, was increased from $6,000 ($3,000 of which was nontaxable), to $12,000 (which is fully nontaxable).

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A deduction for the first $2,200 of military income earned by a member of the following: The Utah Army National Guard, or The Utah Air National Guard. The deduction is taken by entering the qualified military pay, up to $2,200, which was included in federal adjusted gross income, on the 2005 Utah TC-40, Schedule S, Part 2. Use code "83" to identify this deduction. Note: For years beginning on or after Jan. 1, 2006, this deduction no longer applies and National Guard and Reserves military pay will be fully taxable in Utah.

5. Complete the remainder of the Utah return per TC-40 instructions. (See the example on page 5.)

Married Military Personnel Special Calculation
If one spouse is a full-year Utah resident and the other is a full-year nonresident they may choose to use "Special Instructions for Married Couples" in Utah Publication 49. If they qualify to use those Special Instructions, they should make the above adjustments first to the separate return of the active duty military spouse, then follow the calculation instructions in Publication 49. (See the example on page 5.)

Nonresident Military Personnel with Utah Non-military Income
A special calculation must be made by qualified nonresident military personnel to compute the Utah income tax on their non-military Utah income. This income could be from separate earnings from non-military employment, or from a non-military spouse's earnings. The following instructions and examples show how to do this calculation.

Filing Returns
Where To File
Mail or deliver your completed income tax return to the address below:

Refund Return
Utah State Tax Commission 210 N 1950 W Salt Lake City, UT 84134-0260

General Information
Federal law prohibits states from considering the military income of a nonresident service member when determining the individual income tax for either the service member or the service member's spouse on a joint return. To ensure nonresident military service members receive the benefit of this provision of the law, nonresident active duty military service members (or their spouse if filing a joint return) stationed in Utah who have Utah income from sources other than military pay may use these special instructions to calculate their Utah tax.

Payments and All Other Returns
Utah State Tax Commission 210 N 1950 W Salt Lake City, UT 84134-0266

When To File
You must file your 2007 Utah return and pay any income tax due: By April 15, 2008, if you file on a calendar year basis (tax year ends Dec. 31, 2007); or By the 15th day of the fourth month following the close of the fiscal year, if you file on a fiscal year basis. All 2007 Utah income taxes must be paid by the due date. If your return is not filed on time, you may be subject to penalties and interest. However, see the following extension instructions.

Single Military Personnel Special Calculation
Military personnel who are not married should calculate their Utah tax as follows: 1. Follow the line-by-line instructions for completing the Utah TC-40. 2. Deduct any active duty military pay that was included in federal adjusted gross income as an "Other Deduction" on the Utah TC-40, Schedule S, Part 2. Use code "82" for this deduction. 3. Calculate the Utah tax on line 14. 4. Calculate the Utah ratio (for line 15) by completing form TC-40C with the following adjustments. a. Enter the active duty military income (included on line 1, column B) on line 30, column B. This adjustment deducts the active duty pay from the total federal income and is necessary to properly calculate the Utah tax. (Note: This adjustment will cause the federal adjusted gross income shown on line 4a of the TC-40 to be higher than the column B, federal income, shown on the TC-40C.) b. Bring over the totals from line 32 of form TC-40C to line 15 of the TC-40: column A to box a on line 15, and column B to box b. c. Calculate the ratio of Utah income (box a) to total income (box b) to four decimal places and enter the result in box c on line 15.

Extensions
You are automatically allowed an extension of up to six months to file your Utah return without filing an extension form. However, there is NO extension of time to pay your taxes only an extension of time to file your Utah tax return. All extension returns must be filed by Oct. 15, 2008. (See exception for military personnel below.) A Utah resident in military service, stationed outside the United States, will be granted a waiver of penalty for late filing if the return is filed on or before the 15th day of the fourth month after the taxpayer's return to the United States or his discharge date, whichever is earlier. Interest is still due on any unpaid amounts from the original due date until the tax is paid. For information on combat zone relief, click on the website at tax.utah.gov/armedforces.html.

Service that Qualifies for an Extension of Deadline
Military personnel serving in a combat zone are eligible to have collection or audit actions suspended until 180 days after the military person has left the zone.

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Taxpayers qualifying for such combat zone relief may notify the Tax Commission directly of their status through a special e-mail address: [email protected] They should provide their name, stateside address, date of birth, and date of deployment to the combat zone. The taxpayer, spouse, or an authorized agent or representative may make this notification. The Tax Commission cannot provide tax account information by e-mail. Therefore, we will send responses to any questions by regular mail to the address we have on record within two business days. We may provide general answers to questions regarding the status of individual combat zone updates via e-mail.

Where to Get Help
If you have additional questions regarding the Utah treatment of military personnel, please contact us at the address or telephone numbers below. Utah State Tax Commission 210 N 1950 W Salt Lake City UT 84134 (801) 297-7705 in the Salt Lake area, or (800) 662-4335, extension 7705 if calling from outside the Salt Lake area. You may submit your questions by fax at (801) 297-6357, or you may email us at [email protected] You can also obtain information on federal treatment at: Soldiers' and Sailors' Civil Relief Act of 1940, United States Code, Title 50, Section 573. Utah Service Members' Civil Relief Act, Utah Code, Title 39, Chapter 7.

Signing Returns
You, and your spouse if filing a joint return, must sign the return. You may also authorize someone to sign for you by granting a power of attorney. Utah rules relating to filing a return for a military spouse serving in a combat zone, a qualified hazardous duty area, in missing status, incapacitated, or who died during the year follow the federal rules. See IRS Publication 3 for details.

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Examples
Example for Single Military Personnel
James is a single nonresident taxpayer in active duty military service stationed in Utah. In addition to his active duty military pay of $18,000, James has non-military pay from a Utah part-time job of an additional $12,500. James is required to file a Utah return. His Utah return is calculated as follows: Federal Return Utah Return Form 1040EZ Form TC-40 Federal adjusted gross income (line 4a) Additions to income (line 4b) State refund from line 10 of federal return (line 5a) Deductions from income military pay, TC-40S, Part 2, code 82 (line 5b) Modified adjusted gross income (line 6) State income tax deducted as itemized deduction (line 7) Standard or itemized deductions (line 9a) Personal exemption (line 9b) One-half federal tax 50% of 2,875 (line 9c) Retirement exclusion/deduction (line 9d) Other deductions (line 9e) Utah taxable income (line 10) Utah traditional tax (line 12) Utah single rate tax (line 13) Lesser of traditional or single rate tax (line 14) Ratio for line 15: Utah total income $12,500 Federal total income 12,500 ** Ratio 1.0000 Utah tax calculated on line 14 times ratio on line 15 $30,500 $30,500 0 0 (18,000) 12,500 0 (5,350) (2,550) * (1,438) 0 0 3,162 106 625 106

(5,350) (3,400)

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* Utah personal and dependent exemption amount for 2007 is $2,550 (75% of federal exemption amount of $3,400). ** The federal total income figure used in the ratio calculation is $30,500 federal adjusted gross income less $18,000 military pay entered on line 30, column B of TC-40C.

Example for Married Military Personnel
Terry is a married active duty military member whose military home of record is Arizona. He was transferred to Utah's Hill Air Force Base in March of 2007. He and his wife had federal adjusted gross income on their federal return of $55,600. Terry had active duty military pay of $24,875, and his spouse had non-military income of $4,700 from her previous employment in Arizona and $25,775 from her non-military job in Utah, plus $250 of interest earned from their bank in Arizona. They are required to file a joint Utah return. Their joint Utah return is calculated as follows: Federal Return Utah Return Form 1040EZ Form TC-40 Federal adjusted gross income (line 4a) $55,600 $55,600 Additions to income (line 4b) 0 State refund from line 10 of federal return (line 5a) 0 Deductions from income military pay, TC-40S, Part 2, code 82 (line 5b) (24,875) Modified adjusted gross income (line 6) 30,725 State income tax deducted as itemized deduction (line 7) 0 Standard or itemized deductions (line 9a) (10,700) (10,700) Terry's personal exemption (line 9b) (3,400) (2,550) * Spouse's personal exemption (line 9b) (3,400) (2,550) * One-half federal tax 50% of 5,050 (line 9c) (2,525) Retirement exclusion/deduction (line 9d) 0 Other deductions (line 9e) 12,400 Utah taxable income (line 10) 578 Utah traditional tax (line 12) 1,536 Utah single rate tax (line 13) 578 Lesser of traditional or single rate tax (line 14) Ratio for line 15: Utah total income $25,775 Federal total income 30,725 ** Ratio .8389 Utah tax calculated on line 14 times ratio on line 15 558 * Utah personal and dependent exemption amount for 2007 is $2,550 (75% of federal exemption amount of $3,400). ** The federal total income figure used in the ratio calculation is $55,600 federal adjusted gross income less $24,875 military pay entered on line 30, column B of TC-40C.

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