State and territory filing reference

Beginning with tax years starting after December 31, 2023, Montana taxpayers must use the same filing status they used for federal purposes. This rule applies to married couples with different residency statuses: a nonresident couple filing a joint federal return is required to file a joint Montana return even if only one spouse has Montana source income.

Prior to January 1, 2024, Montana law permitted taxpayers to claim a filing status different from what they claimed on their federal tax return if they met the requirements for that status.

When spouses have different residency statuses and one is a resident or part-year resident, they must use “part-year resident” status and complete Schedule II with Form 2 to compute their tax on a joint return.

In general, if during the tax year a taxpayer was a resident or part-year resident of Montana, or if they were a nonresident who received Montana source income, and they had a requirement to file a federal tax return, then they must file a Montana income tax return. A Montana filing requirement also exists if a taxpayer did not have a federal filing requirement but has a Montana addition or subtraction.

Nonresidents who earned only wages for services performed in Montana for 30 days or less and worked in more than one state during the tax year do not have to file a tax return or pay tax to Montana on that income. If a taxpayer incurred or reported losses (including capital losses, passive losses, and net operating losses), they must file a Montana tax return to track the sourcing of the losses and to use those losses in calculating tax liability.

Generally, if a taxpayer is a nonresident military servicemember or nonresident spouse of an active duty servicemember and they do not have any other Montana source income, they do not have a filing requirement. Montana residents must file a return even if all income is exempt. Nonresident active service members stationed in Montana do not need to file a Montana income tax return unless they have other Montana-source income.

Active service members temporarily stationed in Montana and their dependents may apply as residents for hunting, fishing, or trapping licenses without becoming tax residents. If a taxpayer and their spouse are not Montana residents, the spouse is not required to pay Montana income tax under the Military Spouse Residency Relief Act (MSRRA), which generally requires nonresident, nonmilitary spouses to pay income tax only in their home state. If a taxpayer is a Montana resident, they must report all of their income to Montana by filing a Montana individual income tax return, even if stationed outside the state.

Generally, if a taxpayer is an enrolled member of a tribe and they live on the reservation governed by their tribe, they have a Montana filing requirement; however, they can subtract the income that can be sourced to the reservation governed by their tribe.

Beginning with tax year 2024, under Senate Bill 399 (2001), the calculation of Montana tax will change. Refundable tax credits.

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Form 2 has been restructured as a result of income tax simplification, with schedules separated from the main form. Most taxpayers will only need to complete pages 1 and 2 to file their Montana tax return. The reporting of payments, and payments and refunds from filing an amended return, are now included on page 1; previously, payments other than wage withholding and withholding reported on a Form 1099 were reported on the Other Payments and Refundable Credits Schedule.

There is a new subtraction for working military retirees and beneficiaries receiving military survivor benefits that meet certain residency requirements. The capital gains tax credit was repealed as of January 1, 2024, but all other tax credits remain. The Transition Schedule is only available for tax year 2024 and is used to report one-time catch-up items as well as the recovery of federal income tax deducted on the 2023 Form 2.

Even if a taxpayer does not need to increase their estimated payment, they may want to make a payment to account for the additional tax they will owe when filing their Montana individual income tax return.

An individual is generally considered a bona fide resident of the Commonwealth of the Northern Mariana Islands (CNMI) if they (1) are physically present in the territory for 183 days during the taxable year, (2) do not have a tax home outside the territory during the tax year, and (3) do not have a closer connection to the U.S. or a foreign country. U.S. citizens and resident aliens are permitted certain exceptions to the 183-day rule.

Internal Revenue Code (IRC) section 937 establishes the criteria for determining residency of an individual in the CNMI and for determining whether income is sourced in the territory. If a taxpayer has income from the CNMI, they may have to file a U.S. tax return only, a territory tax return only, or both returns, depending on whether they are considered a bona fide resident.

Bona fide residents of the CNMI, Guam, or the United States Virgin Islands have an income tax filing requirement only with the territory, known as the single filing rule. They will be allowed a tax credit on a territory return for withholding or estimated tax payments made to the IRS and may be allowed other tax credits by the territory.

A bona fide resident of the CNMI cannot claim the Earned Income Credit (EIC), Additional Child Tax Credit (ACTC), Credit for Other Dependents (ODC), or American Opportunity Tax Credit (AOTC) on a U.S. Form 1040. CNMI residents should contact the Commonwealth of Northern Mariana Islands Division of Revenue and Taxation to determine whether similar credits are available and whether they qualify.

The CNMI has its own income tax system based partly on the same income tax laws and tax rates as the U.S. Internal Revenue Code and partly on local taxes imposed by the CNMI government. A U.S. citizen who is self-employed in the CNMI must pay self-employment tax on net self-employment earnings of $400 or more.

Individuals who are bona fide residents of the Virgin Islands file Form 1040 with the Virgin Islands and pay tax on their worldwide income to the Virgin Islands. To be a bona fide resident, an individual generally cannot have a tax home outside of the Virgin Islands during any part of the taxable year.

Non-residents with Virgin Islands income must file identical returns with the United States and the Virgin Islands by April 15 of the following year (assuming a calendar year taxpayer), using IRS Form 8689 to figure out what portion of their income tax must be paid to the Virgin Islands. This form must be attached to both returns.

When this procedure is followed, both a taxpayer’s payments to the Virgin Islands and Virgin Islands employer withholdings are credited against their U.S. tax liability. Section 932 of the IRC provides that the United States will be treated as including the Virgin Islands for purposes of determining the U.S. tax liability of U.S. citizens or residents with Virgin Islands income, and the Virgin Islands will be treated as including the United States for purposes of determining territory tax liability.

There is no income tax imposed by the State of Texas nor its political subdivisions. Therefore, wages, interest, dividends, capital gains, and other sources of income received by an individual are not subject to any Texas state or local income tax. Although Texas does impose a franchise tax on corporations (including S corporations), a corporation would not be subject to franchise tax if it has no activity or other connection to Texas.

Texas taxpayers may be required to electronically report (file) and/or pay based on the amount reported and paid in the preceding state fiscal year (September 1 to August 31). Taxpayers who paid $500,000 or more for a specific tax in the preceding state fiscal year (September 1 to August 31) are required to pay using TEXNET. If a taxpayer is required to report electronically, there is an additional 5% penalty for failure to do so. If a taxpayer is required to pay electronically, there is an additional 5% penalty for failure to do so. Late returns may be assessed a $50 late filing penalty.