Montana Reciprocity with North Dakota
Montana has an income tax reciprocity agreement with North Dakota. This agreement allows residents of one state to be exempt from wage withholding and individual income tax on compensation received for work performed in the other state.
Key Features of the Reciprocity Agreement
- Exemption from Withholding: If you are a resident of Montana working in North Dakota (or vice versa), you may be exempt from Montana income tax withholding on your wages.
- Nonresident Filing: To claim the exemption, you must mark the box for “Nonresident” on your Montana Form 2.
- North Dakota Reciprocity Box: You must also mark the box for “North Dakota Reciprocity” on Form 2 to indicate your eligibility.
- Employer Notification: If you do not want your employer to withhold Montana income tax, you must claim the North Dakota reciprocity exemption on Montana Form MW-4 and provide it to your employer.
How to Claim the Exemption
To claim the reciprocity exemption on your Montana tax return (Form 2):
- Complete the personal information section at the top of page 1.
- Mark the box for “Nonresident.”
- Mark the box for “North Dakota Reciprocity.”
- Complete lines 1 through 3 and line 7 on page 1.
- Report your Montana wage withholding on lines 11a and 11, then enter this amount on lines 21, 23, and 26.
Note: This reciprocity applies only to wage income earned while working in the other state. It does not extend to other types of income such as self-employment, investment, or business income.
Source:
Montana Individual Income Tax Return Form 2 Instructions
Form EST-I
Montana Employer and Information Agent Guide
Disclaimer: Always verify details with official forms and instructions from the Federal or State Department of Revenue.