Utah Income Tax Withholding Requirements

Learn the rules for Utah state income tax withholding for employees.

If your small business has employees working in Utah, you’ll need to withhold and pay Utah income tax on their salaries. This is in addition to having to withhold federal income tax for those same employees. Here are the basic rules on Utah state income tax withholding for employees.

Get an EIN

With rare exceptions, if your small business has employees working in the United States, you’ll need a federal employer identification number (EIN). You should obtain your EIN as soon as possible and, in any case, before hiring your first employee. EINs are issued by the IRS and you’ll need one first and foremost for federal taxes. In addition, some states use the federal EIN for state withholding tax purposes. Other states (like Utah) issue separate state tax ID numbers. You’ll need an EIN to register with the state (see below). You can apply for an EIN at the IRS website (www.irs.gov). Generally, if you apply online, you will receive your EIN immediately.

Register With the Utah State Tax Commission

Apart from your EIN, you also need to establish a Utah withholding tax account with the Utah State Tax Commission(USTC). You set up your account by registering your business with the USTC either online or on paper. To register online, go to the OneStop Online Business Registration website. To register on paper, use Form TC-69, Utah State Business and Tax Registration. You can download forms from the Forms & Publications section of the USTC website. You can submit Form TC-60 by regular mail or by fax. There is no fee to register your business with the USTC as an employer.

Have New Employees Complete a Federal Tax Form

All new employees for your business must complete a federal Form W-4. Unlike many other states, Utah does not have a separate state equivalent to Form W-4, but instead relies on the federal form. You can download blank Forms W-4 from irs.gov. Clearly label W-4s used for state tax withholding as your state withholding form. You should keep the completed forms on file at your business and update them as necessary.

Make Scheduled Withholding Tax Payments

In Utah, there are three possible payment schedules for withholding taxes: monthly, quarterly, or annually. The annual payment schedule only applies in special cases of household employees. Your payment schedule ultimately will depend on the average amount you hold from employee wages over time. The more you withhold, the more frequently you’ll need to make withholding tax payments.

The exact threshold dollar amounts for the different payment schedules, as well as other rules, may change over time so you should check with the USTC at least once a year for the latest information.

Here are the due dates for payments:

  • Monthly: Payments are due by the last day of the month following the month in which the tax was withheld.
  • Quarterly: Payments are due by the last day of the month following the end of the quarter.
  • Annually: Payment is due by January 31st.

If the payment is due on a Saturday, Sunday, or holiday, the due date is extended to the next business day.

About 30 days after you’ve registered with the USTC, you’ll be sent a withholding packet. You’ll also be sent a new packet each subsequent year. The packet contains the forms you’ll need to pay taxes and file returns. Depending on your paying frequency, your packet will contain the following forms:

  • Annual: One annual return (TC-941) with payment coupon (TC-941PC) and one annual reconciliation form (TC-941R)
  • Quarterly: Four quarterly returns (TC-941) with payment coupons (TC-941PC) and one annual reconciliation form (TC-941R)
  • Monthly: Four quarterly returns (TC-941), 12 monthly payment coupons (TC-941PC) and one annual reconciliation form (TC-941R)

You may pay on paper or electronically. To pay on paper, use a payment coupon (Form TC-941PC) along with a payment check. To pay electronically, either use electronic funds transfer (EFT) or the Utah Taxpayer Access Point(TAP; also known as TaxExpress) website. You can find more information about EFT in USTC Publication 43,Electronic Funds Transfer, which you can download from the Forms & Publications section of the USTC website.

The USTC provides several different methods for calculating how much tax to withhold. For more information on this and other withholding tax matters, check the latest version of USTC Publication 14, Withholding Tax Guide. You can download a copy of the guide from the Forms & Publications section of the USTC website. The guide is updated at least every few years.

File Scheduled Withholding Tax Returns

Apart from making scheduled tax payments, businesses also must file withholding tax returns. The returns reconcile the tax paid for the quarter with the tax withheld for the quarter. (Employers on an annual payment schedule file a single, annual return.) You can file returns online or by regular mail. To file online, use the TAP website. To file on paper, use Form TC-941. You can download blank forms download from the Forms & Publications section of the USTC website.

Quarterly returns are due on or before the last day of the month following the close of the quarter:

  • first quarter (January – March) is due April 30
  • second quarter (April – June) is due July 31
  • third quarter (July – September) is due October 31, and
  • fourth quarter (October – December) is due January 31.

You must file returns even if you have not withheld any taxes. In those cases, the return should show zeroes.

As with tax payments, if a return due date falls on a Saturday, Sunday, or holiday, the due date is extended to the next business day.

Complete an Annual Reconciliation

After the end of the year, you must file an annual reconciliation with the USTC that summarizes the employee taxes you’ve withheld during the year. The annual reconciliation is in addition to providing each of your employees with a federal form W-2 summarizing the employee’s withholding for the year. You can file electronically or on paper. Large employers are required to file electronically. To file electronically, use the TAP website. To file on paper, use Form TC-941R, Utah Annual Withholding Reconciliation. If filing on paper, you should attach copies of the federal W-2s sent to all of your employees working in Utah to the reconciliation form and submit by mail.

Annual reconciliations filed electronically are due by March 31. Annual reconciliations filed by mail are due by the last day of February.

Independent Contractors are Not Employees

This article is only concerned with employees, not independent contractors. In general, different tax rules apply to independent contractors.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including withholding taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of Utah employee withholding taxes. The USTC makes clear that employers are liable for the tax required to be withheld, and that if an employer fails to pay any of the withheld taxes, the state may put a lien on all of the employer’s business assets and property. Avoid possible penalties for making mistakes by checking both the IRS and USTC websites for the latest information. You also can get more information about small business tax issues in other articles here on Nolo.

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