Utah Subtractions from Income
When you enter Subtractions from Income these entries are combined and will appear on line 8 of your state return. The entries will be listed individually for you on the accompanying TC-40A, Part II.
Interest from U.S. Government Obligations
Interest or dividends earned on U. S. Government obligations or securities issued by the United States, or an agency, authority, commission, instrumentality, or possession of the United States is exempt from state income tax. These obligations include:
- Treasury bills;
- Treasury notes; and
- E, EE, H, HH, and I bonds.
The following income is NOT exempt from Utah income tax:
- Interest or dividends from the Federal National Mortgage Association (FNMA);
- Interest or dividends from the Government National Mortgage Association (GNMA); and
- Interest on IRS or other federal agency refunds.
Only interest or dividend income from U. S. Government obligations included in your federal adjusted gross income may be deducted from your Utah income. Before entering an amount, subtract any related interest expense on money borrowed to purchase the obligation or security.
Native American Income
A member of a Native American tribe in Utah who lives and works on the reservation on which he/she is an enrolled member is exempt from Utah income tax on the reservation income. An enrolled member of the Ute tribe who works on the Uintah and Ouray Reservation and lives on land removed from that reservation under Hagen vs. Utah (510 U.S. 399 (1994)) is exempt from Utah income tax on income earned on the reservation.
Railroad Retirement Income
Federal law does not permit states to tax railroad retirement, disability income, unemployment income, and sickness benefits received from the Railroad Retirement Board and reported on form RRB-1099. If a railroad retirement pension from form RRB-1099 is used to calculate the retirement credit on form TC-40C for a taxpayer under age 65, do not deduct the amount again as a deduction on TC-40A, Part 2.
Railroad retirement pensions are deductible only to the extent they are taxable on the federal return. If you received pension payments, disability income or unemployment payments under the Railroad Retirement Act and are required to report all or part of the amount received as income on lines 16b and/or 20b on federal form 1040, or lines 12b and/or 14b of federal form 1040A, you may deduct that amount from Utah income. If amounts derived from sources other than railroad retirement are included on these lines of federal form 1040, only deduct the railroad retirement amounts reported on these lines.
Enter any qualified equitable adjustment needed to prevent suffering a double tax. Attach an explanation of any equitable adjustment claimed.
Nonresident Active Duty Military Pay
Active duty military service pay received by a nonresident is not taxable on the Utah return. The amount of active duty military pay included in federal adjusted gross income should be deducted on TC-40A, Part 2. Also, see instructions for TC-40B, line 30 and Pub 57, Military Personnel Instructions.
State Tax Refund Distributed to Beneficiary of Trust
Enter any state tax refund distributed to a beneficiary of a resident trust to the extent the tax was included in computing federal income of the resident trust for the year.
Nonresident Military Spouse Earned Income
All Utah income of the nonresident spouse of a nonresident active duty military service member may be exempt from Utah tax if the following conditions are met: 1) the nonresident spouse had the same domicile as the nonresident service member prior to moving to Utah, 2) the nonresident active duty service member is in Utah under military orders, and 3) the nonresident spouse is in Utah to be with their military spouse.
If the nonresident military spouse qualifies for this exemption, all their income is exempt from Utah tax. (This income may still be taxable for federal purposes and may be taxed in the state of residence.)
State Tax Refund Included in Federal Income
If you reported a state tax refund on your federal form 1040, line 10, enter that amount on Utah form TC-40, line 7.
For additional information, please see http://incometax.utah.gov/subtractions