Department of Revenue - income_tax

Individual Income Tax - TY2011 FAQs

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General Questions

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

A. Send your change of address in a letter signed by you that 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

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

A. 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 after filing your amended federal income tax return.

Q. 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. Mark the “Amended Return” box found in the upper left hand corner of the form. Include 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 AMD Worksheet 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 include the AMD Worksheet, or a similar reconciliation form outlining the changes, with your corrected tax return.
When filing multiple tax returns, please file each 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.
Please mark 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. On the 2006 Form 2, this box is located on page 3 of the return.

Other Notes

If you are amending a return for married individuals who filed “married filing separately on the same form,” complete a separate AMD Worksheet 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, partial pension and annuity income exemption, or standard deduction.
If amending to change your filing status from joint to married filing separately on the same form or on separate forms, include a detailed breakdown showing the allocation of income and deductions between spouses.

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

A. 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 errors on your previous return.

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

A. 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 after filing 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.

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

A. 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 annual interest rate for all unpaid individual income taxes changed from 12% to 8%. 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 due.

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 mark the “Amended Return” box on the tax return. By doing so, you are requesting a waiver of the late payment penalty.

Q. 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?

A. If you itemized deductions, you should recalculate to see if the 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, partial pension and annuity income exemption, or standard deduction.

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

A. 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

Q. What options do I have to file my Montana tax return electronically?

A. You have several electronic filings options.

File your Montana tax form FREE through our website. Please note that this service only applies to your Montana tax return; you may still have to file a federal tax return.
File through the federal/state electronic filing program, a cooperative effort between the Internal Revenue Service (IRS) and state tax agencies at www.irs.gov. This option allows you to electronically file your federal and state tax return at the same time. Some of the services offered may be free or low-cost to use.
Purchase software to prepare and electronically file federal and state tax returns at
the same time. Some of the services offered may be free or low-cost to use.
File through a tax professional who is an Authorized IRS E-file Provider.
File by using software that you download which helps you to prepare and electronically file your federal and state tax returns at the same time. A listing of approved e-file vendors can be found on our website at revenue.mt.gov.
File by using one of the free electronic filing options listed on MontanaFreeFile.org. Some options have eligibility requirements.

Please see the following chart to find out which e-filing methods are available to you as a first-time filer, full-year resident, part-year resident or nonresident.

	In 2011, I was a...
	First-time filer	Full-year resident	Part-year resident	Nonresident
E-file with tax preparer	Yes	Yes	Yes	Yes
E-file with online/retail software	Yes	Yes	Yes	Yes
E-file through TAP*	No	Yes	Yes***	Yes***
E-file through MT Direct File**	Yes	Yes	Yes	Yes

*Taxpayer Access Point (TAP) is a free electronic service for accessing your Montana tax account information, filing your return, paying your tax and more. Visit revenue.mt.gov.

**MT Direct File is a free electronic service for filing your Montana tax return without signing up for account access. Visit revenue.mt.gov.

***If you are a nonresident or part-year resident who has previously filed a Montana income tax return, you may use this option. If you have not previously filed, you cannot sign up for account access and e-file through TAP.

Q. Why should I e-file?

A. E-filing your return has many benefits. It's simple, secure, and convenient. Some benefits are:

Quicker refund — for the fastest refund you should also use Direct Deposit.
Increased accuracy — most software includes math edits and up-to-date tax law changes.
Acknowledgement and/or confirmation your e-filed return was received.
Convenience — e-file 24 hours a day, seven days a week, with nothing to mail.
Control over your payment — file now but pay later (on or before April 17). When filing electronically you can also schedule your electronic payment withdrawal to occur on April 17. To avoid penalties, please pay by April 17.

Note for 2011 tax year: Every few years the District of Columbia’s celebration of Emancipation Day affects the individual income tax filing due date, as it does this year. When tax day falls on a weekend or holiday, the IRS has traditionally allowed tax returns to be filed on the next business day. While this is not a holiday observed in Montana, the Montana Department of Revenue will also accept returns until the following business day which, in this case, is April 17, 2012.

Environmentally friendly — uses less paper.

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

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

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 do 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.

Q. If I file electronically, do I have to send a copy of my income tax return, supporting schedules, copies of my federal Forms W-2 and 1099, or signature verification?

A. No, you do not. If you file electronically, you don't have to mail in a paper copy of your tax return, any accompanying federal Form(s) W-2 and 1099, or any other Montana supplemental forms. When you file your tax return electronically, you represent that you have kept all the documents required as your tax record and that you will provide copies if we ask for them.

You also don't have to sign a copy of your tax return and submit it to us. The act of completing and filing your income tax return electronically is considered an authorized signature.

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 System Credit (Form ENRG-A)

Q. What is a geothermal system?

A. 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.

Q. What installation costs are allowed when claiming the credit?

A. Your allowed installation costs include:

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 pump heat from a well into a building
Design and labor

Q. Who qualifies for the geothermal system credit?

A. The geothermal system credit is available to Montana residents who complete the installation of a geothermal system in their principal dwelling.

The credit is also available to contractors that install a geothermal system in a new residence they're building for sale.

Only builders that are individuals or C corporations can claim the credit. This credit is not available to builders that are partnerships or S corporations.

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

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

A. No. Because you did not install and pay for the system, you are not entitled to the credit. The builder may be entitled to the credit.

Q. 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?

A. No. The individual for whom you are installing the system may, however, be entitled to the credit.

Q. 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?

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

Q. I 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?

A. Yes. This credit is considered a nonrefundable carryover credit that you can carry forward for seven succeeding years. If you are an individual, complete lines 9, 10 and 11 to determine the unused amount of your geothermal credit that can be carried forward from a prior year. If you are filing as a C corporation, include the carryforward on Form CLT-4, Schedule C. You also need to include a detailed schedule of your separate entity geothermal system credit carryforward, if applicable. Your total credit reported in the year of installation and in subsequent years cannot exceed the maximum credit of $1,500.

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

A. 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.

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

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

Alternative Energy System Credit (Form ENRG-B)

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

A. 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.

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

A. 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 60.533, or
- uses wood pellets as its primary source of fuel; or
an outdoor hydronic heater qualified for the phase 2 white tag under the U.S. Environmental Protection Agency Method 28 OWHH; or
a masonry heater constructed or installed in compliance with the requirements for masonry heater in the International Residential Code for One- and Two-Family Dwellings.

Q. Who qualifies for the alternative energy system credit?

A. The alternative energy systems credit is available only to Montana resident individuals who install a qualifying system or device in their principal dwelling.

Q. In 2011, I paid for an alternative energy system but installation wasn’t complete until 2012. When can I take the credit?

A. You can claim the credit in 2012 when installation was complete and the system was first in service. You can include the amount paid in 2011 when calculating your credit for 2012.

Q. I installed a wood burning stove in my principal home this year but I 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?

A. Yes. You can carry forward any unused portion of your credit for four succeeding years.

Complete lines 15, 16 and 17 to determine the amount of credit that can be carried forward. Your total credit reported in the year of installation and in subsequent years cannot exceed the maximum credit of $500 per taxpayer for each installation. For example, you are a single individual who purchased and installed an alternative energy system for $4,000 in 2010. You took a $500 alternative energy system credit on your 2010 tax return. You are not entitled to any additional credit for that installation in any tax year following 2010.

Q. My spouse and I jointly own our principal dwelling. Can we both qualify for the alternative energy system credit?

A. 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.

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

A. No. Repairs to your existing alternative energy system are not installation costs that entitle you to an additional alternative energy system credit. Also, additions to your existing alternative energy system do not qualify for this credit.

For example: In 2011, you replaced damage solar panels that were installed in your principal home in 2008 at which time you claimed an alternative energy system credit of $500. You are not entitled to an additional $500 credit for the repairs and replacement of parts to your existing solar system.

Energy Conservation Installation Credit (Form ENRG-C)

Q. What is the energy conservation installation credit?

A. 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.

Q. What capital investments can I make to a building that will qualify for the energy conservation credit?

A. The following investments qualify for the energy conservation credit:

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 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
Windows that result in a reduction of energy consumption
Storm doors and insulated exterior doors
Caulking and weather stripping of an existing structure
Devices which limit the flow of hot water from shower heads and lavatories
Heat recovery ventilators (HRV)
Glass fireplace doors on existing fireplaces
Exhaust fans to reduce air conditioning requirements
Replacement of incandescent light fixtures with fixtures of a more efficient type such as those with electronic ballast and compact or linear fluorescent lamps and LED lights
Lighting controls with cutoff switches to permit the selective use of lights
Programmable thermostats
Installation of new domestic water heaters, heating or cooling systems, so long as the new system uses energy more efficiently than the prior system

Some types of investments must meet certain ratings or specifications to qualify for the credit. Please refer to the following chart for information about any requirements there may be for your investment.

Type of Investment	Specification to qualify for the credit
Exterior windows and skylights	U-factor and SHGC less than or equal to 0.30
Storm windows	U-factor and SHGC less than or equal to 0.30 when measured in combination with the exterior window over which it is installed
Exterior doors	U-factor and SHGC less than or equal to 0.30
Storm doors	U-factor and SHGC less than or equal to 0.30 when measured in combination with the wood door over which it is installed
Split system central air conditioning	EER greater than or equal to 13 and SEER greater than or equal to 16
Package system central air conditioning	EER greater than or equal to 12 and SEER greater than or equal to 14
Split system air source heat pumps	HSPF greater than or equal to 8.5, EER greater than or equal to 12.5 and SEER greater than or equal to 15
Package system air source heat pumps	HSPF greater than or equal to 8, EER greater than or equal to 12.5 and SEER greater than or equal to 14
Natural gas or propane furnace	AFUE greater than or equal to 95
Oil furnace	AFUE greater than or equal to 90
Hot water boiler	AFUE greater than or equal to 90
Advanced main air circulating fan	no more than 2% of total energy use
Heat recovery ventilators	CSA C439-00 standard
Gas, oil, or propane water heater	energy factor greater than or equal to 0.82 or thermal efficiency of at least 90%
Electric heat pump water heater	energy factor greater than or equal to 2.0

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

A. 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
Reshingling or repairing a roof
Metal roof with pigmented coating or asphalt roof with cooling granules
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

Q. I installed a high efficiency central air-conditioning system in my home that did not have a central air-conditioning system previously. Can I claim the credit?

A. Yes. You may claim the credit if the system meets or exceeds the applicable specification listed in the chart.

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

A. Yes you can. Investments made in items as part of constructing new buildings or dwellings will qualify for the credit as long as the items meet or exceed the applicable specification listed in the chart on the previous page. Except for insulation, if an item meets or exceeds the applicable specification, both the cost of the item itself and any basic installation costs qualify. Insulation must exceed the 2009 IECC as amended for Montana and only the costs of exceeding the specifications qualify.

Q. Is there another way to calculate the credit for investments made while constructing a new home?

A. Yes, there is another option. The purchase by the first owner or construction by an individual of a site-built home can be considered the equivalent of investing $4,000 in energy conserving measures if the home has been certified under either the ENERGY STAR program or the Montana Building Industry's Green Build program. A home certified under the Green Build program must attain either Gold level or a Silver level with an ENERGY STAR heating system in order to calculate the credit in this manner.

The resulting credit of $500 ($2,000*25%) may be split among all individuals who purchased the home. The resale of a home certified under either program does not qualify for any credit. For more information, please contact the Department of Revenue toll-free 1- 866-859-2254 or in Helena, 444-6900 or review the administrative rules at energycredit.mt.gov.

Q. 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 tax credit?

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

Q. I qualify for the energy installation 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?

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

Q. I ordered new windows and exterior doors in my home. I paid half of the total price in 2011 and the balance will be paid when the installation is complete in 2012. Does my down payment qualify for the energy conservation installation credit?

A. The energy conservation installation credit is available in tax year 2012 only (the year when the installation is completed). You can include the down payment expended in 2011 to determine the total cost of your expenditures for the credit.

Q. I purchased and completed installation of a qualifying furnace during October 2011. Half of the total price of the furnace was paid for in 2011 and the other half was paid in 2012? Do I qualify for the energy conservation installation credit for both 2011 and 2012?

A. The energy conservation installation credit is available in tax year 2011 only (the year when the installation is completed). You are not entitled to an additional energy conservation installation credit for the second half payment made in 2012.

Q. 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?

A. No, you are not. Your energy conservation installation 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.

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

A. 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 tax credit.

Estimated Tax Payments

Q. Am I required to make estimated tax payments?

A. If you estimate that you will owe more than $500 in tax for 2012 (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.

Completing the Montana Individual Estimated Income Tax Worksheet will help you determine if you need to pay estimated tax payments.

Q. Am I required to allocate estimated tax payments?

A. If you are filing married separately on the same form and have made estimated payments, you might consider allocating the payments claimed by each spouse so that one spouse does not owe tax and the other is 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.

Q. I did not make estimated tax payments in 2011 and my income tax due is more than $500. Am I subject to any penalties and interest on my underpayment?

A. Yes, you are. You are required to pay your income tax liability throughout the year. You can make your payments through employer withholding, installment payments of estimated taxes, or a combination of employer withholding and estimated tax payments.

If you did not pay in advance at least 90% of your 2011 income tax liability (after applying your credits) or 100% of your 2010 income tax liability (after applying your credits), you may have to pay interest on the underpayment of your estimated tax.

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

Q. Where do I find the form to pay my estimated tax payments?

A. The individual income tax payment voucher is available on our website.

You may also make your estimated tax payments online using Taxpayer Access Point (TAP).

Or contact us at:

Montana Department of Revenue Citizens Services
PO Box 5805
Helena, MT 59604-5805
Phone: (866) 859-2254 (toll free) or 444-6900 in Helena area

Q. When are my estimated tax payments due?

A. When you file your return on a calendar year basis, you may prepay all of your estimated taxes for 2012 by April 17, 2012, or you may pay them in four equal amounts that are due on the dates listed below.

First payment - due April 17, 2012
Second payment - due June 15, 2012
Third payment - due Sept. 17, 2012
Fourth payment - due Jan. 15, 2013

If any of these installment dates fall on a weekend or a holiday, your payment is due on the next business day. If you file your return on a fiscal year basis, your payment dates are the 15th day of the fourth, sixth, and ninth months of the fiscal year and the first month of the following fiscal year.

Extensions

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

A. You are granted an automatic, six-month extension of time for filing your Montana income tax return if you have paid 90% of your 2011 Montana income tax liability or 100% of your 2010 Montana income tax liability through your estimated tax payments, your withholding tax, or a combination of both your estimated and withholding tax payments by April 17, 2012.

Please use the Montana Form EXT-10, 2011 Extension Payment Worksheet, to determine if you have to make an extension payment by April 17, 2012, to qualify for the automatic filing extension. If you are required to make an extension payment, please use the tax payment voucher found on this worksheet or sign up to make your payment online by visiting our website at revenue.mt.gov.

Important: Please be aware that any extension of time to file your Montana income tax return is not an extension of time to pay your income tax liability. If you have a valid Montana extension but you have not paid your entire 2011 income tax liability by April 17, 2012, you are relieved of late file penalties but you are not relieved of late pay penalties and interest on your outstanding Montana income tax liability.

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

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

Q. 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 2011 Montana income tax return by April 17, 2012. Can I (and my spouse) obtain an extension to file?

A. Yes, you can. Montana law follows federal law with respect to the time allowed for filing a return. Therefore, the extension of time to file your Montana tax return is the same for filing your federal 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 tax return for up to 180 days after your last day in a combat zone.

If you are filing your tax return under this provision, clearly write on the top of Montana Form 2, using red ink, “combat zone or contingency operations extension,” and file your tax return within 180 days after your last day in a combat zone. If you file within the 180 days, you are not assessed any penalties or interest.

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

A. If you need to establish a payment plan with us, call us toll-free at 1 (866) 859-2254 (in Helena, 444-6900) as soon as possible to discuss your options and make payment arrangements. You can also refer to Requesting a Payment Plan for Your Delinquent Tax Liability for more information.

Filing Deadlines

Q. When do I have to file my Montana tax return?

A. The deadline for Montana Individual Income Tax returns is Tuesday, April 17, 2012.

If you operate on a fiscal year, your return has to be filed by the 15th day of the 4th month following the close of your fiscal year. If you file after this date, you may have to pay penalties and interest.

Filing Requirements

Q. Do I have to file a Montana individual income tax return?

A. If you are a resident, non-resident, or 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 that are identified in the chart below:

IF your filing status is...	AND at the end of 2011 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	$4,010 $6,200
Head of Household	Under 65 65 or older	$5,830 $8,020
Married filing jointly with your spouse	Both under 65 One spouse 65 or older Both spouses 65 or older	$8,020 $10,210 $12,400
If you or your spouse is blind, you are entitled to an additional exemption. Increase your federal gross income by $2,190 to determine if you are required to file.

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

A. 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.

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

A. 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. A permanent home in Montana means a dwelling place you habitually use as your home, whether or not you own it and whether or not you may someday leave. You will not lose your Montana residency if you left the state temporarily with the intention of returning. Your Montana residency is lost when you establish a permanent residence outside of Montana with no intention of returning. Unless there is a specific exception under Montana law, if you establish Montana residency for any other purpose, you are considered a Montana resident for income tax purposes.

You are a nonresident of Montana if you were not a resident during any part of the tax year.

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

A nonresident or part-year resident who is required to file a Montana tax return needs to use Form 2.

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

A. 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 elsewhere for work or for other temporary purposes. Your do not change residency by being away from home temporarily or for a prolonged period of time. You change residency when you leave your home and do not intend to return, but instead, establish a new home elsewhere.

Q. How do I file for a deceased person?

A. If you are responsible for the financial affairs of a deceased person, you'll have to file a tax return for that person if his or her income exceeds the minimum filing requirements. If you and the deceased person were married, you can file a joint tax return. If you are filing a joint return and you are the surviving spouse, that is all that is required. All other filers requesting the deceased taxpayer's refund must file the return and include a federal Form 1310 as well as any court documents appointing you as the personal representative.

This tax return has to include the income of that 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. Income of the deceased person received after the date of death should not be included on an individual tax return. Post-death income is reported on a fiduciary income tax return for a trust or estate, Montana Form FID-3.

Q. 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 return?

A. Yes. Montana law differs from federal law. Montana law permits a dependent that is claimed on his or her parent’s tax return to claim themselves on his or her own tax return.

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

A. If you choose not to file electronically, Montana has two different addresses for individual income tax returns. We do this so that if you are asking for a refund, we can get your refund processed and to you more quickly and efficiently.

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

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

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

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

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

A. If you have a filing obligation but are unable to complete and file 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

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

A. 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;
Your spouse died during the tax year and you did not remarry during the tax year; or
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 and/or deductions, or 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. But, 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 any income is earned from property that is jointly owned by both spouses, that income should be split equally unless you and your spouse can show a different proportional ownership. When you file separately, both spouses must either claim the standard deduction or itemize their deductions. You cannot file separately on the same form when one spouse is a resident and the other spouse is a nonresident.

Please note: Although submitted on the same form, married taxpayers electing to file using this status are submitting two tax 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. However, if you are entitled to a refund and your spouse owes, and you file separate returns on the same form, we treat your election to file separately on the same form as your direction to us to apply your refund to the amount owed by your spouse. If you do not want your refund to be offset against any tax due from your spouse, you and your spouse must file on separate forms. If we discover a math or other computational error when processing the form, we will adjust it to correct the error and this may result in our applying one spouse’s refund to the other spouse’s increased tax. If you do not wish for this to occur, you will need to file your own separate return.

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 nonresident; 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 nonresidents and one spouse has no Montana source income; or
you are a resident and your spouse is a nonresident 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.

Form 1099-G

Q. What is a Form 1099-G?

A. Form 1099-G (or Substitute 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 2011. If we issued refunds for more than one tax year, they are reported on separate Forms 1099-G.

Q. I received a document called Form 1099-G and Form 1099-INT from the Montana Department of Revenue. Why did I receive this?

A. 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 reports on Form 1099-G and Form 1099-INT any refund or overpayment credit amount issued and any interest paid or credited to you during 2011.

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

A. 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.

Q. I did show an overpayment on my 2010 Montana return, but I had the money applied as a credit to 2011. Since I didn't receive a refund check, do I still have to report this amount as income?

A. Yes, you will 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.

Q. I claimed a Montana tax refund for 2010, but the Department of Revenue applied the money to a bill for another year. Do I still have to report this as income?

A. Yes, you will have to report this amount 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

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

A. The Department of Revenue issues this form to inform you of interest the department paid to you in 2011.

Injured Spouse

Q. 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?

A. If you do not want your refund to be applied toward your spouse’s child support obligation, you can file your Montana tax return using Form 2 and filing status 3b, which is "married filing separate tax returns on separate forms." When using this filing status, each spouse claims his or her own income, losses, deductions, expenses, exemptions, and credits, and your Montana refund would not be offset by your spouse's child support debt.

If you filed a joint return with your spouse and your refund was applied to your spouse’s child support debt, you may be considered an “injured spouse” and we can help you resolve the matter. You need to contact us within 30 days after receiving notice that your refund was applied to your spouse’s child support debt. If necessary, we can help you file the correct tax return(s).

Innocent Spouse Relief

Q. Who is an "innocent spouse"?

A. 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 one spouse earned all the income. An innocent spouse is a taxpayer who has filed joint federal and Montana tax returns for the same tax year, has obtained relief from a joint and several federal income tax liability under section 6015 of the IRC, and is requesting relief from a joint and several Montana income tax liability.

Q. What is a joint and several liability?

A. When you file a joint income tax return, the law makes both you and your spouse responsible for the entire tax liability. This is called joint and several liability. Joint and several liability applies not only to the tax liability you show on the return but also to any additional tax liability that may be determined to be due, even if the additional tax is due to the income, deductions, or credits of your spouse or former spouse. You remain jointly and severally liable for taxes, and the department still can collect from you, even if you later divorce and the divorce decree states that your former spouse will be solely responsible for the tax.

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

A. If the Internal Revenue Service granted you "innocent spouse" relief from a joint federal tax liability for tax years beginning on or after January 1, 2003, you may be eligible for similar relief if you filed a joint Montana tax return for the same year.

To apply for Innocent Spouse Relief, you must provide the department with the following in writing:

The tax years for which relief is sought;
The reasons for which relief is sought;
Complete copies of all correspondence sent to and received from the IRS, including documentation that relief has been granted for the periods applying;
Any court order stating that the taxpayer’s spouse or former spouse is responsible for paying the Montana individual income tax liability; and
Other information that demonstrates why relief should be granted, as required in 15-30-2646, MCA

If the department determines, after consideration of the facts and circumstances you presented, that it would be unfair to hold you responsible for some or all of the tax, penalty, and interest, you will be granted relief. However, the relief granted by the department must be based on the same circumstance for which relief was granted by the IRS and the relief cannot exceed the relief granted by the IRS.

If you disagree with the decision made by the department, you will have the option to appeal. Please see the Tax Appeal Process section of our website to learn more about the appeal process.

Itemized Deductions

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

2011 and 2009 Montana Form 2, Schedule III "Montana Itemized Deductions": If you claimed a deduction for state and local sales taxes on your federal Schedule A, you may claim a deduction in addition to the federal income tax deduction. Please report this deduction on line 8, General State and Local Sales Tax Paid. If you were not required to file a federal return or claimed the standard deduction on your federal return and you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. If you didn't save your receipts, you can fill out the worksheet and use the optional general sales tax tables in the instructions for federal Schedules A and B (Form 1040) or use the Sales Tax Deduction Calculator available on the Internal Revenue Service website at apps.irs.gov/app/stdc. If you claimed your state income taxes as an itemized deduction on your federal return, you cannot claim the deduction for sales taxes on your Montana return.
2010, 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 Montana qualifies as a general sales tax under the federal definitions and are not deductible.

Q. How do I report qualified mortgage insurance premiums?

A. Individuals who entered into a contract issued after December 31, 2006 for qualified mortgage insurance are allowed to claim the premiums paid during the year as an itemized deduction. Qualified mortgage insurance means insurance provided by the Veterans Administration, the Federal Housing Administration, the Rural Housing Administration or private mortgage insurance.

In order to be eligible, the loan must have been issued after 2006 for you to buy or build your primary residence and the loan must be secured by that residence. Insurance on a loan not used to build or buy a residence such as an equity loan used to consolidate debt is not eligible even if the loan is secured by your residence. Mortgage insurance premiums you paid or accrued after December 31, 2006, or that are properly allocable to any period after December 31, 2006 are deductible as home mortgage interest.

The deduction amount you can claim on your Montana tax return is the same amount you can claim on your federal tax return. If you did not itemize your deductions on your federal return, complete Worksheet VI, Qualified Mortgage Insurance Premiums Deduction, to determine the amount you can deduct. Married taxpayers filing separately in Montana may allocate the total allowable amount between both spouses.

Keeping Records

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

A. You must keep accurate records to verify items of income, deductions, and credits claimed on your income tax return or credit claim. You should 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. A list of some of the tax records you should maintain is as follows:

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 canceled 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 Montana return or the date filed, whichever is later. The statute of limitations for federal income tax purposes is generally three years.

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 20 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

Q. 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 17, 2012, or October 15, 2012 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 17, 2012, the late pay penalty is equal to 1.2% per month or fraction of a calendar month on the unpaid balance from April 17, 2012 until it is paid.
Interest: If you have not paid 100% of your income tax liability by April 17, 2012, you will have to pay 8% per year accrued daily on your unpaid balance. To calculate your interest, multiply the unpaid balance by .0002192 (.02192%) times the number of days after April 17, 2012 your payment is received.

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

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

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

A. 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 voucher and payment to:

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

Military Personnel (Active Duty, Federal Reserve Components, Montana National Guard and Retired)

Q. If I am a resident of Montana serving in the U.S. armed forces, the federal reserve components, or the Montana National Guard, am I required to file a Montana income tax return? Does it make any difference if I am stationed within or outside of Montana?

A. All Montana residents, including those serving in the US armed forces, the federal reserve components, or the Montana National Guard, are required to file a Montana income tax return if they have federal gross income, excluding unemployment compensation, that is equal to or greater than the threshold for their filing status. The requirement to file a Montana income tax return applies regardless of whether the military member is stationed within or outside of the State. For tax year 2011 the thresholds are:

IF your filing status is...	AND at the end of 2011 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	$4,010 $6,200
Head of Household	Under 65 65 or older	$5,830 $8,020
Married filing jointly with your spouse	Both under 65 One spouse 65 or older Both spouses 65 or older	$8,020 $10,210 $12,400
If you or your spouse is blind, you are entitled to an additional exemption. Increase your federal gross income by $2,190 to determine if you are required to file.

Q. 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?

A. 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 on separate forms." 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.

Q. 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?

A. Probably not. The Military Spouses Residency Relief Act (MSRRA) is effective for tax years 2009 and later and generally requires a nonresident nonmilitary spouse to pay income tax on compensation only in the state of residency. Please visit our website for further information.

For years before 2009, if your spouse had Montana wages in excess of the standard deduction and one exemption, your spouse is required to file a tax return as a resident or as a nonresident, as applicable.

Q. 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?

A. 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, royalties, ordinary and capital gains, Montana source income from a partnership or S corporation, 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.

Q. I am a nonresident of Montana, on active service in the military and stationed temporarily in Montana. If I apply for a resident hunting license, will I be considered a Montana resident for tax purposes?

A. No. Usually if you claim the benefits of Montana residency for any purpose, you are considered a resident for tax purposes too. But Montana currently allows nonresident active servicemembers in the state on orders (and dependents in the household) to be treated as a resident to obtain resident hunting, fishing, and trapping licenses without actually becoming a resident (§87-2-102, MCA).

Q. I am a nonresident of Montana, on active service in the military and stationed temporarily in Montana. If I get a Montana driver’s license will I be considered a Montana resident for tax purposes?

A. No. Montana law allows nonresident servicemembers to drive in Montana without a Montana driver’s license in a number of circumstances (§61-5-104, MCA), but if you do get a Montana driver’s license, that alone will not make you a Montana resident for tax purposes.

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

A. 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 these activities:

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 who is 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.

If you receive wages under the combat zone exclusion that are not included in your Form W-2, Box 1, it will not be included in your federal adjusted gross income, so you should not subtract that pay again. However, if you are a commissioned officer who could not exclude all of your wages received under the combat zone exclusion because it exceeded the highest rate of enlisted pay for each part of the month you served in a combat zone or were hospitalized as a result of your service there, you may exclude the additional combat pay that was included in your federal adjusted gross income.

Please Note: 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;
Salaries that you have received for performing full-time National Guard duty pursuant to Title 32 of the United States Code (for example, Active Guard and Reserve, Active Duty for Operational Support, or Active Duty for Counter Drug 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 include verification of your military status (such as your military orders) with your income tax return.

Q. Are my civilian wages or income I earn from my business exempted from tax?

A. No, only the specific items of military compensation already described are exempt from Montana income tax.

Q. I am a member of the National Guard. My salary is received under Title 32, not Title 10, of the United States Code, so it is not exempt from Montana tax. I am unable to get my employer to withhold Montana taxes from my wages. I have been assessed interest on underpayment of estimated taxes by the Department of Revenue. What can I do to stop this from happening again?

A. If you have service-related income that is not exempt and you are unable to have Montana tax automatically withheld from your wages, you will probably be required to pay interest for underpaying your Montana taxes during the year unless you make quarterly estimated tax payments. The department has a worksheet (Form ESW) to help you determine how much you should pay each quarter to avoid the interest.

The instructions with Form ESW explain more fully the procedure for making estimated tax payments, but basically, you estimate the amount of tax you will owe for the year, divide that amount by four, and send in that amount on April 17, June 15, September 17 and January 15. We encourage you to use TAP, our free electronic service, to make the estimated payments and monitor your account. If you choose not to pay electronically, you can contact us to send you instructions and a payment voucher to send in with your first estimated payments. Call toll free (866) 859-2254 (in Helena, 444-6900) or TDD (406) 444-2830 for hearing impaired.

Q. As long as I’m in the military, doesn’t the Servicemember’s Civil Relief Act prevent you from taking any action against me or my spouse if we don’t file an income tax return or pay the tax?

A. Not always. The Act sometimes prevents us from collecting tax until after your service is finished; it does not extend the time you are allowed to file a tax return (but see the next paragraph for a special rule that allows the time for filing a return to be extended when you are serving in a combat zone.)

Under some circumstances, the Act prevents us from collecting individual income tax from you while you are on active duty as a member of the armed forces. When you have not been called to active duty in the armed forces, it does not prevent us from collecting the tax while you are in the National Guard, even if you are on full-time National Guard duty, or while you are serving in the reserves.

Even if you are on active duty as a member of the armed forces, the Act does not automatically protect you from tax collection actions. The Act prevents us from collecting tax from you on income falling due before or during your military service (and 180 days after termination or release from service) only if your ability to pay the income tax is materially affected by military service.

Q. I am on active duty in the regular armed forces, the federal reserve components, or the National Guard of the United States and currently serving in an area designated as a "combat zone" or "contingency operations." I am unable to file my 2011 Montana income tax return by April 17, 2012. Can I (and my spouse) obtain an extension to file?

A. Yes, you can. Montana law follows federal law with respect to the time allowed for filing a return. Therefore, the extension of time to file your Montana tax return is the same as provided for 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 your last day in a combat zone.

If you are filing your tax return late under this provision, clearly write on the top of Montana Form 2, using red ink, "combat zone or contingency operations extension," and file your return within 180 days after your last day in a combat zone. If you file within the 180 days, you are not assessed any penalties or interest.

Q. 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?

A. 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 Servicemembers 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.

Q. 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?

A. 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 Servicemembers 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.

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

A. Yes. For tax years 2003 and later, the federal government passed a law allowing you to deduct travel expenses if you travel more than 100 miles from home to perform services as a National Guard or reserve member. Because Montana follows the federal law for this deduction, you are entitled to an itemized deduction for travel expenses, subject to the 2% limitation of Montana adjusted gross income, but you do have to include your federal Form 2106 or 2106-EZ with your Montana return.

Q. I am a member of the National Guard. While I was serving on active duty in a contingency operation, the U.S. Department of Defense reimbursed my life insurance premiums. Do I have to add in this amount as taxable income when I prepare my Montana income tax return?

A. No, you do not. To the extent that the reimbursement was taxable for federal or Montana purposes, it has already been added into your federal adjusted gross income so you should not add it in again when you prepare your Montana income tax return.

Q. I am a member of the National Guard who received reimbursement from the Montana Department of Military Affairs, not from the Department of Defense, for premiums I paid under the servicemember’s group life insurance program. How do I report this reimbursement on my tax returns?

A. Because the Montana Department of Military Affairs reimbursement is not tax exempt for federal income tax purposes but is exempt for Montana income tax purposes, it should have been included in your federal adjusted gross income and you can deduct these reimbursements from your federal adjusted gross income in arriving at your Montana adjusted gross income.

Native American Filers

Q. Do I need to obtain official certification of enrollment from my tribe in order to complete Form IND?

A. No. Form IND was revised in 2010 removing the requirement that tribal members receive official certification of enrollment from their tribes. This eliminates the need for a tribal member to request this information from their tribal headquarters.

In addition, the revision added a request on Form IND for the tribal member’s employer information. This will assist the department in an effort to limit unnecessary contact with tribal members to verify tax-related information.

Q. I received payments under The Claims Resettlement Act of 2010 (Cobell). Are these payments taxable in Montana?

A. No. Amounts that are received as either a lump sum payment or periodic payments are not taxable in Montana and should not be included in your Montana gross income. Although these payments are not taxable in Montana, they must be included in your ‘gross household income’ if you are filing Form 2EC for the Montana Elderly Homeowner/Renter Credit.

Q. 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?

A. 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 include Montana Form IND, Tribal Member Certification (formerly known as Indian Certification).

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

A. 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 apply:

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

Q. 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?

A. 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.

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

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

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

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

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

A. 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.

Q. 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?

A. You may use your post office box address as the mailing address. However, to qualify for the exemption you must also provide a physical address on your reservation.

Non-Filers

Q. What is a non-filer?

A. 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.

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

A. 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.

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

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

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

A. Obtain forms and file all late returns at this time. If you have questions, write to us at:

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

You may also e-mail us or call us toll-free at (866) 859-2254 (in Helena, 444-6900).

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

A. 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

You may also e-mail us or call us toll-free at (866) 859-2254 (in Helena, 444-6900).

Q. 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?

A. 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

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

A. Yes. If you are a resident, your worldwide income is subject to tax. If you are a nonresident, you complete your return in the same way a resident does, but the tax a resident would pay is multiplied by the ratio of Montana source income to income from all sources to determine your Montana tax liability.

Q. 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?

A. 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.

Q. 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?

A. 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

Q. 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 17, 2012, or October 15, 2012 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 17, 2012, the late pay penalty is equal to 1.2% per month or fraction of a calendar month on the unpaid balance from April 17, 2012 until it is paid.
Interest: If you have not paid 100% of your income tax liability by April 17, 2012, you will have to pay 8% per year accrued daily on your unpaid balance. To calculate your interest, multiply the unpaid balance by .0002192 (.02192%) times the number of days after April 17, 2012 your payment is received.

Q. When is underpayment interest assessed?

A. 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.

Pensions, Annuities and Retirement Income

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

A. 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.

Q. How is my pension taxed?

A. Montana allows a pension and annuity income exemption of up to $3,760 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.

The 2009 Montana Legislature enacted a law impacting the pension and annuity income exemption. An inflation factor will be applied to both the pension and annuity income exemption and to the federal adjusted gross income threshold, which will increase the amount of the exemption and slow its phase-out.

Q. How much of my social security benefits are taxable by Montana?

A. 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

Q. 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?

A. If you mark the “Yes” box on the bottom of your return, we can discuss any concerns that we might have with your 2011 tax return—for example, a missing W-2—with a third party designee (and your spouse if you are married filing separately on the same form). If you mark the “No” box or do not mark a box, we cannot discuss your return with anyone but you or someone to whom you have given a power of attorney that allows us to discuss the return with them.

If you and your spouse are filing separately on the same form, and the “Yes” box is marked, each of you is authorizing us to call either spouse and the third party designee, if applicable, to answer any questions that arise while we are processing your 2011 tax return. If you are filing a joint return, you are automatically authorizing us to discuss the joint return with either spouse, but you will still need to complete the third party designee section if you wish to allow another person, such as a tax preparer, to discuss your return.

By marking “Yes,” you are also authorizing us to:

Request that the third party designee give us any information that is missing from your return.
Respond to the third party designee's call to us for information about the processing of your return or the status of your refund or 2011 payment(s).
Discuss certain notices from us about math errors, offsets and return preparation. Note: The department will only send notices directly to you, not to the third party designee.

You are not authorizing the third party designee to receive any refund check, bind you to anything (including any additional tax liability), receive any information about any other tax year or tax matter, or otherwise represent you before the department.

Please be aware that this authorization cannot be revoked. The authorization will, however, automatically end no later than the due date, without regard to extensions, for filing your next year’s (2012) tax return. This is April 15, 2013, for most people.

If you want to expand or change the third party designee's authorization (for example, to verify any estimated payments you’ll be making in the future), you can use Form POA, Power of Attorney, Authorization to Disclose Tax Information. You also can grant your third party designee access to your tax account information through Taxpayer Access Point (TAP).

Q. 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?

A. 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.

Reciprocity

Q. What is reciprocity? Which states have reciprocity with Montana?

A. 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.

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

A. 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 website.

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

A. 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 by February 28 of the calendar year for which you want it to apply, or within 30 days after you begin working or change your permanent residence. You can get this form from your employer or from the Montana Department of Revenue, PO Box 5805, Helena, MT 59604-5805.

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, including Montana Form NR-1, North Dakota Reciprocal Affidavit, and a copy of your North Dakota income tax return. Mail these documents to the Montana Department of Revenue by April 17, 2012.

Refund Information

Q. How can I check on my refund?

A. If you are expecting a refund, you can check the status of your refund online. Visit our website at revenue.mt.gov and go to Online Services.

You can also check the status of your refund by calling us toll free at (866) 859-2254 (in Helena, 444-6900). We will be glad to tell you the status of your refund once we have entered it into our computer system.

To check the status of your refund either by telephone or online, you will need to provide the following information:

A social security number.
- If you filed your return as single, head of household, or married filing separately, enter your social security number; or
- If you filed a joint return, enter the social security number of the first taxpayer listed on your tax return.
The amount of the refund requested as shown on your tax return.

Senior Citizens

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

A. 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.

Q. What are my options for filing Form 2EC?

A. You can file Form 2EC with your Form 2 or 2M, or alone if you are not required to file a Montana tax return, at revenue.mt.gov. If you choose not to file electronically and you are not required to file Montana Form 2 or 2M, please mail your Form 2EC to:

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

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

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

The administrative rule addressing this exemption was revised in 2008 to retroactively clarify that you can exempt up to $800 of the interest income that you included in your Montana adjusted gross income when determining your Montana taxable income. The rule previously referred to federal adjusted gross income.

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 Montana 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 Montana 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 Montana 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 Montana adjusted gross income.

Interest income from state, county, or municipal bonds from other states is not eligible for this exclusion.

Q. Are my retirement benefits taxable?

A. 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 5% or 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 1099-R, 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 $3,760, as long as your federal adjusted gross income is $31,370 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 $31,370 or less, you both can exclude the lesser of your taxable retirement income that you receive personally or $3,760 each for a maximum of $7,520. If you are filing your income tax return separately on the same form, or on separate forms, the lesser of your retirement income or $3,760 applies separately to both spouses as long as your separately stated federal adjusted gross income is $31,370 or less.

Q. How much of my social security benefits are considered taxable by Montana?

A. 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.

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

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

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

A. If 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 2011" in the description box on Federal Form SSA-1099. The supplemental part of Medicare insurance (Medicare B) and the premiums you pay for Medicare D insurance from your social security benefits are 100% deductible as an itemized deduction on Schedule III, Montana itemized deductions, line 5. The basic monthly premium in 2011 was $115.40.

Tax Rates

Q. What is my tax rate?

2011 Tax Brackets and Table
If your taxable income on Form 2, line 45 is:
More than:	But not more than:	Then your tax is:	Less:
$0	$2,700	1% of your taxable income
$2,700	$4,700	2% of your taxable income	($27)
$4,00	$7,200	3% of your taxable income	($74)
$7,200	$9,700	4% of your taxable income	($146)
$9,700	$12,500	5% of your taxable income	($243)
$12,500	$16,000	6% of your taxable income	($368)
$16,000 or more		6.9% of your taxable income	($512)
For example: Taxable income $6,800 X .03(3%) = $204. $204 minus $74 = $130 tax

Treasury Offset Program (TOP)

Q. 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?

A. 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.

Q. What is an offset?

A. 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.

Q. Can an offset be avoided?

A. 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.

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

A. 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.

Q. Are there any fees I have to pay related to this debt collection program?

A. 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)

Q. What should I do if I did not receive a Form W-2, wage and tax statement, from my employer or I misplaced it?

A. Your employer is required to issue a Form W-2 by January 31 if you earned wages during the previous calendar year. If you haven’t received your W-2 by that date or you misplaced it, request your employer to reissue it. You may also obtain this information anytime by completing a Request for Copies of Tax Information (Form RTI) and submitting it to us in person, by fax or by mail. You can obtain this form by visiting revenue.mt.gov or by calling us toll free at (866) 859-2254 (in Helena, 444-6900).

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. Include Form 4852 with 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 Montana individual income tax return.

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

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

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

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

Which Form to File?

Q. Who may file Form 2EZ?

A. 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 2011.
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 2011.
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.
I am not claiming any credits.

Q. Who may file Form 2M?

A. 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 2011.
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, social security benefits or refunds.
The only tax credit that I am claiming is one (or more) of the following:
- Adoption Credit
- 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)

Q. Who may file Form 2?

A. You will have to use Montana Form 2 if you answer "Yes" to ANY of the following:

I was a Montana resident for only part of 2011.
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, estates or trusts.
My tax year ended on a date other than December 31, 2011.
I am claiming the tax withheld from my Montana mineral royalty payments.
I am claiming the tax withheld by a pass-through entity (Montana Schedule K-1 or Form PT-WH).

Q. Who may file Form 2EC?

A. 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, 2011.
I occupied a Montana residence as an owner or renter for a total of six months or more during 2011.
I resided in Montana for nine months or more during 2011.
My gross household income was less than $45,000 in 2011.

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.

Last updated 1/18/2012 12:45:29 PM

MONTANA DEPARTMENT OF REVENUE