Part 4 – Nonapportionable Nonrefundable Credits

Nonapportionable nonrefundable credits can reduce your income tax to zero, but any credit greater than your tax liability will not be refunded.

Enter the following nonapportionable nonrefundable credits that apply. Attach TC-40A to your return.

Write the code and amount of each nonapportionable nonrefundable credit in Part 4. Total the amounts and carry the total to TC-40, line 26.

Codes for Nonapportionable Nonrefundable Credits, TC-40A Part 4

01 At-home parent credit

02 Qualified sheltered workshop cash contribution credit

06 Historic preservation credit

12 Credit for increasing research activities in Utah

17 Credit for income tax paid to another state

19 Live organ donation expenses credit

21 Renewable residential energy systems credit

25 Combat related death credit

27 Veteran employment credit

28 Employing persons who are homeless credit

63 Achieving a Better Life Experience (ABLE) program credit

AA Military survivor benefits credit

AG Carson Smith Opportunity Scholarship Program credit

AP Pass-through entity taxpayer income tax credit

Keep all related documents, including credit forms, with your records. You may have to provide this information later to verify a credit claimed on your return.

Each nonapportionable nonrefundable credit is explained below.

(01) At-Home Parent Credit (UCA §59-10-1005)

An at-home parent may claim a nonrefundable credit of $100 for each child 12 months old or younger on the last day of 2025. An at-home parent includes the:

biological mother or father,

stepmother or stepfather,

adoptive parents,

foster parents,

legal guardian, and

persons housing a child placed by a child-placing agency for legal adoption.

To qualify for the credit, all of the following conditions must be met:

The child must be 12 months or younger on the last day of 2025;

the at-home parent must provide full-time care in their residence;

the child must be claimed as a dependent on the at-home parent's return;

the total of the at-home parent’s wages, tips and compensation listed on federal W-2 forms and the gross income on federal Schedule C, Profit or Loss from Business, line 7, must be $3,000 or less for the tax year; and

the federal adjusted gross income (TC-40, line 4) must be $50,000 or less.

Note: You may not carry forward or back any credit that is more than your tax liability.

There is no form for this credit. Keep all related documents with your records.

(02) Qualified Sheltered Workshop Cash Contribution Credit (UCA §59-10-1004)

TIP: Charitable contributions claimed on the federal Schedule A cannot be claimed as a credit here.

Cash contributions made during the tax year to a qualified Utah nonprofit rehabilitation sheltered workshop facility for persons with disabilities are eligible for the credit. Check with the workshop to make sure they have a current Day Training Provider License or Day Support Provider Certificate issued by the Department of Human Services. The credit is the lesser of $200 or 50 percent of the total cash contributions.

There is no form for this credit. Keep all related documents with your records.

TIP: You must enter the name of the qualified workshop on TC-40A, Part 4 to claim the credit.

Note: You may not carry forward or back any credit that is more than your tax liability.

For more information contact:

Division of Services for People with Disabilities 288 N 1460 W Salt Lake City, UT 84116 1-844-275-3773 dspd.utah.gov

(06) Historic Preservation Credit (UCA §59-10-1006)

The credit is for costs to restore any residential certified historic building.

Complete form TC-40H, Historic Preservation Tax Credit, with the State Historic Preservation Office certification, verifying the credit is approved. Do not send form TC-40H with your return. Keep the form and all related documents with your records to provide the Tax Commission upon request.

Note: You may carry forward for the next five years any credit that is more than your tax liability.

For more information contact:

Utah State Historic Preservation Office 3760 S Highland Drive Salt Lake City, UT 84106 801-245-7277 ushpo.utah.gov/shpo/financial-incentives/

(12) Credit for Increasing Research Activities in Utah (UCA §59-10-1012)

The credit is:

5 percent of your qualified expenses for increasing research activities in Utah above a base amount,

5 percent of certain payments made to a qualified organization increasing basic research in Utah above a base amount, and

7.5 percent of your qualified research expenses in Utah for the current tax year.

Note: You may carry forward for the next 14 years any credit for 1 or 2 (above) that is more than your tax liability. You may not carry forward any credit for 3 (above).

There is no form for this credit. Keep all related documents with your records.

(17) Credit for Income Tax Paid to Another State (UCA §59-10-1003)

If you are a Utah resident or part-year resident with income that is taxed by Utah and another state(s), the District of Columbia, or a possession of the United States, you may be entitled to a credit for income tax paid to the other state(s). Nonresidents do not qualify for this credit. Complete Schedule B to see if your income was taxed by both states.

You can only take this credit for individual income tax (i.e., you cannot take it for sales tax or local taxes). You may take this credit for taxes paid to another state by a pass-through entity only if the income is included on TC-40, line 9 (Utah taxable income).

Complete and attach form TC-40S, Credit for Income Tax Paid to Another State . If there are two or more states, calculate each state separately. Carry the sum of the credits from TC-40S, line 7 to TC-40A, Part 4, using code 17.

Do not use the state income tax withheld from form W-2 as the tax paid to the other state. You must complete and file the other state's return to determine the tax amount paid. You may have to provide additional information later to verify this credit.

Part-year residents rarely qualify for this credit. If you are domiciled in Utah for part of the year and domiciled in another state for part of the year, you may only claim credit on the portion of income:

taxable in Utah,

taxed also by the other state(s), and

included in "Column A - Utah" income on form TC-40B.

Part-year residents must prorate and enter the tax paid to the other state(s) on TC-40S, line 6. The credit only applies to tax paid on the part of your income (TC-40, line 1) taxed by both states.

Note: You may not carry forward or back any credit that is more than your tax liability.

Keep a signed copy of the other state's return and all related documents with your records.

FYI: Common Credit 17 Errors

Claiming the withholding amount on a W-2 as taxes paid to another state.

Claiming credit for taxes other than income tax.

Claiming the entire amount of tax paid to another state.

Part-year residents not prorating correctly on TC-40S.

(19) Live Organ Donation Expenses Credit (UCA §59-10-1015)

You may claim a credit up to $10,000 of qualified costs incurred for donating human bone marrow, or any part of an intestine, kidney, liver, lung, or pancreas for transplanting in another person. Qualified expenses include travel, lodging or a "lost wage" if the expense was not reimbursed, and the organ was donated by you, your spouse, or a dependent.

Note: You may carry forward for the next five years any credit that is more than your tax liability.

Complete form TC-40T, Live Organ Donation Expenses Credit . Do not send form TC-40T with your return. Keep the form and related documents with your records to provide the Tax Commission upon request.

(21) Renewable Residential Energy Systems Credit (UCA §59-10-1014)

This credit is for reasonable costs, including installation, of a residential energy system that supplies energy to a Utah residential unit. Additional residential energy systems or parts may be claimed in following years as long as the total amount claimed does not exceed certain limits. Contact the Governor’s Office of Energy Development for more information. If the residence is sold to a non-business entity before claiming the credit, you may irrevocably transfer the right to the credit to the new owner. The principal portion of the system's lease payments may qualify for the credit if the lessor irrevocably transfers the credit rights to the new owner.

Get form TC-40E, Renewable Residential and Commercial Energy Systems Tax Credits , from the Governor's Office of Energy Development with their certification stamp, verifying the credit is approved and showing the amount of the approved credit. Do not send form TC-40E with your return. Keep the form and all related documents with your records to provide the Tax Commission upon request.

You may not claim this credit if you are claiming the credit described in UCA §59-10-1029.

Note: You may carry forward for the next four years any credit that is more than your tax liability.

Note : The credit for residential solar power systems has expired effective 2023. Carryforwards are allowed through 2027.

For more information contact:

Governor's Office of Energy Development (OED) PO Box 144845 Salt Lake City, UT 84114 801-538-8682 energy.utah.gov/tax-credits/renewable-energy-systems-tax-credit

(25) Combat Related Death Credit (UCA §59-10-1027)

If you are filing a return on behalf of a military service member who died as a result of military service in a combat zone, you may claim a nonrefundable credit equal to the amount of your tax liability on the return attributable to the deceased service member.

To qualify for the credit, all of the following conditions must be met:

The military service member must have been in an active or reserve component of the United States Army, Navy, Air Force, Marine Corps, Coast Guard or Space Force;

The combat related death must have occurred on or after Jan. 1, 2010;

The death must have occurred while the military service member was serving in a combat zone, or be the result of a wound, disease, or injury incurred while serving in a combat zone; and

The service must have been on or after the date declared by the President of the United States by Executive Order as a combat zone, and on or before such designation is terminated by the President.

If the return is being filed by a single person (or married filing separately), the credit is equal to your tax liability shown on line 22. Enter this amount on TC-40A, Part 4, using code 25.

If the return is being filed as married filing jointly (deceased service member and spouse), use the following calculation to determine the allowable credit.

Calculation of Combat Related Death Credit for Joint Return Calculation Steps Amount Adjusted gross income on joint federal return 1 _________ Federal adjusted gross income of deceased military member 2 _________ Allocated percentage - divide line 2 by line 1 3 _________ Amount of tax liability from TC-40, line 22 4 _________ Combat Related Death Credit: Multiply line 3 by line 4 5 _________

Enter this amount on TC-40A, Part 4, using code 25.

Note: You may use a different method of allocating your tax liability if that method more accurately reflects the deceased service member's tax liability.

(27) Veteran Employment Credit (UCA §59-10-1031)

A nonrefundable credit is available to taxpayers who hire a qualified, recently deployed veteran.

A qualified, recently deployed veteran is a person who was mobilized to active federal military service in an active or reserve component of the United States Armed Forces, and received an honorable or general discharge within the two-year period before the employment begins.

To qualify for the credit, the qualified veteran must meet all of the following conditions:

received an honorable or general discharge within the two-year period before the employment begins;

was collecting or was eligible to collect unemployment benefits, or has exhausted their unemployment benefits within the last two years, under UC Title 35A, Chapter 4, Part 4, Benefits and Eligibility; and

work for the taxpayer for at least 35 hours per week for not less than 45 of the 52 weeks following the veteran’s employment start date.

The credit is claimed beginning in the year the 45 consecutive weeks in paragraph 3 above are met.

Calculate the credit as follows:

First Year Credit (count all months in the year the 45-week requirement is met): Calculation Steps Amount Number of months or partial months the veteran was employed in the first year 1 _________ Monthly credit allowable in first year 2 200 First year credit: Multiply line 1 by line 2 (maximum $2,400) 3 _________

Second Year Credit Calculation Steps Amount Number of months or partial months the veteran was employed in the 2nd year 4 _________ Monthly credit allowable in second year 5 400 Second year credit: Multiply line 4 by line 5 (maximum $4,800) 6 _________

We will not refund any credit greater than your tax due, but you may carry it forward to offset tax for up to five years.

If taking this credit, you must keep the following documentation and make it available to the Tax Commission upon request:

the veteran’s name, last known address, and taxpayer identification or Social Security number;

the start date of employment;

documentation establishing that the veteran was employed 45 out of the 52 weeks after the date of employment;

documentation from the veteran’s military service unit showing that the veteran was recently deployed; and

a signed statement from the Department of Workforce Services that the veteran was collecting, was eligible to collect, or exhausted their unemployment benefits within the last two years.

(28) Employing Persons Who Are Homeless Credit (UCA §59-10-1032)

You may claim a credit for hiring a homeless person if you receive a credit certificate from the Department of Workforce Services.

Do not send the certificate with your return. Keep the certificate and all related documents with your records.

Note: You may carry forward for the next five years any credit that is more than your tax liability.

For more information contact:

Department of Workforce Services 140 E 300 S PO Box 142503 Salt Lake City, UT 84111-2503 385-272-7798 [email protected] jobs.utah.gov/employer/business/htc.html

(63) Achieving a Better Life Experience (ABLE) Program Credit (UCA §59-10-1035)

You may claim a credit for 4.5 percent of the total qualified contributions you made to a Utah resident's Achieving a Better Life Experience Program account. You must make the contributions during the tax year and have an itemized statement from the qualified ABLE program.

You may not claim a credit for an amount of a contribution that is returned to you or an amount already deducted on your federal income tax return.