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 pay taxes to both Montana and another state. If the other state is North Dakota, please see the reciprocal agreement instruction below. If you have part-year Montana return, you will need to manually enter the information asked within the Montana state program.
If you claimed the foreign tax credit on your federal tax return, you can claim this credit for foreign taxes on your Montana tax return only if you have unused federal credit that is not eligible to be carried back or carried forward to another tax year. If you are a resident and have unused federal credit or paid tax to another state, please refer to the state instruction booklet here.
What if I worked in North Dakota (Reciprocal state)?
Wages for work performed in North Dakota – If you worked in North Dakota while a resident of Montana, the wages you receive for this work are not taxable by North Dakota under the income tax reciprocity agreement between the two states. If this applies to you, but your employer withheld North Dakota income tax from the wages, you should not take this credit. Instead, file a North Dakota individual income tax return to obtain a refund of the North Dakota income tax withheld. Review our Knowledgebase Article for complete filing instructions for the resident and nonresident returns.
Part-year residents
If you are a part-year resident and you paid an income tax to another state or country on income that is also taxable to Montana and if you included it as Montana source income on Form 2, Schedule IV, lines 1 through 16, you may be entitled to a credit against your Montana part-year resident income tax liability for these income taxes paid to another state or country. If you claimed the foreign tax credit on your federal tax return, you can claim this credit for foreign taxes on your Montana tax return only if you have unused federal credit that is not eligible to be carried back or carried forward to another tax year. If you are a part-year resident and have unused federal credit or paid tax to another state, please refer to the state instruction booklet here.