FAQS - Frequently Asked Questions

I have a question about:

General Questions

1. How can I notify the Department of Revenue of a change to my address, name, or social security number?

Send your change of address in a letter signed by you which provides both your old and new address, and the date the new address takes effect. Please mail your letter to our office at the following address:

Montana Department of Revenue
PO Box 5805
Helena, MT 59604-5805

Amended Returns

1. When am I required to amend my Montana income tax return?

You are required to file an amended Montana tax return when information on your original return was reported incorrectly or to report changes made to your federal income tax return, including changes made by the Internal Revenue Service. If the Internal Revenue Service changes your federal taxable income or if you voluntarily change your federal taxable income, you are required to file an amended Montana income tax return within 90 days of receiving notification of the change from the IRS or when you have filed your amended federal income tax return.

2. How do I amend my Montana return?

Instructions

You need to complete a new Montana individual income tax return that reflects the corrections that you are making to your previously filed return. For example, if you are amending 2006 tax year, use the 2006 income tax forms and complete a new tax return using the corrected information. Check the “Amended Return” box found in the upper left hand corner of the form. Attach copies of all schedules submitted with the original filing, even if none of the amounts previously reported have changed, and all new schedules that you are submitting for the first time.
Montana Form AMD is available to assist you in reconciling the adjustments on your Montana amended tax return with your original tax return, regardless of whether the original return was filed electronically or on paper. Although not required, we suggest that you complete and attach the Form AMD, or a similar reconciliation form outlining the changes, to your corrected tax return.
When filing multiple tax returns, please file the amended return separately from other returns.
You will receive a statement of account if you owe any additional tax, penalties or interest.
Late payment penalty and interest are assessed on any unpaid tax from the prescribed due date of the original return until the tax is paid.
If your amended return results in a refund, a check will be mailed to you at the address included on the tax return.

Specific Tax Year Information

The “Amended Return” box is not included on tax returns prior to tax year 2005. Instead, clearly write the words “Amended Return” on top of the first page of the return.
Please note that forms 2M and 2EZ cannot be used to amend years prior to tax year 2006. Also Form 2S cannot be used for tax years after 2005.
For tax years after 2006, please check the “NOL” box in the upper left hand corner of Form 2 if you are amending your tax return to carry back a net operating loss. This option is not available on earlier tax returns so we encourage you to check this box on the Form AMD and attach it to your tax return.

Other Notes

If you are amending a return for married individuals who filed “married filing separately on the same form,” complete a separate Form AMD for each spouse.
If you itemized deductions, you should recalculate to see if your income changes affect the limitations for medical expenses and miscellaneous itemized deductions.
An adjustment to income could also change the amount of your taxable social security benefits or the amount of the partial pension and annuity income exemption, or the standard deduction.
If amending to change your filing status from joint to married filing separately on the same form or on separate forms, attach a detailed breakdown showing the allocation of income and deductions between spouses.

3. How long do I have to amend my Montana income tax return?

You have 5 years from the original due date of the tax return to file an amended Montana income tax return and to correct any error's on your previous return.

4. The Internal Revenue Service (IRS) has adjusted my federal income tax return. What should I do for Montana?

If the Internal Revenue Service changes your federal taxable income or if you voluntarily change your federal taxable income, you are required to file an amended Montana income tax return within 90 days of receiving notification of the change from the IRS or when you have filed your amended federal income tax return.

If you do not notify us within 90 days of the change to your federal taxable income, we have five years from the date that the changes become final on your federal return to adjust your Montana income tax return to reflect the changes made on your federal income tax return.

5. I am amending my Montana income tax return to report additional income. Should I pay the additional tax with the amended return?

Yes, you should pay the tax. Interest is calculated from the original due date of the return being amended to the date of payment. Effective January 1, 2007, the interest rate for all unpaid individual income taxes changed from 12% annually to 8% annually. If you do not pay the full amount due with your amended return, we will send you a statement of account with penalties and interest computed to the due date of the notice.

If you file an amended return that reflects an increased tax liability, you may have the late payment penalty waived provided that you pay the tax and applicable interest in full. Simply check the “Amended Return” box on the tax return (write “Amended Return” on the face of your tax return for tax years prior to 2005). By doing so, you are requesting a waiver of the late payment penalty.

6. I am amending my Montana income tax return to increase/reduce my income. Are there any other changes that I need to make on my amended return?

If you itemized deductions, you should recalculate to see if the income changes affect the limitations for medical expenses, miscellaneous itemized deductions, and the standard deduction. An adjustment to income could also change the amount of your taxable social security benefits or the amount of the partial pension and annuity income exemption.

7. I am filing an amended return and expect a refund. Will I receive interest on the tax refunded to me?

Interest is attached to overpayments of tax at the same rate as charged on delinquent taxes.

Interest is not paid on a refund which results from a net operating loss carry back or carry forward, or a credit such as Form 2EC, Elderly Homeowner/Renter Credit.

Electronic Filing

1. How do I e-file my tax return?

There are more services available to electronically file your Montana taxes than ever before and some of them are free:

File your Montana tax form online through the Montana Department of Revenue - See if you qualify.
File your federal along with or without your state return using approved online tax software - many are at no cost to you; off-the-shelf tax preparation software; or through a tax preparer.

Some taxpayers may qualify to prepare and submit their taxes online for free through services of MontanaFreeFile.org, a partnership between Montana Department of Revenue, Montana Legal Services Assoc, Montana's Credit Unions, and Rural Dynamics, Inc.

2. Why should I e-file?

There's really no good excuse not to e-file. It's simple, secure, and convenient. Some benefits are:

Federal/state e-filing: Taxpayers can e-file their federal and state tax returns in one transmission to the IRS. The IRS forwards the state data to the Montana Department of Revenue.
More accurate returns: Tax software does the math and checks for errors or other missing information, making e-filed returns more accurate and reducing errors.
Quick electronic confirmation: You will receive a confirmation acknowledgement that your return was received.
Convenient: Online filing can be completed at any time of the day. When the taxpayer selects direct deposit of the refund, the refund goes directly into the bank account - a safer, more convenient transaction.
Faster refunds: Direct Deposit can speed refunds to e-filers. The average e-file refund is issued in 5 - 10 days.

3. If I filed electronically but did not receive my refund as quickly as I expected to, what might be the cause of the delay?

Certain conditions may delay refunds and may change refund amounts. This happens with both electronically filed returns as well as paper returns. Some possible reasons for refund delays:

The taxpayer or spouse owes delinquent Montana taxes.
The taxpayer or spouse owes a debt to another Montana state agency.
The estimated tax payments claimed on the return does not match the estimated tax payments recorded by the Department of Revenue.
The refund or balance due amount is adjusted when the electronic return is processed.
The return may need to be reviewed before the refund can be issued.

Energy Related Credits and Information

Please visit our website energycredit.mt.gov for additional information regarding energy-related tax relief options. The website includes information such as answers to frequently asked questions and links to other related sites.

Geothermal Systems Credit (Form ENRG-A)

1. What is a geothermal system?

A geothermal system is a system that transfers energy either from the ground, by way of a closed loop, or from ground water, by way of an open loop, for the purpose of heating or cooling a residential building.

2. What costs are included in the installation cost of my geothermal system?

Your installation costs include the cost of:

Trenching, well drilling, casing, and downhole heat exchangers
Piping, control devices, and pumps that move heat from the earth to heat or cool the building
Ground source or ground coupled heat pumps
Liquid-to-air heat exchanger, ductwork, and fans installed with a ground heat well that pumps heat from a well into a building
Design and labor

3. Who qualifies for the geothermal system credit?

For individuals, the geothermal system credit is available only to a Montana resident who completes the installation of a geothermal system in his or her principal dwelling or home. This credit is not available to a nonresident individual.

For businesses, the credit is available for installing a geothermal system while constructing a new Montana residence on “spec.”

Only one credit is allowed for a residence so the builder and owner of a new residence with a qualifying geothermal system cannot both claim the credit.

4. I am an individual and purchased a newly constructed home with a geothermal system installed by the builder. Am I entitled to the credit?

No. You did not directly pay the installation costs of the system so you are not entitled to the credit. In this situation, the builder is entitled to the credit.

5. I am a contractor or builder and have been hired to construct a residence. The plans include installing a geothermal system. Am I entitled to the credit?

No. The individual who hired you is bearing the additional costs associated with installing the system so they are entitled to the credit.

6. I am an individual purchasing a “spec house” that is still under construction. The current plans do not include a geothermal system. If I have the plans changed to include a system, can I claim the credit?

Yes. As long as you pay for the additional costs associated with installing the geothermal system, you are entitled to the credit.

7. I have installed a geothermal system in my principal home this year but am unable to claim the full amount of my geothermal credit because my income tax liability is less than $1,500. Can I carry my unused credit forward?

Yes. This credit is considered a nonrefundable carryover credit in which you can carry forward any unused portion for seven succeeding years. Your total credit reported in the year of installation and in subsequent years cannot exceed the maximum credit of $1,500.

8. My spouse and I both own our primary home. Can we both qualify for the geothermal system credit?

Yes, you can, but the credit is limited to $1,500 for the installation of a geothermal system in your principal home. You may allocate the credit between you and your spouse in any manner you choose.

9. I made repairs to my geothermal system this year. Am I entitled to claim this credit for the cost of my repairs?

No. Repairs to your existing geothermal system are not installation costs that entitle you to a geothermal system credit.

Alternative Energy Systems Credit (Form ENRG-B)

1. What is a recognized nonfossil form of energy generation?

A recognized nonfossil form of energy generation means

a system that captures energy or converts energy sources into usable sources, including electricity, by using:

solar energy, including passive solar systems
wind
solid waste
the decomposition of organic waste
geothermal
fuel cells that do not require hydrocarbon fuel; or

a system that produces electric power from biomass or solid wood wastes, or
a small system that uses water power by means of an impoundment that is not over 20 acres in surface area.

2. What is a low-emission wood or biomass combustion device?

A low-emission wood or biomass combustion device means a wood-burning appliance that:

is certified by the U.S. environmental protection agency pursuant to 40 CFR 60.53, or
uses wood pellets as its primary source of fuel.

3. Who qualifies for the alternative energy system credit?

The alternative energy system credit is available only to a Montana resident individual who installs a recognized nonfossil form of energy generation such as a wind generating system or installs a low-emission wood or biomass combustion device such as a wood or pellet burning stove in his or her principal dwelling or home. This credit is not available to a nonresident individual.

4. My spouse and I both own our primary home. Can we both qualify for the alternative energy system credit?

If you both paid for the installation of any one alternative energy system and the total cost was $1,000 or more, you can each claim up to $500. If the cost of the system was less than $1,000, you may allocate the credit between you and your spouse but neither spouse can claim more than $500.

5. I have installed a wood burning stove, which is one type of an alternative energy system, in my principal home this year but I am unable to claim the full amount of my alternative energy system credit because my income tax liability is less than $500. Can I carry my unused credit forward?

Yes. This credit is considered a nonrefundable carryover credit in which you can carry forward any unused portion for four succeeding years. Your total credit cannot exceed the maximum credit of $500 per taxpayer for each installation.

6. I made repairs to my alternative energy system this year. Am I entitled to claim this credit for the cost of my repairs?

No. Repairs to your existing alternative energy system are not installation costs that entitle you to an additional alternative energy system credit.

Energy Conservation Credit (Form ENRG-C)

1. What is the energy conservation installation credit?

Individual Montana residents can claim the credit for materials or equipment purchased and installed in a home or other building that either:

Reduces the waste or dissipation of energy; or
Reduces the amount of energy required to accomplish a given quantity of work.

2. What are some examples of a capital investment that I can make to a building that will qualify for the energy conservation credit?

In order to qualify for this credit your investment has to be made to the building itself. The following investments qualify for the energy conservation credit. This list is not intended to be an all inclusive list, but a guideline to assist you in determining if your investment qualifies.

Insulation of floors, walls, ceilings, and roofs in existing buildings
Insulation in the floors, walls, ceilings and roofs of a new building to the extent that it exceeds the current International Energy Conservation Code (IECC) with Montana amendments as adopted by the Montana Department of Labor and Industry
Insulation of heating and air conditioning pipes, insulation and sealing of heating, ventilation and air-conditioning (HVAC) ducts, and insulation of hot water heaters and tanks
Installing windows that result in a reduction of energy consumption
Installing storm doors and insulated exterior doors
Caulking and weather stripping of an existing structure
Installing devices which limit the flow of hot water from shower heads and lavatories
Installing heat recovery ventilators (HRV)
Installing glass fireplace doors on existing fireplaces
Installing exhaust fans to reduce air conditioning requirements
Replacing incandescent light fixtures with light fixtures of a more efficient type, such as those with electronic ballast and compact or linear fluorescent lamps and LED lights
Installing lighting controls with cutoff switches to permit the selective use of lights
Installing programmable thermostats
Installation of new domestic water heaters, heating or cooling systems, so long as the replacement has an efficiency rating higher than the prior system

3. What are some examples of investments that will NOT qualify for the energy conservation credit?

In general, any investment for repairs or maintenance to a building or residence will not qualify. The following are examples of expenditures that will NOT qualify for the energy conservation installation credit. This list is also not intended to be an all inclusive list, but a guideline to assist you in determining if your investment qualifies.

Installing carpet
Installing an insulated garage door in an unheated garage
Re-shingling or repairing a roof
Paint
Replacing or repairing a failing foundation
Siding with little or no insulation
Portable air conditioners
Space heaters
Household appliances such as ENERGY STAR washers, dryers and refrigerators

4. I am constructing a new home. Can I claim the energy conservation credit?

Yes you can. For new buildings, eligible investments are energy saving materials or systems that exceed the 2003 International Energy Conservation Code (IECC) requirements for Montana or established standards of construction. The extra costs associated with building a home above energy code minimum requirements are considered eligible investments for this tax credit.

The eligible investment for the energy conservation installation credit in new home construction will need to exceed the requirements of the 2003 IECC with Montana amendments. Your investment that only meets the requirements of the 2003 IECC is not an eligible investment for purposes of the tax credit. For example, if you install an ENERGY STAR qualified furnace in a new home construction project, the incremental cost of the qualified furnace and its installation cost that exceed the cost of a conventional furnace that is required by IECC will qualify for the tax credit.

5. How do I determine if a specific furnace or boiler model or cooling system qualifies as an eligible investment for the energy conservation installation credit?

In general, heating and cooling equipment that qualifies for the ENERGY STAR Program will meet specifications for the tax credit. Visit the ENERGY STAR website at energystar.gov to view a listing of ENERGY STAR qualified equipment from any manufacturer.

6. My spouse and I replaced the windows and doors in our home with those that will qualify us for the energy conservation installation credit. Are we both entitled to the energy conservation credit?

Yes, you are. To the extent that your energy conservation investment(s) exceeded $4,000 and both you and your spouse own the home, you are each entitled to a $500 energy conservation credit. If you are filing jointly with your spouse, you may claim $1,000 as your energy conservation credit. If you are filing separately with your spouse, each spouse’s energy conservation credit is limited to the smaller of $500 or 25% of his or her investment.

7. I qualify for the energy conservation credit this year but am unable to claim the full amount of my credit because my income tax liability is less than $500. Can I carry my unused credit forward?

No, you cannot. The energy conservation installation credit is considered a nonrefundable single year credit. You cannot carry forward any unused portion of your credit to succeeding tax years.

8. I ordered new windows and exterior doors in my home. I paid half of the total price in 2008 and the balance will be paid when the installation is completed in 2009. Does my down payment qualify for the energy conservation credit?

The energy conservation credit is available in tax year 2009 only (the year when the installation is completed). You can include the down payment expended in 2008 to determine the total cost of your expenditures for the credit.

9. I purchased and completed installation of an ENERGY STAR qualifying furnace during October 2008. Half of the total price of the furnace was paid for in 2008 and the other half in 2009. Do I qualify for the energy conservation for both 2008 and 2009?

The energy conservation credit is available in tax year 2008 only (the year when the installation is completed). You are not entitled to an additional energy conservation credit for the second half payment made in 2009.

10. I installed new windows and exterior doors in my home for a total expenditure of $10,000. My 25% energy conservation credit is $2,500. Am I eligible for the full $2,500 credit?

No, you are not. Your energy conservation credit is limited to the smaller of $500 or 25% of the qualified investments made during the tax year. You are not eligible to carry any of the excess credit forward to succeeding tax years.

11. What type of records should I retain to document my eligible expenses for the energy conservation credit?

You should retain invoices, sales agreements or receipts that document work done and the equipment installed. Your records should clearly state the equipment manufacturer, make and model number of any installed heating and cooling systems, windows, doors, light fixtures, thermostats, etc. that will determine the qualifications for this credit.

Estimated Tax Payments

1. Am I required to make estimated tax payments?

If you estimate that you will owe more than $500 in tax for 2009 (after subtracting your estimated withholding and credits), then you should make quarterly estimated payments.
Common examples of income sources that make quarterly estimated payments necessary are self-employment income, pensions, commissions, lump sum payments, capital gains, dividends, interest, alimony or other sources of income not subject to withholding.

2. Am I required to allocate estimated tax payments?

If you are filing married separately on the same form and have made estimated payments, you should allocate the payments claimed by each spouse so that both spouses either owe or are due a refund. You may wish to contact the department before filing your tax return to verify that estimated payments are applied to the intended spouse. Only estimated payments can be allocated.

3. When is underpayment interest assessed?

You may be assessed underpayment interest if you did not pay in advance at least 90% of your current year income tax liability (after applying your credits) or 100% of your prior year income tax liability (after applying your credits).

For more information about underpayment interest, see either Worksheet VII or Form EST-I.

Extensions

1. How can I get an extension of time to file my Montana income tax return?

1a) Individual Income Tax
You can be granted an extension of time for filing your Montana income tax return if you meet BOTH of the following requirements:

By April 15, 2009, you have applied to the Internal Revenue Service by filing federal Form 4868 for an automatic six-month extension to file your federal income tax return.
You have paid 90% of your current year Montana income tax liability or 100% of your prior year Montana income tax liability through your estimated tax payments, your withholding tax, or a combination of both your estimated and withholding tax payments.

Even though you have applied for an automatic six-month federal extension, this does not guarantee that you have a Montana extension unless you have met one of the requirements listed in number 2 above on or before April 15, 2009. You should examine and use the Montana EXT-08, which is the "Extension Payment Calculator" worksheet, in order to determine whether you have a Montana extension payment requirement. If you are required to make an extension payment, please use the tax payment voucher found on the Montana EXT Worksheet.

To further complete your Montana extension, you have to check the extension indicator box found on the bottom right hand corner of the Montana Form 2EZ, Form 2M or Form 2 and attach a copy of your federal Form 4868 "Application for Automatic Extension of Time to File U.S. individual Income Tax Return" to your Montana income tax return. Do not send a copy of your federal Form 4868 prior to filing your Montana income tax return.

If you do not follow the requirements stated above, your extension will be denied and late file penalty applied.

1b) Fiduciary (FID-3)

If you cannot file your return by the due date, Montana allows an automatic extension of time to file your return provided you meet both of the following requirements:

On or before the due date of your return, you have applied with the Internal Revenue Service for an extension of time to file your federal income tax return (federal extension Form 7004).

In no case will the extension be allowed for more than five months.

The estate or trust has paid by estimated tax payments, withholding tax, or a combination of estimated tax payments and withholding tax, 90% of the estate’s or trust’s current year tax liability or 100% of its previous year’s tax liability.

Form 7004 does not extend the time for payment of tax.

1c) Partnership (PR-1)

The Montana filing period is the same as your federal filing period. For a calendar year partnership, Form PR-1 is due on or before April 15 following the close of the taxable year. For a fiscal year partnership, Form PR-1 is due on or before the 15th day of the 4th month following the close of the tax year.

If you cannot file your return by the due date, Montana allows an automatic five month extension of time to file provided that on or before the due date of your return, you have applied with the Internal Revenue Service for an extension of time to file your federal income tax return (federal extension Form 7004).
In no case will the extension be allowed for more than five months.

1d) S corporation (CLT-4S)

The Montana filing period is the same as your federal filing period. For a calendar year S corporation, Form CLT-4S is due on or before the 15th day of the third month following the close of the taxable year. For a fiscal year S corporation, file Form CLT-4S by the 15th day of the third month following the close of the tax year.

If you cannot file your return by the due date, Montana allows an automatic six month extension of time to file provided that on or before the due date of your return, you have applied with the Internal Revenue Service for an extension of time to file your federal income tax return (federal extension Form 7004).
In no case will the extension be allowed for more than six months.

2. If I have an extension, will this extend the time to pay any tax due?

Any extension of time to file your Montana income tax return is NOT an extension of time to pay your income tax liability.

3. I am on active duty in the regular armed forces and currently serving in an area designated as a "combat zone" or "contingency operations." I am unable to file my Montana individual income tax return by April 15, 2009. Can I (and my spouse) obtain an extension to file my 2008 Montana individual income tax return?

Yes, you can. Montana state law conforms to federal law and references the Servicemembers Civil Relief Act, which provides for the same extension of time for you to file your Montana individual income tax return that is provided on your federal income tax return. If you are serving in a combat zone or in a contingency operation, you (and/or your spouse) can extend the filing of your Montana income tax return for up to 180 days after the time you (and/or your spouse) are discharged from service.

If you are filing your return that is allowed to be extended by the Servicemembers Civil Relief Act, clearly write on the top on Montana Form 2, using red ink, “combat zone or contingency operations extension,” and file your return within 180 days after being discharged from service. In addition, if you file within 180 days of being discharged you are not assessed any penalties or interest.

4. I am unable to file and pay the tax owed by the due date. Can I get a payment plan?

If you need to establish a payment plan with us, call us toll-free at (866) 859-2254 (in Helena, 444-6900) as soon as possible to discuss your options and make payment arrangements. You can also refer to the "Features" section on the front page of our website under "Request a Payment Plan" for more information.

Filing Deadlines

1. When do I need to file my individual income tax return?

The deadline for Montana Individual Income Tax returns is Tuesday, April 15, 2009.

If you operate on a fiscal year, your return has to be filed by the 15th day of the fourth month following the close of your fiscal year. If you file after this date, you may have to pay penalties and interest.

Filing Requirements

1. Am I required to file a Montana return?

If you are a resident, non-resident, or a part-year resident, you have to file a Montana individual income tax return when you have Montana source income and your federal gross income, excluding unemployment compensation, is equal to or greater than the corresponding amounts in the chart below:

IF your filing status is..	AND at the end of 2008 you were	THEN you should file a return if your federal gross income, excluding unemployment compensation was at least.
Single, or married filing separately	Under 65 65 or older	$3,730 $5,770
Head of Household	Under 65 65 or older	$5,420 $7,460
Married filing jointly with your spouse	Both under 65 One spouse 65 or older Both spouses 65 or older	$7,460 $9,500 $11,540
If you or your spouse is blind, you are entitled to an additional exemption. Increase your federal gross income by $2,140 to determine if you are required to file.

2. Do I have to file my state return when I don't have to file a federal return?

If you had Montana income tax withheld from your wages or you paid estimated tax, you should file a Montana return since this is the only way to get a refund.

3. How do I determine whether I am a full-year resident, non-resident, or a part-year resident of Montana for individual income tax purposes?

You are a resident of Montana for individual income tax purposes if you live in Montana or if you maintain a permanent home in Montana. You will not lose your Montana residency if you left the state temporarily with the intention of returning. Your Montana residency is lost, or changed, when you establish a permanent residence outside of Montana with no intention of returning. Unless there is a specific statutory exception, if you establish Montana residency for any other purpose, you are considered a Montana resident for income tax purposes.

You are a non-resident of Montana if you did not consider Montana your home at any time during the tax year even though you may have lived and worked in Montana temporarily during the tax year.

You are a part-year resident of Montana if you moved into or out of Montana during the tax year with the intention of establishing a permanent residence in your new state.

4. How do I determine my legal residence for Montana income tax purposes?

Your legal residence is generally the place where you maintain your most important family, social, economic, political and religious ties. It is a place where you remain when you are not called elsewhere for work or for other temporary purposes. Your change in residency is not accomplished by being away from home temporarily or for a prolonged period of time. Your change of residency is established when you leave your home and do not intend to return, but instead, intend to establish a new home elsewhere.

5. How do I file for a deceased person?

If you are responsible for the financial affairs of a deceased person, you'll have to file a return for that person if his or her income exceeds the minimum filing requirements.

You can file a joint return if the deceased person was married. This return has to include the income of the deceased spouse from the beginning of the year to the date of death in addition to the income of the surviving spouse for the entire year.

6. Can dependent children claim themselves on their Montana individual income tax return even though they are claimed as a dependent on their parents' federal and state income tax returns?

Yes. Montana law differs from federal law. Montana law permits dependents that are claimed on their parents' tax returns to claim themselves on their own tax return.

7. Where do I file my Montana individual income tax return?

Montana has two different addresses for individual income tax returns.

If a refund or no tax is due:

Montana Department of Revenue
PO Box 6577
Helena, MT 59604-6577

If tax is due:

Montana Department of Revenue
P O Box 6308
Helena, MT 59604-6308

8. A mental or physical disability prevents me from completing and submitting a tax return. What can I do?

If you have a filing obligation but are unable to complete and submit a tax return because of a mental or physical disability, the return can be prepared by your authorized agent, guardian or person responsible for your care and property.

Filing Status

1. What are Montana's filing status options, and which one should I use?

Below are the Montana filing status options. If more than one filing status applies to you, choose the one that will give you the lowest tax.

Single

You are considered single if, on December 31 of the tax year:

You were never married; or,
You were legally separated according to your state law under a final decree of divorce or separate maintenance; or,
You were widowed before January 1 of the tax year and you did not remarry during the tax year.

Married filing joint return

You and your spouse may file a joint return if:

You were married as of December 31 of the tax year, even if you did not live with your spouse at the end of the tax year; or,
Your spouse died during the tax year and you did not remarry during the tax year
You were married as of December 31 of the tax year and your spouse died in the following tax year before filing a tax return.

A husband and wife may file a joint return even if only one had income of if they did not live together all year. However, both spouses must sign the return, and both are responsible for any tax due on the joint return. This means that if one spouse does not pay the tax due, the other may have to.

A joint return cannot be filed if you and your spouse have different tax years.

Married filing separately on the same form

If both you and your spouse have income, you can file your Montana income tax return separately even if you filed your federal income tax return jointly. If you and your spouse file separately, you will each need to report your own adjusted gross income. You cannot arbitrarily assign income between the two of you.

Your income from salaries, wages, bonuses, commissions and other income from providing personal services either as an employee or an independent contractor should be reported by the spouse who earned it. Any other income that you earned from rents, royalties, dividends, etc. from property that is owned by only one spouse has to be reported by that spouse. If you and your spouse jointly own the property, any income could be split equally unless you and your spouse can show a different proportional ownership. When you file separately, both spouses should either claim the standard deduction or itemize their deductions.

Please note: Although submitted on the same form, married taxpayers electing to file using this status are submitting two returns. If both taxpayers are entitled to refunds, two separate checks or direct deposits will be issued. In the event both spouses owe additional tax, penalties or interest, we will mail separate Statements of Account (SOAs). If you are entitled to a refund and your spouse owes, and you file separate returns on the same form, you are directing the Department of Revenue to apply your refund to the amount owed by your spouse.

Married filing separately on separate forms

You should select this filing status if:

both of you have Montana source income and one spouse is a resident of Montana and the other spouse is a non-resident; or
you want to receive your own refund or pay your own tax

Married filing separately and spouse not filing

You can use this filing status when:

both you and your spouse are non-residents and one spouse has no Montana source income,
you are a resident and your spouse is a non-resident who has no Montana source income, or
another taxpayer claims your spouse as a dependent.

When you select this filing status, you cannot claim your spouse as an exemption on your return.

Head of Household

To use this filing status, you must qualify to file your federal income tax return using head of household.

Forms 1099-G

1. What is a Form 1099-G?

Form 1099-G is issued by the Department of Revenue as an informational statement for your records. It reports all income tax refunds the department issued to you in 2008. If we issued refunds for more than one tax year, they are reported on separate Form 1099-Gs.

2. I received a Form 1099-G from the Montana Department of Revenue. Why did I receive this form?

The Internal Revenue Service (IRS) requires government agencies to report certain payments made during the year because these payments may be taxable income for the recipients. The Department of Revenue must report on Form 1099-G any refund or overpayment credit amount issued during 2008 to individuals.

3. Why would I have to report my refund as income?

In computing itemized deductions on your federal income tax return, you are allowed to deduct state income taxes paid during the year. Most people deduct the amount of state income tax withheld, as shown on Form W-2, plus any Montana estimated tax payments made during the year. Since this deduction reduces federal taxable income, if any part of the state tax deducted on the federal return is later refunded, that amount has to be reported as taxable income for the year in which the refund is issued. The Federal Form 1040 instruction booklet or the Federal Publication 525 has a worksheet to help you determine the amount of your overpayment that will be taxable.

4. I did show an overpayment on my 2007 Montana return, but I had the money applied as a credit to 2008. Since I didn't receive a refund check, do I still have to report this amount as income?

A refund and a credit are different types of overpayments. We issued the refund to you, and based on your instructions, we applied the money to your estimated tax account. This does not change the fact that a refund was issued to you, so we are required to report the refund on Form 1099-G.

5. I claimed a Montana tax refund for 2007, but the Department of Revenue applied the money to a bill for another year. Do I still have to report this as income?

Montana law requires the Department to apply refunds or credits to outstanding bills. The application of funds doesn't change the fact that you claimed an overpayment for the year on your Montana return. Even though it was applied to an outstanding account, we are required to report it as a refund you were entitled to receive. If your refund was applied to income tax for another year, you should follow instructions for federal Schedule A, line 5, or call the Internal Revenue Service for assistance.

Form 1099-INT

1. Why did I receive a Form 1099-INT from the Department of Revenue?

The Department of Revenue issues this form to inform you of interest the department paid to you in 2008.

Injured Spouse

1. My spouse has a past child support obligation and I don't want my refund to be applied to this obligation. What can I do?

You are considered an "injured spouse" if you are a taxpayer who does not owe a child support obligation but who has reported income on a joint return with a taxpayer who does owe a past due child support obligation. If you do not want your refund to be applied against your spouse's child support obligation, you will have to file your Montana income tax return using filing status "married filing separate returns on separate forms". When filing under this filing status, each spouse claims his or her own income/loss, deductions, expenses and exemptions. If you have filed a joint return with your spouse and you are considered an "injured spouse" as defined above, you can amend your return from "married filing joint" to "married filing separate returns on separate forms". You have to make this request in writing within 30 days after you and/or your spouse have received notice of the offset and have been given the opportunity for a hearing on the offset.

2. Who is an "innocent spouse?"

Generally, when a joint tax return is filed, each spouse is equally liable for all the tax, penalties, and interest for the particular joint tax year. This means the entire amount of tax, penalties, and interest may be collected from either spouse, even if only spouse earned all of the income.

3. I received Innocent Spouse Relief from the IRS (Internal Revenue Service). Does Montana grant me the same relief?

Injured Spouse Relief is different than Innocent Spouse Relief. An injured spouse situation occurs when a joint refund was applied to the separate liability of a spouse, such as child support. Montana law does not have an innocent spouse provision.

Itemized Deductions

1. How do I report state and local general sales tax deduction?

2008 and 2007 Montana Form 2, Schedule III “Montana Itemized Deductions”: Any general and local sales tax paid in 2008 or 2007 may be deducted in addition to the federal income tax deduction. Please report this deduction on Line 11 “Other Deductible Taxes” instead of including it with the federal income tax deduction on line 7f (2008) or line 7e (2007). Please keep a copy of all supporting documents regarding the general or local sales tax paid.
2005 and 2006 Montana individual income tax returns: If applicable, you may file amended tax returns for the 2005 and/or 2006 tax year to reflect a deduction for state and local sales tax in addition to the federal income tax deduction.
None of the resort, accommodations or similar taxes collected in some communities in Montana qualifies as a general sales tax under the federal definitions and are not deductible.

2. How do I report qualified mortgage insurance premiums?

You may be able to take an itemized deduction for mortgage insurance premiums you paid after 2006 and before 2011. The mortgage insurance must be paid in connection with home acquisition debt and the mortgage insurance contract must have been issued after 2006.
If your federal adjusted gross income is more than $100,000 ($50,000 if married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. You cannot deduct any mortgage insurance premiums if your FAGI exceeds $109,000 ($54,500 if married filing separately). Please see the instructions for the Montana Qualified Mortgage Insurance Premiums Worksheet on page 14, Form 2M or page 34, Form 2.

Keeping Records

1. What records should I keep for Montana tax purposes, and how long should I keep them?

You must keep accurate records to verify items of income, deductions, and credits claimed on your income tax return or credit claim. Maintain records in a manner that will allow the Department to determine your correct tax liability if requested during an audit.
You should keep copies of your tax returns and credit claims as part of your tax records. Following is a listing of some of the tax records you should maintain:

Income: Keep Forms W-2 (wage statements), Forms 1099, financial statements, bank statements, contracts, and other documents to verify income reported on your returns.
Deductions and Credits: Keep cancelled checks, bank statements, paid invoices, sales receipts, Forms 1098 (mortgage interest), loan documents, financial and legal documents, mileage logs, appointment books, credit card statements, and other documents to verify expenses and credits claimed on your returns.

Generally, you must keep your tax records at least until the statute of limitations expires for the tax return on which any of those items of income, deductions, or credits appear. Usually this is five years from the due date of the return or the date filed, whichever is later.
If you underreport your income on your return by 25% or more, the statute of limitations is six years from the due date of the return or the date filed, whichever is later. If the return is false or fraudulent, or if no return is filed, there is no statute of limitations and departmental action can generally be brought at any time.
There are times you should keep records longer:

You should keep records relating to property you own as long as they are needed to figure the basis of the original or replacement property and for five years after a return is filed on which you report any sale or other disposition of the property.
Net operating losses may be carried forward up to 15 years. Taxable years which are otherwise closed to adjustment may be audited for purposes of determining the correctness of a net operating loss which is claimed as an offset against income in an open year. If you are claiming a net operating loss, you should keep your records for the year of the loss and all subsequent years in which you are claiming a net operating loss carry forward. These records should be kept until five years after the unextended due date or the date filed, whichever is later, of the return on which the last of the net operating loss carry forward was claimed.

Late-Filed Returns

1. Am I subject to interest or penalties if I don't file my Montana income tax return by the due date?

Late File Penalty: If you file your return after April 15, 2009, or October 15, 2009 if you have a valid extension, a late file penalty will be assessed if your combined total tax due is greater than your combined payments and offsets. The penalty is equal to the lesser of $50 or the amount of tax you owe.
Late Pay Penalty: If you have not paid 100% of your income tax liability by April 15, 2009, the late pay penalty is equal to 1.2% per month or fraction of a calendar month on the unpaid balance from April 15, 2009 until it is paid.
Interest: If you have not paid 100% of your income tax liability by April 15, 2009, you will have to pay 8% annual interest, computed daily on your unpaid balance. To calculate your interest, multiply the unpaid balance by .0002192 (.02192%) times the number of days after April 15, 2009 your payment is received.

2. Will I be penalized if I am due a refund, but my return is filed late?

If you file a late return for which you are receiving a refund, you will not be charged a late fee.

3. What happens if I'm late in filing my Montana individual income tax return?

If you file your return late, you will be assessed a late file penalty of $50 or the amount of tax due, whichever is less. If you file a late return for which you are receiving a refund, you will not be charged a late fee.

Mailing Addresses for Returns and/or Payments

If you are filing an individual income tax return that includes no payment or if you are due a refund, mail your return to :

Montana Department of Revenue
P O Box 6577
Helena, MT 59604-6577

If you are filing an individual income tax return that includes a payment, mail your return and check to:

Montana Department of Revenue
P O Box 6308
Helena, MT 59604-6308

If you are paying an estimated individual income tax payment, mail your coupon and payment to

Montana Department of Revenue
P O Box 6309
Helena, MT 59604-6309

Military Personnel (Active Duty and Retired)

1. I am a resident of Montana serving in the U.S. armed forces and stationed outside of Montana. Am I required to file a Montana income tax return?

As a Montana resident, you are required to file a Montana income tax return if you meet the requirements to file a federal income tax return. Your income from all sources is subject to Montana income tax to the same extent that it is taxable on your federal return.

2. I am a resident of Montana serving in the U.S. armed forces. My spouse is a nonresident of Montana. We file a joint federal return. How do we file our Montana income tax return?

Married couples filing a joint federal return, where one is a Montana resident and one is a non-resident, must file the Montana income tax return as "married filing separately." If both spouses have income reportable to Montana, then a return for each spouse must be filed. Otherwise, just the Montana resident must file a Montana return. Montana residents report their income from all sources to Montana regardless of what state or country the income is sourced from. This includes Montana military personnel stationed outside Montana.

3. I am in the military and I am temporarily stationed in Montana. My spouse and I are not Montana residents. My spouse earned wages working in Montana. Is my spouse required to file a Montana return and pay Montana taxes on that income?

Yes, if your spouse has Montana wages of $3,920 or more, your spouse is required to file a nonresident tax return (Montana Long Form 2) and pay taxes on the income earned in Montana.

4. I am a nonresident of Montana serving in the U.S. armed forces and stationed in Montana. Do I need to file a Montana income tax return?

You do not need to file a Montana income tax return unless you receive income from wages or salaries for civilian work (including work for the Federal Government, whether on or off of a military base), rents, ordinary and capital gains, or net income from a trade or business from Montana sources. The income that you receive would then be taxable and you would be required to file a return with Montana.

5. Does Montana provide any exemptions for military personnel, either on active duty or retired from the military?

If you are a Montana resident receiving military compensation and if this compensation is included in your federal adjusted gross income, you can subtract from your federal adjusted gross income your basic, special and incentive pay that you receive from:

serving on active duty as a member of the regular armed forces;
being a member of a reserve component of the armed forces or as a member of the National Guard serving on active duty in a "contingent operation" as it is defined in 10 USC 101, and
being a member of the National Guard and assigned to active service authorized by the President of the United States or the Secretary of Defense for a period of more than 30 consecutive days for the purpose of responding to a national emergency declared by the president and supported by federal funds.

Military compensation that you have received from the following activities cannot be subtracted from your federal adjusted gross income:

salaries that you received for annual training and weekend duty;
salaries that you have received for being a member of a reserve component of the armed forces that is not received under 10 USC 101; and
income you have received from retirement, retainer, equivalent pay, or allowances.

When you claim this exemption, you will need to attach verification of your military status (such as your military orders) to your income tax return.

6. I am on active duty in the regular armed forces and currently serving in an area designated as a "combat zone" or "contingency operations." I am unable to file my Montana individual income tax return by April 15, 2009. Can I (and my spouse) obtain an extension to file my 2008 Montana individual income tax return?

Yes, you can. Montana state law conforms to federal law and references the Servicemembers' Civil Relief Act, which provides for the same extension of time for you to file your Montana individual income tax return that is provided on your federal income tax return. If you are serving in a combat zone or in a contingency operation, you (and/or your spouse) can extend the filing of your Montana income tax return for up to 180 days after the time you (and/or your spouse) are discharged from service.

If you are filing your return that is allowed to be extended by the Servicemembers' Civil Relief Act, clearly write on the top on Montana Form 2, using red ink, "combat zone or contingency operations extension," and file your return within 180 days after being discharged from service. In addition, if you file within 180 days of being discharged you are not assessed any penalties or interest.

7. I am a nonresident of Montana who recently retired from the U.S. armed forces. I was stationed in Montana. Now I receive pension income from the federal government. Am I required to file a Montana income tax return?

Generally, if you retire from the U.S. armed forces and remain in the state that you were stationed in, you will become a resident of that state because you are no longer covered by the Federal Soldiers' and Sailors' Civil Relief Act. If you are considered a full-year or part-year resident of Montana, you will need to pay tax on the income you receive while you are a Montana resident.

8. I am a resident of Montana who retired from the U.S. armed forces during the current tax year. I was stationed outside of Montana. Is the pension income I receive taxable by Montana?

Generally, if you retire from the U.S. armed forces and remain in the state that you were stationed in, you will become a resident of that state because you are no longer covered by the Federal Soldiers' and Sailors' Civil Relief Act. The pension income that you receive is not taxable to Montana because you are no longer a resident of Montana. However, if you maintain your Montana residency, any income you receive while a resident is taxable to Montana.

9. I'm in the National Guard and I hear that there is deduction for travel expenses. Is this true?

Yes. For tax years 2003 and later, the federal government passed the law allowing the overnight travel expenses deduction. Because Montana follows the federal law, you are entitled to a deduction for travel expenses, subject to the 2% limitation of Montana adjusted gross income.

10. As a member of the National Guard, my life insurance premiums were reimbursed. Is this exempt from my taxable income?

If you are a Montana National Guard member or a Reservist who is serving on active duty in a contingency operation and you were reimbursed by the Montana Department of Military Affairs for the life insurance premiums that you paid for benefits under the service member's group life insurance program, you can deduct these reimbursements from your federal adjusted gross income in arriving at your Montana adjusted gross income.

The reimbursement that you received is considered a bonus and is included in taxable income for federal income tax purposes. In order to exempt this reimbursement, you will need to have paid the premiums and have served on active duty in a contingency operation after February 28, 2006. The maximum amount of premium reimbursement that you are entitled to exempt cannot exceed $17.50 a month for each month that you are on active duty in a contingency operation.

Native American Filers

1. Do I have to file a Montana income tax return if I live on the Indian reservation where I am enrolled and all of my income is earned on my enrolled reservation?

If you are a tribal member whose federal gross income meets the state filing requirements, you must file a Montana income tax return even though your income may be exempt. To exempt your income from Montana tax, you need to file Montana Form 2 and attach Montana Form IND, "Certification of Enrollment," signed by a representative of your governing tribe who can attest to your residency on your reservation along with your tribal enrollment number.

2. I live on an Indian reservation. Am I required to file a Montana income tax return?

If you are a Native American and your federal gross income meets the state filing requirements, you must file a Montana individual income tax return. The income would be exempt from Montana income tax if all of the following applies:

You are enrolled as a member of a federally-recognized American Indian tribe, and
You live on the Indian reservation where enrolled, and
You derive all of your income from sources on the Indian reservation where enrolled.

3. I live on the Indian reservation where I am enrolled, but earned some income from another Indian reservation or from another city in Montana. Is my income from the other reservation and location subject to Montana income tax?

Yes. The income earned on the other Indian reservation and off the reservation is subject to Montana income tax because the income is not from sources on the Indian reservation where you are an enrolled member.

4. I am married and live on my spouse's reservation. Is the income earned from my tribe exempt from tax?

No. You must live on your tribe's reservation and be an enrolled member for your income to be exempt from Montana taxation.

5. I live and work on an Indian reservation and am a descendent of the tribe. Am I exempt from filing a Montana income tax return?

No. You must be an enrolled member of the Indian tribe in addition to living and working on the Indian reservation.

6. What documents should I keep to support my income exclusion for income I earned on my tribe's reservation?

Keep documents that establish your tribal source of income and documents that establish your place of physical residence. You need the information if we examine the income inclusion for earned income from tribal reservation sources. If we contact you and request this information, you must respond in a timely manner even if you believe your income is exempt and/or you did not file a Montana income tax return.

7. I live on the reservation in a very rural area. I receive all of my mail at a post office box in the nearest town. Why can't I use my mailing address?

You may use your post office box address on the return. However, to qualify for the exemption you must have a physical address on your reservation.

Non-filers

1. What is a non-filer?

A non-filer is someone who missed filing a prior year(s) tax return, when it appears that he or she was required to file for Montana. Often these taxpayers have filed some years but are missing one or more years.

2. How does the Department of Revenue identify non-filers?

We have many ways to identify non-filers. We receive federal information, information from other state agencies, anonymous tips, and information from other areas of our department. We also perform periodic checks of our own taxpayer information to identify non-filers.

3. Is there a time limit on how far back the department can go to find years when I did not file?

There is no time limit on how far back the department can go to request a tax return.

4. I haven't filed income tax returns for several years. What should I do?

Obtain forms and file all late returns at this time. See the information about obtaining forms. If you have questions, write to us at:

Montana Department of Revenue
PO Box 5805
Helena, MT 59604-5805
e-mail us, or call us toll-free at (866) 859-2254 (in Helena,444-6900).

5. I received a letter stating I didn't file income tax returns for one or more years. What should I do?

Respond to the letter. If you did file the returns, send copies of them with your reply. If you didn't file, explain why not. On the back of the letter or on a separate sheet, list the type and amount of your income and the year you received it. If you have questions, write to us at:
Montana Department of Revenue
PO Box 5805
Helena, MT 59604-5805
e-mail us, or call us toll-free at (866) 859-2254 (in Helena,444-6900).

6. Some time ago I received letters from the Department of Revenue about not filing income tax returns. I didn't respond to these letters. Now the Department has attached my wages, other income, or taken my tax refunds. What can I do?

The Department issued an estimated assessment against you because you did not respond to our request to file your tax returns, and the assessment is now delinquent. You need to resolve the issue of your missing returns. You should contact the Department by calling us toll-free at (866) 859-2254 (in Helena,444-6900).

Part-year and Nonresidents

1. I am from a foreign country working in Montana. Do I have to file a Montana income tax return?

Yes. Nonresident aliens can claim tax treaty benefits on their Montana individual income tax return. Montana honors all tax treaties recognized by the United States.
Example: Liam Smith, a nonresident alien from Canada, earned $6,000 in wages while working in Montana in 2008. Since his wages exceed the $3,920 filing requirement, Mr. Smith would normally have to file a Montana return. However, the tax treaty with Canada exempts $5,000 of the wages, so only the remaining $1,000 is included in the gross income filing requirement. Mr. Smith is not required to file a Montana return.
For more information, see IRS Publication 901, U.S. Tax Treaties.

2. I am a nonresident of Montana and a partner in an entity that has a business interest in Montana. Am I required to file a Montana income tax return?

If an individual derives any gross income from Montana sources, and is required to file a federal income tax return, that individual also has a Montana filing requirement. This includes partners, limited liability company members, and small business corporation shareholders of any business that has derived gross income from Montana sources, regardless of whether that income is distributed from the business.

3. I am a nonresident of Montana. I sold real estate located in Montana. Do I have to report the sale of this property to Montana?

Yes, any gain or loss from the sale of real estate located in Montana must be reported to Montana regardless of the owner's state of residence. For more information, see our publication Transferring Real Estate.

Penalties and Interest

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1. Am I subject to interest or penalties if I don't file my Montana income tax return by the due date?

Late File Penalty: If you file your return after April 15, 2009, or October 15, 2009 if you have a valid extension, a late file penalty will be assessed if your combined total tax due is greater than your combined payments and offsets. The penalty is equal to the lesser of $50 or the amount of tax you owe.
Late Pay Penalty: If you have not paid 100% of your income tax liability by April 15, 2009, the late pay penalty is equal to 1.2% per month or fraction of a calendar month on the unpaid balance from April 15, 2009 until it is paid.
Interest: If you have not paid 100% of your income tax liability by April 15, 2009, you will have to pay 8% annual interest, computed daily on your unpaid balance. To calculate your interest, multiply the unpaid balance by .0002192 (.02192%) times the number of days after April 15, 2009 your payment is received.

2. When is underpayment interest assessed?

Pensions, Annuities and Retirement Income

1. I moved to Montana after retiring in another state. Is my pension from that state taxable in Montana?

Montana taxes all pension and retirement income received while residing in Montana to the extent it is taxable on the federal return. Tier I and Tier II Railroad Retirement benefits are 100% exempt from Montana income tax.

2. How is my pension taxed?

Montana allows a pension and annuity income exemption of up to $3,600 per individual, if certain income limitations are met. Early distributions from an IRA do not qualify for this exemption. Complete Worksheet IV-Partial Pension and Annuity Income Exemption to determine your exclusion.

3. How much of my social security benefits is taxable by Montana?

Your social security benefits taxable to Montana may be different from what is taxable federally. You will need to complete Worksheet VIII-Taxable Social Security Benefits to determine your Montana taxable social security.

Power of Attorney

1. My return is prepared by a tax professional. If the department has any questions concerning my return, can I give you authorization to talk to my tax professional about my tax return?

Yes you can. We have included a place on your return for you to authorize this. Place an "X" in the box marked "yes" next to our heading, "May the DOR discuss this return with your tax preparer?" It appears at the bottom of all forms near the signature block on the return. If you check this box, you are authorizing Department of Revenue employees to discuss the tax return itself with the accountant/preparer. Any other issues, such as outstanding tax liabilities, cannot be discussed without a completed POA form.

2. My return is being audited and I want my tax professional to handle the audit. How can I give you authorization to talk to my tax professional about my tax return?

Power of Attorney (Form POA), Authorization to Disclose Tax Information, is used by taxpayers to either change a Power of Attorney status or provide written authorization to a representative. A disclosure authorized by this form may take place by telephone, letter, facsimile, e-mail or a personal visit.

If tax matters and tax periods are not specified, the form will not be in effect.

Form POA

Reciprocity

1. What is reciprocity, and which states have reciprocity with Montana ?

Montana currently has a reciprocity agreement with North Dakota. The agreement states, in general, that residents of these states will be taxed on personal service income (salaries, wages, commissions, and fees earned by an employee) by their home state. This agreement does not extend to other types of income earned in these states.

2. How do I file if I have earned wages in North Dakota and I am a Montana resident?

Montana has a reciprocity agreement with North Dakota that exempts a Montana resident who earns wages in North Dakota from paying North Dakota income tax on these wages. However, this agreement does not extend to other types of income earned in North Dakota and you may have to file an income tax return and pay an income tax to North Dakota on this other income.

If you are earning wages in North Dakota and you are a Montana resident, you can be exempt from North Dakota withholding tax on these wages. Complete North Dakota Form NDW-R and submit it to your North Dakota employer to be exempt from North Dakota withholding. You can get this form from your employer, from the Office of State Tax Commissioner, State Capitol, Bismarck, ND 58505, or visit their web site at by clicking here.

3. I am a North Dakota resident earning wages in Montana. How do I file a Montana income tax return?

Montana has a reciprocity agreement with North Dakota that exempts a North Dakota resident who earns wages in Montana from paying Montana income tax on these wages. However, this agreement does not extend to other types of income earned in Montana and you may have to file an income tax return and pay an income tax to the State of Montana on this other income.

If you are earning wages in Montana and you are a North Dakota resident, you can be exempt from Montana withholding on these wages. To be exempt from Montana withholding, complete Montana Form NR-2 annually, submit it to your employer and provide a copy to the Montana Department of Revenue. You can get this form from your employer, from the Montana Department of Revenue, PO Box 5805, Helena, MT 59604-5805, or you can download our form on the Downloadable Forms page.

If your Montana employer has withheld Montana income tax from your wages and you wish to get a refund for it, you should file a Montana income tax return Form 2, attaching Montana Form NR-1, North Dakota Reciprocal Affidavit, along with a copy of your North Dakota income tax return and mail these to the Montana Department of Revenue by April 15, 2009.

Refund Information

1. How can I check on my refund?

You can check the status of your refund online at Where's My Refund? You can also check the status by calling toll free 1-866-859-2254 or 444-6900 in Helena.

Senior Citizens

1. What is the Montana elderly homeowner/renter credit (Form 2EC) and how can I determine if the credit is available to me?

The Montana elderly homeowner/renter credit is a property tax relief program that provides you with a refundable credit if you are age 62 or older, have resided in Montana for more than nine months during the tax year, occupied a Montana residence for a total of six months or more during the year, and your gross household income is less than $45,000. Now available, if you will not be filing an individual income tax return, you can file your Form 2EC online for free. Form 2EC is also available here.

2. Is all of my interest income taxable to Montana?

There is a partial interest exemption for taxpayers age 65 or older.

If you are single and age 65 or older at the end of the calendar year, you can exempt up to $800 of the interest income that you reported in your federal adjusted gross income.

If you are married and filing a joint return with your spouse and at least one of you is age 65 or older at the end of the calendar year, you can exempt up to $1,600 of the interest income that you reported in your federal adjusted gross income.

If you are married and filing your return separately and are age 65 or older at the end of the calendar year, you can exempt up to $800 of the interest income that you reported in your federal adjusted gross income. Please note, however, that you are not allowed to exclude interest income earned by and reported by your spouse.

For the purpose of this exclusion, when you determine the amount of your interest income, you should consider distributions commonly called dividends on deposits or share accounts as interest. Under no circumstances can you exclude more interest income than what you have reported in your federal adjusted gross income. Interest income from state, county, or municipal bonds from other states is not eligible for this exclusion.

3. Are my retirement benefits taxable?

If you have reported taxable retirement income on the federal income tax return, you may be entitled to a partial exemption of this income.

Tier I and Tier II Railroad Retirement benefits are 100% exempt from Montana taxation.

Early distributions which required payment of the federal 10% additional tax do not qualify for the retirement income exclusion.

Also, if you have received a disability pension, which is identified as a distribution code 3 on your 1099R, you should use the disability pension worksheet Montana Form DS-1 to determine your deduction instead of the retirement income exclusion.
If you have received retirement income other than Tier II Railroad benefits, you should complete Worksheet IV – Partial Pension and Annuity Income Exemption in order to determine the amount of your exclusion. Your retirement exclusion is limited to the lesser of your taxable retirement income that you received or $3,600, as long as your federal adjusted gross income is $30,000 or less and you are filing a single return, filing jointly with your spouse and only one of you have taxable retirement income, or you are filing as head of household.

If both you and your spouse have received retirement income and you are filing jointly with your spouse, and your federal adjusted gross income is $30,000 or less, you both can exclude the lesser of your taxable retirement income that you receive personally or $3,600 each for a maximum of $7,200. If you are filing your income tax return separately on the same form, or on separate forms, the lesser of your retirement income or $3,600 applies separately to both spouses as long as your separately state federal adjusted gross income is $30,000 or less.

4. How much of my social security benefits is considered taxable by Montana?

Your social security benefits taxable to Montana may be different from the amount of taxable benefits that you reported for federal income tax purposes. You should determine your Montana taxable social security benefits by completing Worksheet VIII – Taxable Social Security Benefits.

After you have completed your social security worksheet and you find that your social security benefits taxable to Montana are greater than those you reported on the federal return, enter the difference as an addition on the Montana income tax return.

If your social security benefits taxable to Montana are less than those that you reported on the federal return, enter the difference as a subtraction to federal adjusted gross income on the Montana income tax return.

5. I receive railroad retirement benefits. Are my benefits taxable to Montana?

If your railroad retirement benefits are from Tier I or Tier II benefits, they are 100% exempt from Montana taxation.

6. Are the Medicare premiums deducted from my social security deductible on the Montana individual income tax return?

lf you are receiving social security and if you have Medicare premiums deducted from your benefits, these premiums are described as "Medicare premium payments made in 2008" in the description box on Federal Form SSA-1099. These premium payments, known as Medicare B, are 100% deductible as an itemized deduction on Schedule III, Montana itemized deductions, line 5. The basic monthly premium in 2008 was $96.40.

Tax Rates

1.What is my tax rate?

2008 Tax Brackets and Table
If your taxable income on Form 2, line 45 is:
More than	But not mor than	Then your tax is	Less:
$0	$2,600	1% of your taxable income
$2,600	$4,600	2% of your taxable income	($26)
$4,600	$7,000	3% of your taxable income	($72)
$7,000	$9,500	4% of your taxable income	($142)
$9,500	$12,200	5% of your taxable income	($237)
$12,200	$15,600	6% of your taxable income	($359)
$15,600 or more		6.9% of your taxable income	($499)
For example: Taxable income $6,800 X .03(3%) = $204. $204 minus $72 = $132 tax

Treasury Offset Program

1. I received a notice that my federal refund had been taken to pay a past-due state tax debt. How can you take my federal refund?

The Treasury Offset Program (TOP) is a debt collection program administrated by Financial Management Services (FMS), a bureau of the U.S. Department of the Treasury. This program allows state agencies to submit past-due, legally enforceable state income tax obligations to FMS for offset of the debtor's individual federal income tax refund.

2. What is an "offset"?

An offset is when the federal refund you would have received is used to pay all or a portion of a state income tax debt. If the full amount is not collected in one year, future offsets may be done to satisfy your tax debt.

3. Can an offset be avoided?

Yes. You must pay the balance of all tax liabilities listed in the notice, including ongoing interest, within the 60-day time frame provided in the Notice of Intent to Offset letter. If the debt is not resolved within 60 days, the department will send our request to FMS to offset any federal income tax refund you may be entitled to receive.

4. Why can the U.S. government collect money to pay debts owed to a state?

Under the federal Debt Collection Improvement Act (DCIA), an administrative offset such as the Treasury Offset Program (TOP) may be used to collect debts, including funds or property owed by a person to a state (including any past-due support being enforced by the state).

The Secretary of the Treasury has the discretion to collect debts owed to states by offset; it is not mandatory. A reciprocal agreement must be made with the state and the appropriate state official must request the offset. Montana has signed an agreement with the Treasury Department to participate in TOP.

5. Are there fees related to this debt collection program?

The debt collection program is administrated by Financial Management Services (FMS), a bureau of the U.S. Department of the Treasury. FMS charges an administrative fee of $22 to administer the program.

Wage and Tax Statements (W-2)

1. I did not receive a Form W-2, wage and tax statement, from my employer. What should I do to file my income tax return?

Your employer is required to issue a Form W-2, wage and tax statement, by January 31st if you earned wages during the previous calendar year. If you haven't received your W-2 form by that date, request your employer to reissue it.

You still must file your tax return on time even if you do not receive your Form W-2. If you do not receive the missing information in time to file, you may complete Federal Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified. Keep a copy of the completed Form 4852 for your records.

If you receive a Form W-2 or W-2C (corrected form) after you have filed your return using Form 4852, and the information differs from what you reported on your return, you must amend your return by filing an amended Montana Individual Income Tax Return and amend your federal return.

2. I forgot to attach W-2 forms to the income tax return I filed. I reported the wages and Montana income tax withheld from those W-2 forms on my tax return. What should I do?

If you reported on your income tax return the wages and Montana tax withheld from those W-2 forms, please keep the W-2 forms until we ask for them. If we need the W-2 forms to process your tax return, we will send a written request for them.

3. After I filed my income tax return I received another Form W-2. I did not report the wages and Montana withholding tax from this W-2 on my tax return. What should I do?

If you did not report the wages or Montana withholding tax from the W-2 form on the tax return you filed, you'll need to file an amended Montana income tax return and attach copies of all your W-2 forms to the amended return you file.

Which Form to File?

1. Who may file Form 2EZ?

To use Montana Form 2EZ, you should be able to answer "Yes" to ALL of the following:

I was a Montana resident for all of 2008.
I am filing from a Montana address.
I am filing as a single person or as a married person filing a joint return.
My spouse and I were under 65 and not blind at the end of 2008.
I am claiming no dependents.
My only income is from wages, interest, dividends, or unemployment.
I am claiming the standard deduction rather than itemizing deductions.
I have not made estimated income tax payments.

2. Who may file Form 2M?

To use Montana Form 2M, you should be able to answer "Yes" to ALL of the following:

I was a Montana resident for all of 2008.
I am filing from a Montana address.
I am filing as a single person, head of household, or as a married person filing a joint return.
My only income is from wages, interest, dividends, capital gains, IRA distributions, pensions, annuities, unemployment, or social security benefits.
The only tax credit that I am claiming is one (or more) of the following:

Elderly Homeowner/Renter Credit (Form 2EC)
College Contribution Credit (Form CC)
Energy Conservation Installation Credit (Form ENRG-C)
Elderly Care Credit (Form ECC)
Alternative Energy System Credit (Form ENRG-B)

3. Who may file Form 2EC?

The Montana elderly homeowner/renter credit is a property tax relief program that provides the taxpayer with a refundable credit, or direct refund, even if they are not required to file a Montana income tax return.

To qualify for this credit you will have to answer "Yes" to all four of the following statements:

I was age 62 or older as of December 31, 2008.
I occupied a Montana residence as an owner or renter for a total of six months or more during 2008.
I resided in Montana for nine months or more during 2008.
My gross household income was less than $45,000 in 2008.

If you think you may have been eligible for the tax credit in prior years and did not take advantage of it, you are still allowed to file for the credit for up to five years from the original due date of the Form 2EC.

4. Who may file Long Form 2?

You will have to use the Montana Long Form (Form 2) if you answer "Yes" to ANY of the following:

I was a Montana resident for only part of 2008.
I am a nonresident of Montana with Montana source income.
I am married, filing a separate Montana income tax return.
My income includes income from a business or profession, farm or ranch, rents, royalties, partnerships, S corporation or trust.
My tax year ended on a date other than December 31, 2008.