Montana and North Dakota have a reciprocal agreement. If a Montana resident works or performs personal/professional services for an employer in North Dakota, the wages are treated as being earned in Montana and the Montana resident does not have to file a North Dakota income tax return reporting those wages.
If your employer withheld North Dakota withholdings in error, you will need to file a nonresident North Dakota return to receive a refund of those withholdings. You cannot claim a credit for taxes paid to another state on your return.
The credit for taxes paid to another state is automatically calculated in your account when you add a Nonresident return to your already created Resident Montana return. If you qualify for the reciprocal agreement, you will need to remove the automatic calculation. To do so, log into your account and create the Montana Resident return. Then, after completing your Montana return entries, create a return for the nonresident reciprocal state.
Add the North Dakota Nonresident Return to the account and complete the Basic Information in the state return. Select 'No School District' from the drop-down menu for the school if you did not maintain a home in North Dakota. Continue through the state return. To claim exempt from future withholdings, file form NDW-R with your employer.
NOTE: The nonresident returns will refund all or most of the taxes withheld. The resident return will calculate an amount owed (usually).