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In the realms of taxation and interstate agreements, the Montana NR-1 Form plays a critical role, especially for those navigating income taxes between Montana and North Dakota. This form embodies the reciprocity agreement between the two states, aimed at easing the tax obligations for residents working across state lines. Specifically, it allows North Dakota residents who earn income in Montana for personal or professional services to exclude this income from Montana state income tax, under certain conditions. This exemption, however, requires the meticulous completion and submission of the NR-1 Form alongside a copy of the individual's North Dakota tax return and, if applicable, their Montana W-2 forms. This reciprocal arrangement, established for the taxable years starting from January 1, 1974, underscores the cooperative spirit between the two states, enabling eligible residents to benefit from not being double-taxed on the same income. The form further delves into the specification about income tax withholdings, directing those who have had Montana income tax withheld despite the exemption to file a Montana return, attaching the NR-1 Form and relevant income documentation. Moreover, it accommodates joint affidavits for spouses, enhancing the convenience for couples meeting the eligibility criteria. The procedure for accessing, completing, and submitting the NR-1 Form, coupled with the options for individuals whose income was not subjected to Montana tax withholding, reflects a well-considered system designed to facilitate taxpayer compliance while respecting interstate agreements.

Montana Nr 1 Example

 

 

 

MONTANA

 

 

 

NR-1

2008 North Dakota Reciprocal Affidavit

 

Rev. 10-08

 

 

 

Instructions on back

 

 

 

 

 

 

Last Name (if joint affidavit, use first names and

First Name and Middle Initial

Social Security Number

middle initials of both)

 

 

 

 

 

 

 

Spouse’s Last Name

Spouse’s First Name and Middle Initial

Spouse’s Social Security Number

 

 

 

 

Address

City

State

Zip Code

 

 

 

 

1.Enter the taxable year for which this affidavit is being submitted ______________________

2.Enter the amount of income that you received for personal or professional services rendered within Montana for which you claim exemption. $ ________________

3.

Was Montana income tax withheld on the income reported on line 2?

yes ____

no ____

4.

Was federal income tax withheld on the income reported on line 2?

yes ____

no ____

5.Enter the name and address of the employer(s) from whom you received the income reported on line 2. If you need additional space, use the reverse side of this form.

Name

Address

6.

Was North Dakota your state of legal residence during the entire taxable year for which this affidavit is being submitted?

 

yes ___

no ____

 

7.

Are you filing a North Dakota individual income tax return reporting the income entered on line 2 above?

 

yes ___

no ____

If yes, submit a copy of the North Dakota tax return with your Montana tax return.

8.

Were you ever a Montana resident?

 

yes ___

no ____

If yes, enter the last year you were a Montana resident ______________

I swear that the above information is true and correct to the best of my knowledge and is submitted in good faith.

__________________________________

____________

_________________________________

___________

Your Signature is required

Date

Spouse’s Signature

Date

 

 

(if filing a joint affidavit, both must sign)

 

When you file your Montana income tax return electronically, you represent that you have retained all documents required as a tax record and that you will provide a copy to the department upon request.

129

Form NR-1 Instructions

General. Pursuant to statutory authority, Montana and North Dakota have entered into a reciprocal income tax agreement whereby neither state will tax residents of the other state on certain income from personal services. Effective with taxable years beginning on and after January 1, 1975, compensation which is subjected to withholding of federal income tax and is received for personal or professional services rendered within Montana by an individual who is a North Dakota resident is excluded from Montana adjusted gross income to the extent the income is reported on the individual’s North Dakota individual income tax return. In order to claim this exclusion you must file Affidavit Form NR-1.

This form, Montana W-2’s and a copy of your North Dakota tax return must be submitted with your Montana tax return.

Joint Affidavit. If both husband and wife have income which is exempt under the Montana - North Dakota Reciprocity Agreement, they may file a joint affidavit on Form NR-1.

Montana Income Tax Withheld. If Montana income tax has been withheld by your employer, you must file a Montana individual income tax return (Form 2), even

though your income is exempt under the reciprocity agreement. In such case, Affidavit Form NR-1, Montana wage and tax statements and a copy of your North Dakota income tax return must be attached to your Montana tax return. Also, you may want to file Form NR-2 (Employee’s Certificate of North Dakota Residence) with your employer to stop withholding of Montana Income Tax on such exempt income.

Montana Income Tax Not Withheld. If Montana income tax was not withheld by your employer and all of your Montana income is excludible under the reciprocity agreement, you do not have to file a Montana income tax return (Form 2). In this case, you need file only Affidavit Form NR-1.

How to Obtain Forms. Call (406) 444-6900 or mail requests to the Montana Department of Revenue, P.O. Box 5805, Helena, MT 59604-5805. In addition you may download our forms and instructions at

mt.gov/revenue/.

If you have questions, please call us toll free at (866) 859-2254 (in Helena, 444-6900). *

Form Specs

Fact Detail
Purpose The form is used to claim exemption from Montana state income tax for residents of North Dakota for personal or professional services rendered within Montana.
Governing Laws Montana and North Dakota reciprocal income tax agreement, effective since January 1, 1975.
Eligibility North Dakota residents who received income for personal or professional services in Montana, and the income is subjected to federal income tax withholding.
Filing Requirement Must file Form NR-1 along with Montana W-2's and a copy of the North Dakota tax return with the Montana tax return, if Montana state income was withheld.
Joint Affidavit Option If both spouses have exempt income under the reciprocity agreement, they may file a joint affidavit using Form NR-1.
Obtaining the Form Available by calling the Montana Department of Revenue, mailing requests, or downloading from the Montana Department of Revenue website.

Guide to Filling Out Montana Nr 1

Filing the Montana NR-1 form is an essential step for North Dakota residents who have earned income from personal or professional services in Montana and are looking to claim exemption under the reciprocal income tax agreement between Montana and North Dakota. This agreement allows certain incomes to go untaxed by the non-resident's state, simplifying the tax obligations for eligible individuals. It's important to accurately complete and submit this form to ensure compliance with both states’ tax laws. Below are the steps to fill out the form correctly.

  1. Write down your last name. If this is a joint affidavit, include the first names and middle initials of both individuals involved.
  2. Enter your first name and middle initial.
  3. Provide your Social Security Number.
  4. For a joint affidavit, enter the spouse's last name.
  5. Enter the spouse's first name and middle initial.
  6. Provide the spouse’s Social Security Number.
  7. Write your complete address, including city, state, and zip code.
  8. In the space provided, enter the taxable year for which this affidavit is being submitted.
  9. Enter the amount of income received for personal or professional services rendered within Montana for which you claim exemption.
  10. Indicate whether Montana income tax was withheld on the reported income with a "yes" or "no."
  11. Indicate if federal income tax was withheld on the reported income with a "yes" or "no."
  12. Enter the name and address of the employer(s) from whom you received the relevant income. If more space is needed, use the reverse side of the form.
  13. Answer whether North Dakota was your state of legal residence during the entire taxable year with a "yes" or "no."
  14. State if you are filing a North Dakota individual income tax return reporting the income entered previously with a "yes" or "no." If "yes," remember to attach a copy of your North Dakota tax return with your Montana tax return.
  15. Indicate if you were ever a Montana resident with a "yes" or "no." If "yes," provide the last year you were a Montana resident.
  16. Sign and date the form. If filing a joint affidavit, both individuals must sign and date.

Once completed, the form, alongside the necessary documentation, should be submitted with your Montana tax return, if Montana income tax was withheld. If no Montana income tax was withheld and all your Montana income is excludible under the reciprocity agreement, only the affidavit Form NR-1 needs to be filed. Pay close attention to detail and ensure all information is accurate before submission to avoid any potential issues with your tax return.

Your Questions, Answered

  1. What is the Montana NR-1 Form?

    The Montana NR-1 Form, also known as the North Dakota Reciprocal Affidavit, is a document used by residents of North Dakota who earn income from personal or professional services in Montana. It allows these individuals to claim an exemption from Montana state income tax on this income, under the reciprocal income tax agreement between Montana and North Dakota. This form, along with the appropriate tax returns and any Montana W-2 forms, must be filed to claim the exemption for income earned for taxable years beginning on and after January 1, 1975.

  2. Who needs to file Form NR-1?

    Any North Dakota resident who receives income for personal or professional services rendered in Montana and wishes to claim an exemption from Montana state income tax under the Montana-North Dakota Reciprocity Agreement must file Form NR-1. If both spouses receive income that is exempt under the agreement, they may file a joint affidavit on Form NR-1. Additionally, if Montana income tax was withheld from your wages, you need to file this form along with your Montana income tax return to potentially receive a refund of the withheld taxes.

  3. What information is required on Form NR-1?

    Form NR-1 requires detailed information, including the taxpayer's name(s), social security number(s), address, the taxable year for which the affidavit is submitted, the amount of income earned in Montana, whether Montana or federal income tax was withheld on this income, employer details, residence information, and a declaration that the provided information is accurate. A signature from the taxpayer (and spouse if filing a joint affidavit) is also mandatory.

  4. What should I do if Montana income tax was withheld from my wages?

    If Montana income tax has been withheld from your wages, you are required to file a Montana individual income tax return (Form 2) even if your income is exempt under the reciprocity agreement. Along with Form 2, you should attach Form NR-1, your Montana wage and tax statements, and a copy of your North Dakota income tax return. It’s advisable to file Form NR-2 with your employer to stop future withholding of Montana income tax on exempt income.

  5. Do I need to file a Montana income tax return if no Montana income tax was withheld and my income is excludable?

    No, if Montana income tax was not withheld by your employer and all your income from Montana is excludable under the reciprocity agreement, you do not need to file a Montana income tax return (Form 2). You only need to file Form NR-1 to claim the income exemption.

  6. How can I obtain Form NR-1?

    You can obtain Form NR-1 by calling the Montana Department of Revenue at (406) 444-6900, or by mailing a request to P.O. Box 5805, Helena, MT 59604-5805. Additionally, forms and instructions are available for download on the Montana Department of Revenue's website. For further questions, you can call toll-free at (866) 859-2254 (or 444-6900 in Helena).

Common mistakes

People often make mistakes when filling out the Montana NR-1 form. These errors can lead to delays or issues with their affidavit submission. Here are six common mistakes to avoid:

  1. Not entering the taxable year for which the affidavit is being submitted correctly. This might seem simple, but mixing up the year can invalidate the entire affidavit.

  2. Failing to accurately report the amount of income received for personal or professional services rendered within Montana. This figure should match the one reported to North Dakota for the same service.

  3. Omitting employer name and address for the income reported. This detail is crucial for verification purposes.

  4. Incorrectly stating residency status. Individuals must be North Dakota residents throughout the entire taxable year to qualify for the exemption.

  5. Neglecting to attach a copy of the North Dakota tax return when required. This document is necessary if you're reporting income on line 2 above and claiming the reciprocal income tax agreement benefits.

  6. Signing the form without ensuring all the information is true, correct, and complete. Both signatures are required for a joint affidavit, highlighting the mutual responsibility for the form’s accuracy.

Besides these specific errors, there are general mistakes to be mindful of:

  • Not retaining documents required as tax records when filing electronically. If the department requests these documents later, individuals need to provide them to avoid penalties.

  • Forgetting to update personal information such as address changes. This oversight can lead to miscommunication or lost documents from the revenue department.

  • Skipping instructions on the back of the form. These instructions offer crucial information on how to correctly fill out and submit the form, including whom to contact for help or where to send completed forms.

By paying close attention to these details, individuals can avoid the common pitfalls that delay or complicate the processing of their Montana NR-1 form.

Documents used along the form

Understanding the various forms and documents related to tax documentation can be a vital step in ensuring compliance and making informed decisions when managing one’s finances. For those handling the Montana NR-1 form, particularly under the reciprocity agreement between Montana and North Dakota, it is beneficial to be aware of additional forms and documents that are commonly used in conjunction. This knowledge can streamline the process, improve fiscal management, and prevent possible errors or oversights.

  • Form 2 - Montana Individual Income Tax Return: This is the primary form used by residents or part-time residents of Montana to report their income and calculate their state tax liability. If Montana income tax was withheld despite the reciprocity agreement, taxpayers must file this form alongside the NR-1 affidavit and attach a copy of their North Dakota tax return. It helps ensure that they receive proper credit for taxes paid and can claim any applicable refunds.
  • Form NR-2 - Employee's Certificate of North Dakota Residence: To prevent withholding of Montana income tax on income exempt under the Montana-North Dakota reciprocity agreement, North Dakota residents working in Montana can file Form NR-2 with their employers. This document certifies their residency and eligibility for income exclusion, helping to streamline their tax reporting obligations.
  • Montana W-2 Statements: These are wage and tax statements that report the amount of federal, state, and other taxes withheld from an employee’s paycheck throughout the year. When filing the NR-1 form, individuals must include their Montana W-2s to provide evidence of the income earned and taxes withheld in Montana, supporting their eligibility for the reciprocity agreement benefits.
  • Copy of North Dakota Tax Return: Including a copy of the North Dakota tax return with the Montana NR-1 form and the Montana tax return (if applicable) is crucial. It verifies the income reported in North Dakota and supports the claim for exclusion of that income on the Montana tax return under the reciprocity agreement. This documentation is essential for transparency and compliance purposes.

For individuals navigating the intricacies of inter-state taxation between Montana and North Dakota, understanding and properly utilizing these documents in conjunction with the Montana NR-1 form is key. This ensures that all tax obligations are met accurately and efficiently, potentially avoiding the pitfalls of misreporting or underreporting income. Whether you are dealing with withheld income taxes, verifying residency status, or reporting income across states, being prepared with the correct forms and documentation is indispensable.

Similar forms

The Montana NR-1 form shares similarities with the Non-Resident Tax Form often found in other states, which is designed for individuals who earned income in a state where they do not reside. Both forms require non-residents to report income earned within the state and provide personal identifying information, including social security numbers and addresses. These forms aim to ensure that income earned within the state is reported correctly, even if the taxpayer resides in another state, thus preventing tax evasion and ensuring compliance with state tax laws.

Another document resembling the Montana NR-1 form is the Employee's Withholding Allowance Certificate (W-4 form) that employees fill out to indicate their tax situations to their employers. Like the NR-1, the W-4 includes personal information and details that affect tax withholding, such as marital status and number of allowances claimed. Both forms are critical for determining the correct amount of taxes to withhold from an individual’s income, ensuring that they comply with tax obligations while avoiding over- or under-withholding.

The Declaration of Taxpayer form for requesting an extension on filing taxes also parallels the Montana NR-1 form in function. This form, much like the NR-1, is used to communicate specific circumstances regarding an individual’s filing status to the tax authorities. It requires detailed personal information and an explanation of the taxpayer's situation, akin to how the NR-1 requires detailed information about residency and income earned out-of-state to determine tax liabilities and exemptions accurately.

Lastly, the Reciprocal Agreement between states on taxation is a legal document similar to the Montana NR-1 form in purpose and necessity. While the NR-1 form is an affidavit for individuals asserting their right to a tax exemption under a reciprocal agreement, the agreement itself lays out the terms under which such exemptions are granted. Both serve to facilitate tax compliance across state lines, ensure accurate state income tax reporting, and define the tax obligations of residents working in reciprocal agreement states.

Dos and Don'ts

When completing the Montana NR-1 form, it's essential to adhere to specific guidelines to ensure accuracy and compliance. Below are lists of things you should and shouldn't do during the process:

Things You Should Do:

  • Thoroughly read the instructions on the back of the form before starting to fill it out, to understand the requirements and exemptions.
  • Ensure the taxable year for which the affidavit is being submitted is correctly entered.
  • Provide accurate amounts of income received for personal or professional services rendered within Montana, for which you claim exemption.
  • Answer honestly about whether Montana or federal income tax was withheld on the reported income.
  • Include the name and address of the employer(s) from whom you received the exempt income accurately. Use the reverse side of the form if additional space is needed.
  • If filing a joint affidavit, make sure both you and your spouse sign the form.

Things You Shouldn't Do:

  • Do not leave any required fields blank. If a question does not apply to you, ensure you mark it with "N/A" or "No," as appropriate.
  • Avoid guessing the information. If you're unsure, take the time to verify the details to ensure they are correct.
  • Do not submit the form without reviewing it for errors or omissions. Take a second look to catch any mistakes that could delay processing.
  • Don't forget to attach a copy of your North Dakota tax return if you are reporting income on line 2 that is exempt.
  • Do not provide false information. It's crucial to be honest and provide information that is true to the best of your knowledge.
  • Avoid waiting until the last minute to submit your form. Ensure you send it in well before the deadline to avoid any late submission penalties.

Misconceptions

Misconceptions about the Montana NR-1 form can easily lead to confusion. Understanding the purpose and requirements of this form is essential for those who work in Montana but are residents of North Dakota. Here is a list of common misconceptions and their clarifications:

  • It’s only for North Dakota residents. While it primarily serves North Dakota residents working in Montana, it’s part of a reciprocal agreement between the two states. Thus, it specifically caters to these individuals to avoid dual state income taxation on the same income.

  • You don’t need it if Montana taxes weren’t withheld. Even if Montana income tax was not withheld from your wages, filing the NR-1 form is integral to claim the income exclusion under the reciprocity agreement. This helps ensure compliance with both states’ tax laws.

  • Filing NR-1 is optional. If you're eligible under the reciprocity agreement, filing this form is not optional but required to legally exclude your Montana-earned income from Montana state income tax.

  • A joint affidavit is not possible. Contrary to this belief, if both spouses have eligible income under the agreement, they can indeed file a joint affidavit on the NR-1 form, streamlining the process for couples.

  • It’s a one-time submission. The NR-1 form must be submitted for each taxable year where applicable income is earned in Montana. It’s not a one-and-done submission but an annual requirement for continuous eligibility.

  • It replaces filing a Montana state tax return. If Montana income tax was withheld by your employer, you must still file a Montana state tax return (Form 2), attaching the NR-1 form along with other documents. The NR-1 form complements but does not replace the state tax return in such cases.

  • Employers handle everything. While employers can assist in the process, such as stopping the withholding of Montana income tax by filing Form NR-2, the responsibility to file the NR-1 affidavit falls on the individual employee.

  • Any Montana income is covered. The reciprocity agreement and thus the NR-1 form only cover personal or professional services income. Other types of income earned in Montana by North Dakota residents may still be subject to Montana state tax.

  • The process is complicated. While dealing with state tax requirements can seem daunting, the NR-1 form comes with instructions that simplify the submission process. Understanding these guidelines can demystify the procedure and make compliance straightforward.

Understanding these key points about the Montana NR-1 form ensures that eligible individuals can take full advantage of the Montana-North Dakota reciprocal income tax agreement, thereby avoiding unnecessary taxation while remaining compliant with both states’ tax regulations.

Key takeaways

Filling out the Montana NR-1 form is crucial for North Dakota residents who work in Montana and wish to claim exemption from Montana state income tax on earnings from personal or professional services. Here are nine key takeaways on how to fill out and use this form:

  • Eligibility is defined by residency: Before filling out the Montana NR-1 form, ensure that you were a legal resident of North Dakota for the entire taxable year for which you're submitting the affidavit.
  • Joint affidavits are possible: If both you and your spouse earned exempt income under the Montana-North Dakota Reciprocity Agreement, you can file a joint affidavit using this form.
  • Income must be reported for exemption: Enter the amount of income earned in Montana for personal or professional services that you're claiming an exemption from Montana state income tax.
  • Documentation is key: Along with the Montana NR-1 form, you must submit Montana W-2 forms and a copy of your North Dakota income tax return with your Montana income tax return, when applicable.
  • Addressing withheld taxes: If Montana income tax was withheld from your paycheck, you are required to file a Montana individual income tax return (Form 2), even though your income may be exempt under the reciprocity agreement. Don't forget to attach the NR-1 form and necessary tax documents.
  • If no Montana tax was withheld: Conversely, if no Montana state income tax was withheld and all your Montana income is excludible under the agreement, filing the Montana income tax return (Form 2) isn't needed. Just the NR-1 form is sufficient.
  • Stopping future withholdings: To stop future Montana income tax withholdings on exempt income, consider filing Form NR-2 (Employee’s Certificate of North Dakota Residence) with your employer.
  • Swearing to truthfulness: By signing the NR-1 form, you and your spouse (if filing jointly) are declaring under oath that the information provided is true and correct to the best of your knowledge.
  • Getting forms and further help: Forms and instructions are available for downloading from the Montana Department of Revenue's website, or by contacting them directly via phone or mail for additional assistance.

Remember, properly filling out and submitting the Montana NR-1 form is essential for North Dakota residents working in Montana who want to take advantage of the reciprocal income tax agreement between the two states. Make sure to accurately report your income and maintain records as proof of your claims.

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