North Dakota Tax Schedule ND-1CR - Calculation of credit for income tax paid to another state Instructions

General Informations 

Who is eligible

You may be eligible for a credit for income tax paid to another state if both of the following apply:

• You were a North Dakota resident for all or part of the tax year.
• You are required to pay income tax for the tax year to North Dakota and to another state on the same income.

Part-year resident—If you were a part-year resident of North Dakota during the tax year, the credit is available only if the income taxed by both North Dakota and the other state was earned or received during the time you were a North Dakota resident.

Definition of state—For purposes of this credit, “state” means any of the other 49 states, the District of Columbia, or a territory of the United States. This credit is not available for income tax paid to a local government (such as a city, county, or school district), nor is it available for income tax paid to another country or any of its political subdivisions.

Other state’s return—The credit is allowed only if you file an income tax return with the other state. The credit is not allowed based on the amount of the other state’s income tax withheld from your wages or the amount of estimated income tax paid to the other state. Part or all of the other state’s income tax withholding or estimated tax paid may be refunded to you depending on the actual income tax liability calculated on the other state’s income tax return.

You must attach this schedule to your Form ND-1 to obtain the credit.

Joint filers having different residency statuses. If you are filing a joint return and you and your spouse had different residency statuses, the credit is available to either or both spouses, provided the spouse meets the eligibility requirements.

Composite return. If you owned an interest in a partnership or other type of passthrough entity, and you elected to be included in a composite (or block) return filed in another state on your behalf by the passthrough entity—which satisfied your income tax filing requirement in that state—your share of the income tax paid to the other state on the composite (or block) return is eligible for this credit if you otherwise meet the eligibility requirements for this credit.

Payment of income tax to more than one other state

If you pay income tax to more than one other state for the tax year, you must complete a separate Schedule ND-1CR for each state. Fill in the total of the separately calculated credit amounts on Form ND-1, line 19.

Did you work in Montana?

If you worked in Montana while a resident of North Dakota, the wages you receive for this work are not taxable by Montana under the income tax reciprocity agreement between the two states. If this applies to you, but your employer withheld Montana income tax from the wages, do not complete this schedule. Instead, you must file a Montana individual income tax return to obtain a refund of the Montana income tax withheld.

Income other than wages from Montana sources—You may be eligible for this credit if you are required to pay income tax to Montana on income other than wages, provided you earn or receive the income while a North Dakota resident.

Did you work in Minnesota?

If you worked in Minnesota while a resident of North Dakota, the wages you receive for this work are not taxable by Minnesota under the income tax reciprocity agreement between the two states, provided you maintained a home in North Dakota to which you returned at least once every month. If this applies to you, but your employer withheld Minnesota income tax from the wages, do not complete this schedule. Instead, you must file a Minnesota individual income tax return to obtain a refund of the Minnesota income tax withheld.

Income other than wages from Minnesota sources—You may be eligible for this credit if you are required to pay income tax to Minnesota on income that is not covered by the income tax reciprocity agreement between North Dakota and Minnesota, provided you earn or receive the income while a North Dakota resident.

Specific line instructions

Line 1b

Enter only those items of income, gain, loss, and adjustments to income (included in your federal adjusted gross income) that have their source in the other state. Generally they have their source in the other state if they are taxable or deductible under the other state’s tax laws. Do not include

exemptions, standard deduction or itemized deductions, or any other adjustment to federal adjusted gross income allowed or required by the other state’s tax laws.

Example: Taxpayer A is a full-year resident of North Dakota. He has wages of $48,000 and interest income of $1,000. His federal adjusted gross income is $49,000 ($48,000 + $1,000). $5,000 of his wages was earned for temporary work performed in the State of Nebraska and is taxable by Nebraska. His interest income is not taxable by Nebraska. The portion of his federal adjusted gross income that has a source in Nebraska is $5,000, which must be entered on line 1b of Schedule ND-1CR.

Line 1c

If you (and your spouse, if filing jointly) were full-year residents of North Dakota, enter the amount from line 1b. Otherwise, enter the portion of line 1b that you (and your spouse, if filing jointly) received or earned while a resident of North Dakota. If filing a joint return with your spouse, and either of you was a full-year nonresident, do not include any of the full-year nonresident spouse’s income.

Example: During the tax year, Taxpayer B was a Montana resident from January 1 through June 30, and a North Dakota resident from July 1 through December 31. While a Montana resident, she received wages of $10,000 for work performed in Montana. After she moved to North Dakota, she received an additional $18,000 of wages for work performed in North Dakota. She also owns land in Montana from which she received net rental income of $1,000 per month (for a total of $12,000 for the year). Her federal adjusted gross income is $40,000 ($10,000 + $18,000 + $12,000). The wages of $10,000 earned in Montana and the net rental income of $12,000 from property located in Montana are taxable by Montana, and she must enter $22,000 on line 1b of Schedule ND-1CR. $6,000 (or $1,000 per month for six months) of the net rental income was received while a North Dakota resident, and therefore she must enter $6,000 on line 1c of Schedule ND-1CR.

Line 6

Enter the amount of the income tax less any income tax credits as shown on the other state’s income tax return. Do not include on this line the amount of the other state’s income tax withheld from your wages or the amount of estimated income tax paid to the other state. Include your share of the tax paid on a composite (or block) return, if applicable—see “Composite return” under “Who us eligible.”