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Show fTEtS I Choose Actual or Standard Mileage STUDENTS OFTEN CONFUSED BY RESIDENCY TAX RULES Many taxpayers who use their cars for business purposes find that deciphering deci-phering federal tax laws about deducting de-ducting auto expenses is like following follow-ing a complicated road map. Taxpayers who itemize their deductions may be able to deduct all or part of their auto expenses such as gas. oil. lease or rental fees, insurance, tolls and repairs if they are employ ee business expenses. Commuting expenses ex-penses going to and from work are not deductible. Taxpayers must choose the method they intend to use when calculating the deduction-either "actual expenses" " or the "standard mileage rate." This election must be made in the first year the car was placed in service for business. busi-ness. If the standard mileage rate is used for the first year the car is placed in service, either method of calculating the deduction can be used in later years. Special depreciation rules apply ap-ply if the actual expense method is used in later vears. How ever, if actual expenses are deducted for the first year, the actual expense method of calculating the deduction must be used in subsequent years. In order to use the standard mileage rate, taxpayers must ( 1 ) own the car. (2) not use the car for hire, such as a taxi and (3) not operate a fleet of cars. The standard mileage rate for tax year 1990 is 26 cents per mile. The ceiling for using the standard mileage rate for only the first 15.000 miles has been rescinded for tax year 1990. Report deductible expenses for business use of a car on IRS Form 2106, "Employee Business Expenses." Ex-penses." For a more complete explanation of these rules, including topics such as leased cars, depreciation, partial business busi-ness use and recordkeeping, order Publication 917. Business Use of a Car. from the IRS. Call toll-free 1-800-TAX-FORM (1-800-829-3676) to order a free copy. You can also call Tele-Tax. IRS recorded tax information, informa-tion, toll-free at 1-800-829-4477 and ask for topic 310. Standard Mileage Rate Up! 26(t 25.5t 24o) 22.5$ 214 h For more information get IRS Publication 917 Business Use of a Car. psi 1 7W f-.w r X y H- y - X Whether you're an out-of-state student attending school in Utah, or a Utahn going to school in another state, filing state income tax returns can be confusing. The Utah State Tax Commission says that, in short, a nonresident student stu-dent attending school out-of-state generally must file two returns: a resident resi-dent income tax return on income received from his home state, and a nonresident return to pay income tax on income from the state in which he attends school. If income tax is required to be paid by the student to his resident state on income earned in Utah, a credit for taxes paid to Utah should be claimed on the student's resident state return. Examples: A resident of California is attending at-tending school at the University of Utah and has earns $2,000 for the year through a part-time job. During the summer break, the student returns to California and earns $5,000. In addition, addi-tion, the student receives a scholarship scholar-ship from the University of Utah. The federal taxable portion of that scholarship is $3,000 for that year. This equals a total net income of $10,000, half earned in Utah, and half earned in California. In this case, the student would be required to file a Utah TC-40NR non-resident return. He would pay Utah income tax on the $2,000 earned in Utah and on the $3,000 taxable portion of the scholarship. Utah tax on a non-resident return is calculated based on the total income of $10,000 with the student stu-dent receiving the applicable deductions deduc-tions and exemptions. The Utah portion por-tion of the total tax is then calculated based on the proportion of Utah income to the total income of the student. In this case, one-half of the total tax as calculated would be Utah tax due. To avoid double taxation, the stu dent would also claim the Utah tax paid as a credit (for taxes paid to another state) on his California return. A resident of California is attending at-tending school at the University of Utah and has a part-time job earning $2,000 a year. During the summer break, she returns to California and earns $5,000. In addition, she receives a scholarship from an Elks lodge in California, the federal taxable tax-able portion of that scholarship is $3,000 for that year. The $3,000 taxable tax-able portion of the scholarship would not be taxed by Utah since it was not received from a Utah source. The Utah income of this student, then, is one-fifth of her net income of $10,000. In this case, she would be required to file a Utah TC-40NR nonresident non-resident return and pay Utah tax on the $2,00C med in Utah. The student stu-dent woulo. receive the applicable deductions and exemptions and the Utah portion of his total tax would then be calculated based on the portion of Utah income to the total income of the student In this case, one-fifth of the total tax as calculated calcu-lated would be Utah tax due. Again, to avoid double taxation, the student would also claim the Utah tax paid as a credit on his California return. Conversely, the same questions arise regarding Utah residents who attend non-Utah schools. Utah residents who attend non-Utah non-Utah schools do not lose their residency solely by being absent from Utah. They are still required to file resident income tax returns in Utah on all income regardless of source. If an income tax is required to be paid to another state on income received while attending a non-Utah school, a credit on the Utah return is allowed for the tax paid to the other state. Examples: A resident of Utah is attending school at the University of Arizona and has a part-time job earning $2,000 a year. During the summer break she returns to Utah and earns $5,000. In addition, she receives a scholarship from the University of Arizona. The federal taxable portion of that scholarship is $1,500 for that year. In this case, the student would be required to file a Utah TC-40 resident resi-dent return and pay Utah tax on the $8,500. If she filed and paid taxes to Arizona on the $2,000 wages and the $ 1 ,500 taxable portion of the scholarship, scholar-ship, she would be allowed a credit on her Utah return for taxes paid to Arizona. A resident of Utah is attending school at the University of Arizona and has a part-time job earning $2,000 a year. During the summer break, he returns to Utah and earns $5,000. In addition, he receives a scholarship from a Utah Elks lodge and the federal taxable portion of that scholarship is $1,500 for that year. In this case, the student would be required re-quired to file a Utah TC-40 resident return and pay Utah tax on the $8,500. If he filed and paid taxes to Arizona on the $2,000 wages earned in Arizona, he would be allowed a credit on the hisher Utah return for taxes paid to Arizona. In this case the $1,500 taxable portion of the scholar- ship would not be taxed by Arizona because it was received by the student from a non-Arizona source. A resident of Utah is attending school at the University of Nevada at Las Vegas and has a part-time job earning $2,000 a year. During the summer break he returns to Utah and earns $5,000. He would be required to file a Utah TC-40 resident return and pay Utah tax on the $7,000. In this case, the student would not be allowed al-lowed a credit for taxes paid to Nevada because Nevada does not have a state income tax. 1986 1987 1988 1989 1990 Tax Guide for Students A publication which guides high school and college students through the federal tax system is available from the Internal Revenue Service. Publication 4. Student's Guide to Federal Income Tax. gives students an overview of the tax system, w ith a brief background of taxation and an explanation of withholding of income tax. types of income and expenses, and filing requirements for students. A free copy of Publication 4 may be ordered bv calling 1-800-TAX-FORM (1-800-829-3676). Choose the Quality Carpet Cleaning that best suits your needs. COUCHES $19.95 DRY STEAM UPHOLSTERY CLEANING! 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