Can MT. use my income from another state as taxable income for the state of MT>?

[DanielV01 · Accepted solution]

It depends.  There are two different possibilities:

• You are a Montana resident.  If you are a Montana resident, Montana will tax all of your income regardless of where you earned it.  However, Montana will give you a credit for the amount of tax you must pay to the other state for income earned there.  (If the other state is ND, there is a reciprocal agreement between MT and ND, and you are only taxed in the state where you live.  You would not have to file a ND return unless ND tax is mistakenly withheld).

• You are working in Montana as a nonresident.  Montana will not tax income earned in the other state, but may factor in all of your income to determine MT tax.  In this situation, MT pretends that all of your income is taxable in MT, and the prorates the amount of tax to the percentage of income you earn in MT.  In this way, MT does not tax your other state's income, but all income is used to determine MT tax.  (Also note, if the other state is ND, you do not need to file a MT return unless MT tax was mistakenly withheld.  If this is the case, you would file a MT return with zero income to have all MT tax refunded to you, and use the refund to pay what you owe to ND on this income.).

[williweb1]

I was a MT, resident for the first 8 months , I am now a resident of WA. which the remainder of my income came from. Wa. state does not have income tax. I fail to understand how Mt. can tax my income from Wa. state.?????????????

[tommyid1]

I am also super confused.  I lived in Montana till may of 2019 then moved to Arizona.  Montana is trying to count the money I made in Arizona as Montana taxable income.  I am unsure what to do.  I am no longer a Montana Resident.  I am now an Arizona Resident.  do I have to do anything on my Montana return and my Arizona return?

[Cheridast78]

Montana is using all of my income including income earned in Washington and Idaho.  So basically paying state taxes on Idaho income to Idaho and Montana.  My taxable income on the Montana form is actually more then my federal!  This is rediculous.  I paid extra to turbo tax for help with this state and am getting nowhere.   Now after I paid TurboTax$300 I will have to go pay an accountant.

[DanielV01]

@Cheridast78  Although what I posted above is correct regarding state tax law, what you describe almost sounds like income was doubled-up in some way.  Since we don't have access to your account or return in this public forum, first double-check what the entries were in the Montana return, and see if there was any manual input that might have created an extra-reported income.  Many income items carry over automatically from the Federal entries, and there's no need to enter a second time on the state side.

If you find something that is fixable on your end, you will then need to prepare an amended return for Montana if they've already processed it.  This Help Article provides instructions on this:   I need to amend my state return (2021 amended returns are not yet functional, but will be soon).

If you do not find something obvious we may be able to take a closer look at it.  Please tag me @DanielV01 if that's the case.