Utah Withholding laws & HR compliance analysis

Utah Withholding: What you need to know

Employers must withhold Utah income tax on wages paid to any employee for any work done in Utah, and to Utah resident employees for work done outside the state (employers may reduce the Utah tax by any tax withheld by the other state).
Employers are to determine the amount to withhold based on the employee’s federal W-4 form and the Utah income tax withholding schedules or tables.
Any employer that does business in Utah 60 days or less during a calendar year may be exempt from the withholding requirements. The employer must receive advance approval from the Tax Commission certifying that the employer is exempt. Thereafter, if the employer does business exceeding 60 days, the employer is liable for all taxes due during the period of exemption. An additional 30-day exemption may be granted if good cause is shown.
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“Wages” are defined as payments or compensation for services performed by an employee for an employer. This includes payments in a form other than cash. Utah defines wages by the Internal Revenue Code, Section 3401(a).
Utah bases withholding tax on wages subject to federal withholding but without subtracting for personal or other withholding allowances claimed on federal Form W-4.
Wages excluded from withholding include certain interstate transportation wages and those earned by qualifying spouses of military personnel.
Interstate transportation wages. Wages of interstate transportation employees are taxable only in the state of their residency. To qualify, the employee must:
1. Work for an interstate railroad, interstate motor carrier, or interstate private carrier;
2. Be a nonresident of Utah;
3. Have regularly assigned duties in more than one state;

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