The following information is prepared to answer some of the more commonly asked questions raised by potential home buyers. In some instances, we have drawn comparisons with neighboring states since a large number of people moving into Washington County come from those states.
Will I have to file a Utah income tax return if I move to Utah: Generally if you are required to file a federal return, you will also be required to file a Utah state tax return. The Utah income tax laws were changed significantly beginning in 2008. Utah now has a “flat tax: system. In general terms, you multiply the Federal Adjusted Gross Income (with a few minor modifications) by the new flat tax of 5 percent. Then you are allowed to offset that tax by certain credits based on your income level, the number of people in your household and your federal itemized deductions, etc. Most of these credits phase out as income increases.
In the year that I move to Utah, do I have to pay Utah tax on all of my income earned during that year even though part of it was earned while I was living in another state? Utah tax laws allow you to file tax returns as a part-year resident. The calculation is as follows: Your tax is computed on your world-wide income as though you were a full-year resident and that amount is reduced by the percentage of your income which was actually earned while you were living outside the state of Utah. A Utah resident is defined as an individual who is domiciled in Utah for any period of time during the tax year (part-year resident) or is an individual who maintains a permanent residence outside of the state but nevertheless spends at least 183 days of the taxable year in Utah.
- How do Utah income tax rates compare to other states? Utah’s new flat tax rate is 5 percent (with allowable credits as discussed in Question 1). For comparison, California’s maximum rate is 9.55 percent; Idaho’s is 7.8 percent; and Arizona’s is 4.54 percent.
- Does Utah tax law provide a benefit for elderly taxpayers? Taxpayers under the age of 65 who have retirement income as well as all taxpayers over the age of 65 are allowed a retirement tax credit. However, this credit also phases out for higher income taxpayers.
- Does Utah have a sales tax? Utah does have a state sales tax varying between 5.9 and 7.95 percent depending upon the county in which the purchase is made. (Cities in Washington and Iron counties are taxed primarily at either 5.95 or 6.25 percent.)
- Is it true that California will still tax my California retirement income even though I don’t live there anymore? This law has now been changed. California can no longer tax nonresident retirees whose sole California-source income is from retirement plans. This change was enacted for 1996 and future years.
- Does Utah have high property tax rates? The real estate property tax rates are computed at just over .55 percent of the market value of the home for primary residences and approximately 1.1 percent of the market value of the home for second homes. These taxes are due by Nov. 30 of each year. Automobile fees range between $10 and $150 based on the age of the vehicle.
- Does Utah have an estate tax? Beginning in 2005, Utah inheritance tax returns do not need to be filed. We understand that this “thumbnail sketch” will not answer all of the questions which you may have in contemplating a move to Utah. These questions are for general information only and any more specific questions should be discussed with competent council. This information was provided by HintonBurdick CPAs & Advisors, 63 South 300 East, Ste. 100, St. George, Ut 84770 435-628-3663. For a complete listing of member accounting/financial planning firms, see the business directory.