Tax Resources
State And Federal

North Dakota Form Nd-1 Instructions

Changes affecting you and your income tax

Developments, updates, and items of interest relating to individual income tax

2013 legislative changes

Income tax rates. For tax years 2013 and after, the income tax rates for individuals were reduced by approximately 19.3 percent. The new tax rates - ranging from 1.22% to 3.22% - are reflected in the tax table and tax rate schedules contained in this booklet.

Long-term capital gain and qualified dividend exclusion. For tax years 2013 and after, the exclusion from North Dakota taxable income allowed for a net long-term capital gain and qualified dividend income was increased from 30% to 40%. Also, the law governing the exclusion for qualified dividend income was changed to provide that, if federal tax law is changed to tax qualified dividends at ordinary income tax rates, the exclusion rate will drop to 30% and apply to all taxable dividend income.

Estimated income tax. For tax years 2013 and after, an individual does not have to pay estimated North Dakota income tax if the previous year's tax liability or the tax due on the current year's return is less than $1,000. (For tax years before 2013, this threshold amount was $500.) This change will result in some individuals no longer having to pay estimated North Dakota income tax.

Renaissance zone income exemption. Effective for new zone projects approved on or after August 1, 2013, the fiveyear income exemption allowed under the North Dakota renaissance zone tax incentive program is subject to the following limitations:

  • Expansion project limitation - If a zone project consists of a physical expansion of an existing building, the amount of the exemption for a tax year is limited to an amount equal to the income eligible for the exemption multiplied by an expansion ratio. The expansion ratio is equal to the square footage added by the expansion project divided by the total square footage of the building after the expansion.
  • Taxpayer limitation - No more than $500,000 of eligible income may be exempted in a tax year. This limitation applies to the total eligible income that a taxpayer derives from all business and investment interests held during the tax year.

Automation tax credit. Note: This credit was created by 2011 legislation, but its effective date was delayed until 2013.

The 2013 tax year is the first of three tax years in which a taxpayer is allowed an income tax credit for purchasing new or used machinery and equipment for the purpose of automating a manufacturing process. Eligibility is limited to a business that is certified as a primary sector business by the North Dakota Commerce Department's Division of Economic Development and Finance (Commerce Department). The credit is equal to 20 percent of the cost of the machinery and equipment approved by the Commerce Department. The credit is first allowed in the tax year in which the taxpayer takes title to the machinery and equipment. If the credit exceeds the tax liability in the first tax year it is allowed, the excess amount may be carried over and used on subsequent years' returns for up to 5 tax years. The total credits allowed for all qualifying purchases by all taxpayers is limited to $2 million per calendar year. To obtain the credit, taxpayers must complete and file an application form with the Commerce Department.

Housing incentive fund credit. The tax credit allowed for making a contribution to the North Dakota Housing Incentive Fund, administered by the North Dakota Housing Finance Agency, was extended for two additional years through the 2014 tax year. The credit is equal to the amount contributed to the fund. If the credit exceeds the tax liability in the first tax year it is allowed, the excess amount may be carried over and used on subsequent years' returns for up to 10 tax years. North Dakota taxable income must be increased by the amount of the contribution upon which the credit is computed to the extent the contribution reduced federal taxable income.

Angel fund tax credit. For investments made in a North Dakota certified angel fund on or after January 1, 2013, the lifetime limit on the total credits allowed to a taxpayer was increased to $500,000. Married individuals are considered one taxpayer for this purpose. This limit applies to the sum of the credits earned for investments directly made by the taxpayer in an angel fund and any credits the taxpayer receives as an owner of a passthrough entity that invests in an angel fund.

Mobile workforce exclusion for nonresident individuals. Note: This exclusion was created by 2011 legislation, but its effective date was delayed until 2013.

Starting with the 2013 tax year, compensation received by an individual for services performed in North Dakota is excluded from North Dakota source income and is not subject to North Dakota income tax if all of the following conditions apply:

  • The individual is not a legal resident of North Dakota for the tax year.
  • The individual has no other income from sources in North Dakota for the tax year.
  • The individual worked in North Dakota for less than 21 days during the tax year. For this purpose, presence in North Dakota for any part of a day constitutes presence for that day unless it is solely for traveling through North Dakota.
  • The individual's state of legal residence either (1) does not impose an income tax or (2) provides a substantially similar exclusion.

"Compensation" means wages, salaries, tips, and other types of compensation that are subject to federal income tax withholding and reportable on federal Form W-2.

Certain individuals, as specified in the law, are not eligible for this exclusion. This exclusion does not affect the reciprocity agreements between North Dakota and the states of Minnesota and Montana. For more information, see N.D.C.C. § 57-38-59.3.

Income tax withholding from oil and gas royalty income. Starting in the 2014 calendar year, North Dakota income tax must be withheld from oil and gas royalty payments made to nonresident royalty owners with a nonworking interest in the production. A "nonresident royalty owner" means an individual who is a nonresident of North Dakota or a business entity with a commercial domicile outside North Dakota. A "business entity" includes a corporation, estate, trust, partnership, and any other entity subject to North Dakota income tax.

North Dakota income tax must be withheld at the highest marginal income tax rate applicable to the royalty owner. In the case of a royalty owner that is a nonresident individual, estate, or trust, tax must be withheld at the rate of 3.22%. In the case of a regular corporation, the withholding rate is 4.53%. In the case of a royalty owner that is a partnership or other type of passthrough entity, either the 3.22% or 4.53% rate, or both in some cases, will apply depending on the type of entities that own the passthrough entity.

Some royalty owners will not see any North Dakota income tax withheld from their royalty payments if the person making the payments is exempt from the new withholding requirement or the amount of the payments is less than minimum amounts specified in the law.

Oil and gas royalty payments based on oil and gas production in North Dakota constitute income from a real property interest in North Dakota and are subject to North Dakota income tax. Whether or not any North Dakota income tax is withheld from royalty payments attributable to North Dakota oil and gas production, a nonresident royalty owner is required to file a North Dakota income tax return and pay any tax due on the royalty income. Persons responsible for making oil and gas royalty payments are required to file a copy of the federal Form 1099-MISC issued to royalty owners with the North Dakota Office of State Tax Commissioner. This applies whether or not any North Dakota income tax is withheld from the royalty payments.

Other items to note

Maximum marriage penalty tax credit reduced. The maximum amount of the marriage penalty tax credit for the 2013 tax year decreased from $234 to $198. This decrease is attributable to the reduction in the individual income tax rates for the 2013 tax year. This and other changes to the marriage penalty tax credit have been incorporated into the credit calculation worksheet on page 14 of this booklet.

Filing by individuals in a same-sex marriage. A marriage of two individuals of the same sex that is validly entered into in a state whose laws authorize a same-sex marriage will be recognized for federal income tax purposes. For tax years 2013 and after, these individuals are considered married for federal income tax purposes and must use the filing status of married filing jointly or married filing separately on their federal income tax returns.

North Dakota law does not recognize a same-sex marriage, even if it was validly entered into under another state's law. Individuals who entered into a same-sex marriage recognized by another state may not file a North Dakota income tax return using the filing status of married filing jointly or married filing separately. Instead, the following rules apply to the filing of the North Dakota income tax return:

  • Each individual must file a separate Form ND-1 using the filing status of single or, if qualified, head of household.
  • Each individual must use the tax rates corresponding to the single or head of household filing status.
  • If the individuals file a joint federal income tax return, they must complete North Dakota Schedule ND-1S. On this schedule, they must determine their separate shares of the adjusted gross income and taxable income amounts reported on their joint federal return. They will use their separate shares of these amounts to complete their separate North Dakota returns.

For more information, obtain the Income Tax Guideline: Filing By Individuals In A Same-Sex Marriage.

General information for all filers

  • See the box below for the steps in completing the North Dakota income tax return.
  • This booklet contains Form ND-EZ and Form ND-1. See "Which form to use" on page 6 to find out which one fits your filing needs.
  • If you are in a same-sex marriage that was validly entered into in another state, obtain the Income Tax Guideline: Filing By Individuals In A Same-Sex Marriage for information on how to complete and file the North Dakota income tax return.

Who must file a return

Full-year resident

If you were a full-year resident of North Dakota for the 2013 tax year and you are required to file a 2013 federal individual income tax return, you must file a 2013 North Dakota individual income tax return. This applies even though you may have worked outside North Dakota (including employment overseas) during the tax year, or you have other income from sources outside North Dakota. You were a full-year resident of North Dakota if you were a resident of North Dakota for the entire tax year, or you meet the statutory 7-month rule - see Statutory 7-month rule on this page.

Definition of resident - In these instructions, the term "resident" refers to an individual who is a legal resident of North Dakota. Legal residence (which is also called domicile) means the place that is your permanent home to which you always intend to return whenever absent from it. If you have more than one physical place of abode, only one of them may be your legal residence. Legal residence is based on your intent and your actions.

Statutory 7-month rule - Even though you were not a resident of North Dakota for any part of the tax year - that is, you were a full-year nonresident - you must file as a full-year resident of North Dakota if you maintain a permanent place of abode in North Dakota and spend in the aggregate more than 210 days of the tax year in North Dakota. A permanent place of abode means a house, apartment, or other dwelling containing cooking and bathroom facilities that is suitable for year-round living and is maintained on a permanent or indefinite basis. This 7-month rule does not apply if you were (1) a part-year resident of North Dakota, (2) a full-year nonresident serving in the U.S. armed forces, or (3) a full- year resident of Montana or Minnesota covered by reciprocity.

Residents in U.S. armed forces - If you were a resident of North Dakota serving in the U.S. armed forces in 2013 and you are required to file a 2013 federal individual income tax return, you must file a 2013 North Dakota individual income tax return as a full-year resident. This applies regardless of where you were stationed during 2013.

Civilian spouse of U.S. armed forces member - If you are a civilian spouse of a U.S. armed forces servicemember, you are subject to North Dakota income tax and must file a 2013 North Dakota individual income tax return if (1) you were a full-year resident of North Dakota for the 2013 tax year and (2) you are required to file a 2013 federal individual income tax return. This applies regardless of your military spouse's state of residence, where you resided, or the source of your income.

Full-year nonresident

If you were a full-year nonresident of North Dakota for the 2013 tax year, you must file a 2013 North Dakota individual income tax return if both of the following apply:

  • You are required to file a 2013 federal individual income tax return.
  • You derived gross income from North Dakota sources during the 2013 tax year. (See the box on page 5 for what is included in gross income from North Dakota sources.)

You were a full-year nonresident if you were not a resident of North Dakota for any part of the tax year and if you do not meet the statutory 7-month rule - see Statutory 7-month rule on page 4.

Nonresidents in U.S. armed forces - If you were a full-year nonresident of North Dakota serving in the U.S. armed forces in 2013, you do not have to file a North Dakota income tax return unless (1) you have gross income from North Dakota sources other than your military compensation or (2) you are married and filing a joint federal income tax return with your spouse who is required to file a North Dakota income tax return.

Civilian spouse of U.S. armed forces member - If you are a civilian spouse of a U.S. armed forces servicemember, you are not subject to North Dakota income tax and do not have to file a 2013 North Dakota individual income tax return if (1) both you and your spouse were full-year nonresidents of North Dakota, (2) your military spouse's permanent duty station was in North Dakota, (3) your only gross income from North Dakota sources was wages for work performed in North Dakota, and (4) you resided in North Dakota only because you wanted to live with your military spouse. If you meet all of these conditions and your employer withheld North Dakota income tax from your wages, you must file a return to obtain a refund of the withheld taxes.

Minnesota or Montana resident - If you were a full-year resident of Minnesota for the 2013 tax year, you do not have to file a 2013 North Dakota individual income tax return if both of the following apply:

  • Your only gross income from North Dakota sources was compensation for personal or professional services.
  • You returned to your home in Minnesota at least once each month during the time you worked in North Dakota.

If you were a full-year resident of Montana for the 2013 tax year, you do not have to file a 2013 North Dakota individual income tax return if your only gross income from North Dakota sources was wages.

Nonresident alien - If you were a nonresident alien of the United States and you received gross income from North Dakota sources during 2013, you must file a 2013 North Dakota individual income tax return. Except where an income tax treaty between the United States and a foreign country specifically exempts income from taxation by a U.S. state, income tax treaties between the U.S. and foreign countries do not apply for North Dakota income tax purposes. Therefore, you may have to pay North Dakota income tax on gross income from North Dakota sources even though the income is exempt from U.S. income tax because of a treaty. For more information, including the instructions on how to complete the North Dakota return, obtain the Income Tax Guideline: Taxation of Nonresident Aliens.

Gross income from North Dakota sources (for nonresidents only)

In the case of a nonresident, "gross income from North Dakota sources" includes the following:

  • Compensation for services performed in North Dakota, such as wages, salaries, tips, commissions, and fees.
  • Income from tangible property in North Dakota, such as rents, oil and gas royalties, and gain from the sale or exchange of the property.
  • Income from a trade or business carried on in North Dakota, whether as a sole proprietorship, partnership, or S corporation.
  • Income from an estate or trust, but only to the extent the income is derived from tangible property or a trade or business in North Dakota.
  • Income from gambling activity carried on in North Dakota.
  • Unemployment compensation attributable to previous employment in North Dakota.

Exceptions. Gross income from North Dakota sources does not include these items received while a nonresident of North Dakota: military pay, interest, dividends, pensions, annuities, gain from the sale or exchange of intangible property, compensation exempted under reciprocity with Minnesota or Montana, compensation exempted under federal military and interstate commerce laws, or compensation exempted under North Dakota's mobile workforce exemption.

Note: Interest, dividends, gains, and other income from intangible property are included in gross income from North Dakota sources if derived from a trade or business carried on in North Dakota, whether as a sole proprietorship, partnership, or S corporation.

Part-year resident

If you were a part-year resident of North Dakota for the 2013 tax year, you must file a 2013 North Dakota individual income tax return if both of the following apply:

  • You are required to file a 2013 federal individual income tax return.
  • You derived gross income from (1) any source inside or outside North Dakota while you were a resident of North Dakota or (2) a North Dakota source while you were a nonresident of North Dakota. (See the box on this page for what is included in gross income from North Dakota sources while a nonresident.)

You were a part-year resident of North Dakota if you were a resident of North Dakota for only part of the year. This generally applies if you moved into or out of North Dakota and the move constituted a change in your legal residence. See Definition of resident on page 4.

Native Americans

If you are a Native American, you are not subject to North Dakota income tax and do not have to file a North Dakota income tax return if all of the following apply:

  • You are enrolled as a member of a federally-recognized Indian tribe.
  • You lived on any Indian reservation in North Dakota.
  • You derived all of your income from sources on any Indian reservation in North Dakota.

If any of the above criteria are not met, you may be subject to North Dakota income tax. For more information, obtain the Income Tax Guideline: Income Taxation of Native Americans.

Which form to use

This booklet contains Form ND-EZ and Form ND-1. If you are required to file a 2013 North Dakota individual income tax return, see the box on this page to determine which of these two forms to use. However, if you are in a same-sex marriage that was validly entered into in another state, you must use Form ND-1. Obtain the Income Tax Guideline: Filing By Individuals In A Same-Sex Marriage for more information.

Reciprocity

North Dakota has income tax reciprocity agreements with the states of Minnesota and Montana. If certain conditions in the agreements are met, compensation for services is taxable only by the state of residence.

Minnesota and Montana residents

If you are a resident of Minnesota and you maintain a permanent home in Minnesota to which you return at least once each month during the time you work in North Dakota, the compensation you receive for personal or professional services performed in North Dakota is not taxable by North Dakota. If you are a resident of Montana, wages you receive for work performed in North Dakota are not taxable by North Dakota.

If you received wages covered by reciprocity, and your employer withheld North Dakota income tax from them, you must file a North Dakota individual income tax return at the end of the tax year to obtain a refund of the amount withheld. If this applies to you and you do not have any other gross income from North Dakota sources, complete Form ND-1 as follows:

  1. Complete the applicable items at the top of Form ND-1, page 1 (through line C), as instructed.
  2. Fill in the circle next to "MN/ MT RECIPROCITY" at the top of Form ND-1, page 1. Also enter "MN" or "MT", whichever applies, in the space under "State."
  3. Leave line D and lines 1 through 27 blank.
  4. Fill in the amount of the North Dakota income tax withheld on lines 28, 30, 31, and 34.
  5. File Form ND-1 with a copy of your federal return and Form W-2s showing North Dakota income tax withholding.

If your wages are covered by reciprocity and you do not want your employer to withhold North Dakota income tax from them, you must complete Form NDW-R and give it to your employer. Ask your employer for this form.

North Dakota residents

If you are a resident of North Dakota and you maintain a permanent home in North Dakota to which you return at least once each month during the time you work in Minnesota, the compensation that you receive for personal or professional services performed in Minnesota is not taxable by Minnesota. Also, wages you receive for work performed in Montana while a resident of North Dakota are not taxable by Montana.

If you received wages covered by reciprocity and your employer withheld Minnesota or Montana income tax from them, you must file an income tax return with the applicable state to obtain a refund of the amount withheld. If your wages are covered by reciprocity and you do not want your employer to withhold Minnesota or Montana tax from them, you must give your employer a properly completed Minnesota Form MW-R or Montana Form NR-2, whichever applies. For assistance and forms, contact:

  • Minnesota Department of Revenue
    Email: individual.incometax@state.mn.us
    Phone: (651) 296-3781
    Web: revenue.state.mn.us
  • Montana Department of Revenue
    PO Box 5805
    Helena, MT 59604-5805
    Phone: (406) 444-6900
    Web: revenue.mt.gov

When and where to file

If you are filing on a calendar year basis, you must file your 2013 North Dakota individual income tax return on or before April 15, 2014. If you are filing on a fiscal year basis, you must file on or before the 15th day of the fourth month following the close of your fiscal tax year. If the due date falls on a Saturday, Sunday or holiday, you have until the next day that is not a Saturday, Sunday, or holiday to file your return.

Mail your return in the preaddressed envelope provided in this booklet. If you don't have a preaddressed envelope, mail it to:

Office of State Tax Commissioner
PO Box 5621
Bismarck, North Dakota 58506-5621

Extension of time to file

You may obtain an extension of time to file your North Dakota individual income tax return by obtaining either a federal extension or a North Dakota extension.

Federal extension. If you obtain an extension of time to file your federal return, it will be recognized for North Dakota purposes. This includes the automatic extension allowed for being outside the U.S. and Puerto Rico on April 15. You do not have to file a separate state extension form, nor do you have to notify the Office of State Tax Commissioner that you have obtained a federal extension prior to filing your North Dakota return. Fill in the circle next to "Extension" on Form ND-EZ or Form ND-1, whichever applies.

North Dakota extension. If you do not obtain a federal extension, but need additional time to file your North Dakota return, you may apply for a North Dakota extension by completing and filing Form 101. This is not an automatic extension - you must have good cause to request a North Dakota extension. Form 101 must be postmarked on or before the due date of your return. You will be notified whether your extension request is approved or rejected. If approved, fill in the circle next to "Extension" on Form ND-EZ or Form ND-1, whichever applies.

Extension interest. If you obtain an extension and file your North Dakota return on or before the extended due date, and you pay any tax balance due with the return, no penalty will be charged. Interest on any tax due on the return will be charged at the rate of 12% per year from the original due date of your return to the earlier of the date you file your return or the extended due date.

Prepayment of tax due. If you are applying for an extension of time to file, you may prepay the tax that you expect to owe to avoid paying extension interest. To do so, submit your check or money order along with a completed 2013 Form ND-1EXT on or before April 15, 2014. Alternatively, you may submit your payment along with a letter containing the following:

  • Your name.
  • Your social security number.
  • Your address and phone number.
  • Statement that you are making a 2013

Form ND-1EXT payment. If you prepay your tax using Form ND-1EXT, you must file Form ND-1 and claim the payment on page 2, line 29; you may not file Form ND-EZ.

Penalty and interest

If you obtain an extension of time to file your return, you may pay the tax due by the extended due date of the return without penalty, but extension interest will apply - see Extension interest and Prepayment of tax due on this page.

If you file your return by its due date (or extended due date), but you do not pay all of the tax due on it by the return's due date (or extended due date), a penalty equal to 5% of the tax due or $5.00, whichever is greater, must be paid.

If you do not file your return by its due date (or extended due date), a penalty equal to 5% of the tax due or $5.00, whichever is greater, applies for the month the return was due, with an additional 5% of the tax due for each month (or fraction of a month) the return remains delinquent, not to exceed 25% of the tax due.

In addition to any penalty, interest must be paid at the rate of 1% per month (or fraction of a month), except for the month in which the tax was due, on any tax due that remains unpaid after the return's due date (or extended due date).

Federal income tax return

Certain information from your 2013 federal individual income tax return - Form 1040, 1040A, or 1040EZ - is needed to properly complete your 2013 North Dakota individual income tax return. Therefore, you must complete your federal return before you attempt to complete your North Dakota return.

In addition, you must attach a complete copy of your federal income tax return to your North Dakota return. A complete copy consists of Form 1040, 1040A, or 1040EZ, along with any supplemental forms and schedules. You do not have to include depreciation schedules or any other statements that you may have prepared as supporting documentation to your federal return.

Changing your return

If you need to change your North Dakota return after you file it, you must file an amended return. There is no special form for this purpose. See How to prepare an amended return on page 8.

If you paid too much tax because of an error in your return, you generally have three years after you file your original return to file an amended return to correct the error and claim a refund of the overpayment. There are other time periods that may apply, such as in the case of a net operating loss carryback, an overstatement of tax of over 25%, or an IRS audit. For these and other time periods that may apply, see North Dakota Century Code § 57-38-40 or contact the Office of State Tax Commissioner.

Penalty and interest apply to additional tax due on an amended return.

Change to federal return. By law, you must file an amended North Dakota return to report changes made to your federal return. This applies whether the changes are attributable to your filing of an amended federal return or an audit or correction by the IRS. The amended North Dakota return must be filed within 90 days after filing the amended federal return or within 90 days after the final determination of the IRS changes.

How to prepare an amended return

  1. Obtain a blank North Dakota individual income tax return for the tax year affected by the changes. For tax years before 2009, use Form ND-1 or Form ND-2, whichever applies. For tax years after 2008, you must use Form ND-1.
  2. Enter your name, current address, social security number, and other information required in the top portion of the return.
  3. Fill in the circle next to "Amended return: General" or "Amended return: Federal NOL," whichever applies, in the top right-hand corner of the return. See "Amended return" on page 11 for more information.
  4. Complete the return through the net tax liability line.
  5. Leave the line for income tax withholding blank unless you are claiming an additional amount not previously claimed.
  6. On the "Total payments" line, enter the net tax liability shown on your original return or previously filed amended return. If the net tax liability has not been fully paid at the time the amended return is filed, only enter the amount of tax that has been paid.
  7. Complete the remaining portion of the return according to the instructions. On an amended return, you may not adjust the amount of any voluntary contribution to the wildlife or trees funds, nor the amount of an overpayment applied to the next year's estimated tax.
  8. Attach a statement explaining why you are changing your return. If you are doing so because of changes you or the IRS made to your federal return, attach a copy of the amended federal return or IRS notice.

Estimated tax requirement (for 2014)

You must pay estimated North Dakota income tax for the 2014 tax year if all of the following conditions apply:

  1. You are required to pay estimated federal income tax for 2014.
  2. Your North Dakota net tax liability for 2013 is $1,000 or more. (If you are not required to file a North Dakota return for 2013, you do not have to pay estimated tax for 2014.)
  3. You expect to owe (after subtracting any estimated North Dakota income tax withholding) at least $1,000 in North Dakota income tax for 2014.
  4. You expect your North Dakota income tax withholding for 2014 to be less than the smaller of the following:
    1. 90% of your 2014 North Dakota net tax liability. Note: Substitute 66 2/3% if a qualified farmer - see instructions for 2014 Form ND-1ES.
    2. 100% of your 2013 North Dakota net tax liability. If you moved into North Dakota during 2013 and had no income from North Dakota prior to the move, this 100% threshold does not apply; you must satisfy the 90% threshold in part (a).
     

In general, one-fourth (25%) of the total estimated tax required to be paid for the 2014 tax year must be paid by April 15, June 15, and September 15, 2014, and January 15, 2015.

If you are required to pay estimated tax for 2014, obtain the 2014 Form ND-1ES, Estimated income tax - individuals.

How to file a return for a deceased taxpayer

If a final federal income tax return is required to be filed for a decedent for the year of death, a final North Dakota income tax return also must be filed. A court-appointed personal representative is responsible for filing the decedent's final return, even if there is a surviving spouse. The information from the final federal return is used to complete the final North Dakota return, and the North Dakota return is to be signed in the same manner as required for federal income tax purposes. If there is a personal representative and no surviving spouse, a copy of the court document showing the appointment must be attached to the final return. If there is a surviving spouse and the final return will be filed on a joint basis, a refund will be mailed in both spouses' names.

If a surviving spouse experiences any problem with depositing or cashing a refund check, or if there is no surviving spouse and no personal representative has been appointed for the decedent, contact the Individual Income Tax Section, Office of State Tax Commissioner for assistance (see the back cover of this booklet).

Fill in the circle for "Deceased" and enter the date of death next to the deceased taxpayer's name on Form ND-EZ or Form ND-1, whichever applies.

2013 Form ND-1 Instructions

Before you begin . . .

  • The instructions on pages 11 through 16 of this booklet apply to Form ND-1.
  • Be sure to have a copy of your completed 2013 federal income tax return - Form 1040, 1040A, or 1040EZ - at hand. You will need information from it to complete Form ND-1.

Nonresident of North Dakota for part or all of the 2013 tax year

If you were a nonresident of North Dakota for part or all of the 2013 tax year, first complete Form ND-1 through line 19. Then complete Schedule ND-1NR (in this booklet) to calculate the amount of your tax. On Schedule ND-1NR, you will indicate whether you were a nonresident for part or all of the tax year by filling in your residency information at the top of the schedule.

If you are married and filing a joint return, and either you or your spouse was a nonresident of North Dakota for part or all of the tax year, you must complete Schedule ND-1NR on a joint basis and attach it to Form ND-1. On Schedule ND-1NR, each of you must indicate your residency status by filing in your residency information at the top of the schedule.

Individuals in same-sex marriage

If you are in a same-sex marriage that was validly entered into in another state, obtain the Income Tax Guideline: Filing By Individuals In A Same-Sex Marriage

for how to complete Form ND-1.

Instructions for top of page 1 of Form ND-1

Fiscal year filer only

If you are filing your federal income tax return on a fiscal year basis, enter in the spaces provided the ending date of your fiscal tax year as shown on your federal return.

Name and address

Enter your full name and address in the spaces provided on the return. If you are married and filing a joint return, include your spouse's full name. If the taxpayer died during the 2013 tax year, fill in the circle for "Deceased" and enter the date of death next to the taxpayer's name.

Social security numbers

Enter your social security number (and your spouse's social security number, if married filing jointly) in the spaces provided on the return.

Item A - Filing status

Fill in the circle next to the filing status that you used on your 2013 Form 1040EZ, 1040A, or 1040.

Item B - School district code

Select the code number from the list of school district codes on page 19.

Item C - Income source code

Select from the following list the code number corresponding to the area from which you derived the majority of your income for the tax year.

Source of income Code number
Farming, ranching, or agricultural production 1
Retail, wholesale trade, and eating and drinking places 2
Federal, state, county, or city government service . 3
Public or private education 4
Accounting, legal, health, motel, and other personal or professional services not classified elsewhere . 5
Construction 6
Manufacturing 7
Transportation, communication, and public utilities 8
Exploration, development, and extraction of coal, oil, and natural gas 9
Banking, insurance, real estate, and other financial services 10
Military service 11
Retirement (Pensions, annuities, IRAs, etc.) 12

Amended return

If you are filing this return to change a return you previously filed for the 2013 tax year, fill in the circle next to:

  • Amended return: General - if you are changing the return for any reason other than a federal net operating loss carryback.
  • Amended return: Federal NOL - if you are changing the return because of a federal net operating loss carryback.

See Changing your return on page 7 for more information.

Extension

Fill in the circle next to "Extension" only if you have an extension to file your North Dakota return. See Extension of time to file on page 7 for more information.

MN/MT reciprocity

Fill in the circle next to "MN/MT Reciprocity" only if you are a Minnesota or Montana resident who is filing this return solely to claim a refund of North Dakota income tax because of reciprocity. See page 6 for details.

Instructions for lines 1-39 of Form ND-1

Line 1 -Federal taxable income

On your federal income tax return, you are instructed to enter "-0-" for your federal taxable income if it calculates out to be less than zero. However, for purposes of completing Form ND-1, enter the negative number on line 1. Enter a minus sign (-) to the left of the number.

Line 2 -Lump sum distribution

If you received a lump-sum distribution from a qualified retirement plan that you elected to report on Federal Form 4972 (Tax On Lump-Sum Distributions), you must enter on this line the amount from Form 4972, line 6 plus line 10. However, if you received the distribution while a nonresident of North Dakota, do not make an entry on this line.

Line 3 -Loss from certain S corporations

Enter on this line the amount of a loss adjustment reported to you by an S corporation that elected taxation under N.D.C.C. § 57-38-01.35. For more information, obtain the Income Tax Guideline: Adjustment For Income (Loss) From An S Corporation Taxed Under N.D.C.C. § 57-38-01.35.

Line 4 -Contribution adjustment

If you are claiming a tax credit on Schedule ND-1TC, line 5 (planned gift credit), line 12 (endowment fund credit from passthrough entity), line 18 (endowment fund contribution credit), or line 19 (housing incentive fund credit), the amount of the contribution on which the tax credit is based must be added back to federal taxable income to the extent that you deducted it in calculating your federal taxable income. This adjustment also must be made if any part of a contribution that was the basis for one of these tax credits claimed in a previous tax year is carried over and deducted on your 2013 federal income tax return. In the case of the planned gift and endowment fund credits, enter the contribution on line 4a. In the case of the housing incentive fund credit, enter the contribution on line 4b.

Line 7 -U.S. obligation interest

Enter the following on this line:

  • Interest income from U.S. obligations.
  • Interest income from other securities that is specifically exempted from state income tax by federal statute.
  • The portion of dividend income from a mutual fund attributable to investment in U.S. obligations and other securities the interest from which is exempted from state income tax by federal statute.

Common sources of interest income that may be entered on this line include:

  • U.S. savings bonds and Treasury bills and notes.
  • Securities issued by:

    Banks for cooperatives

    Commodity Credit Corporation

    Federal Deposit Insurance

    Corporation

    Federal Farm Credit System

    Federal Home Loan Banks

    Federal Intermediate Credit Banks

    Federal Land Banks

    Federal Savings & Loan Insurance

    Corporations

    Student Loan Marketing Association

     

Do not enter on this line interest income from securities of the Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), and Government National Mortgage Association (Ginnie Mae), nor from a federal income tax refund or repurchase agreement.

Line 8 -Net long-term capital gain exclusion

If your federal taxable income includes a net long-term capital gain (including a capital gain distribution from a mutual fund), you may be able to exclude 40 percent of the gain from your North Dakota taxable income. If you were a full-year nonresident or a part-year resident of North Dakota for the year, only a net long-term capital gain reportable to North Dakota is eligible for the exclusion. A net long-term capital gain included in an amount entered on line 9, 11, or 16 of Form ND-1 is not eligible for the exclusion.

Complete the worksheet on page 13 to calculate the amount to enter on this line.

Line 9 -Native American's exempt income

If you are an enrolled member of a federally-recognized Indian tribe who lived on any Indian reservation in North Dakota for all of 2013, enter on this line income you derived from sources on any Indian reservation in North Dakota. This includes the portion of the Standing Rock and Lake Traverse Indian Reservations situated in South Dakota. Do not enter income derived from non-reservation sources in North Dakota. If you lived in North Dakota in 2013, but you did not reside on an Indian reservation for part or all of 2013, do not enter income earned or received while living off the reservation.

Line 10 -U.S. Railroad Retirement Board benefits

Enter on this line unemployment, sick pay, or retirement benefits received from the U.S. Railroad Retirement Board that are included in federal taxable income.

Line 11 -Income from certain S corporations

Enter on this line the amount of an income adjustment reported to you by an S corporation that elected taxation under N.D.C.C. § 57-38-01.35. For more information, obtain the Income Tax Guideline: Adjustment For Income (Loss) From An S Corporation Taxed Under N.D.C.C. § 57-38-01.35.

Line 12 -National Guard or reserve member exclusion

If you were a member of the North Dakota National Guard or the U.S. armed forces reserve, and you were mobilized or activated for federal active duty service under Title 10, United States Code, enter the compensation received for that service. Do not enter compensation exempted from federal income tax, nor compensation received for attending annual training, basic military training, or professional military education. Attach a copy of your Title 10 orders.

Line 13 -Servicemember Civil Relief Act adjustment

If you were a full-year nonresident of North Dakota for the tax year, enter on this line the amount of your compensation received for active duty in the U.S. armed forces, or for active duty in the commissioned corps of the Public Health Service or the National Oceanic and Atmospheric Administration. If you were a part-year resident of North Dakota for the tax year, only the compensation received for this service while a nonresident of North Dakota may be entered on this line. If you were a full- year resident of North Dakota for 2013, do not make an entry on this line. Attach a copy of the Form W-2 showing the military pay.

Line 14 -College SAVE contribution deduction

If you made a contribution in 2013 to a North Dakota College SAVE account administered by the Bank of North Dakota, you are allowed a deduction for the contribution, up to a maximum deduction of $5,000 ($10,000, if married filing jointly). You are allowed the deduction regardless of whether you or someone else owns the account. A rollover of funds from another I.R.C. Section 529 college savings plan into a North Dakota College SAVE account does not qualify.

Line 15 -Qualified dividend exclusion

You may exclude 40 percent of dividend income that meets both of the following:

  • The dividends are "qualified dividends" for federal income tax purposes, which are taxed at the lower federal tax rate applicable to a net long-term capital gain.
  • The dividends are reportable to North Dakota.

Full-year resident - Multiply the "qualified dividends" from line 9b of Form 1040A or Form 1040 by 40 percent and enter the result.

Full-year nonresident or part-year resident - Multiply the portion of the "qualified dividends" from line 9b of Form 1040A or Form 1040 that are reportable to North Dakota by 40 percent and enter the result. Note: Only include dividends that are reportable on Schedule ND-1NR, line 2, column B.

Line 16 -Other subtractions

See the instructions to Schedule ND-1SA for information about the following:

  • Renaissance zone income exemption
  • New or expanding business income exemption under N.D.C.C. ch. 40-57.1
  • Human organ donor deduction
  • Employee workforce recruitment exclusion

Enter on this line the total subtractions from Schedule ND-1SA, line 5. Attach Schedule ND-1SA.

Line 20 -Calculation of tax

If you were a full-year resident for the tax year, use the Tax Table on page 20 to calculate your tax. This also applies if you are married filing jointly and both you and your spouse were full-year residents for the tax year.

If you were a full-year nonresident or a part-year resident for the tax year, you must complete Schedule ND-1NR (in this booklet) to calculate your tax. This also applies if you are married filing jointly and either you or your spouse was a nonresident for part or all of the tax year. Attach Schedule ND-1NR.

Farm income averaging - If you have farm income and used Schedule J (Form 1040) to calculate your federal income tax for 2013, you may be able to lower your North Dakota income tax by completing Schedule ND-1FA. Attach Schedule ND-1FA.

Sale of tax credit - If you received any proceeds from the sale of a North Dakota research expense tax credit to another taxpayer, you must obtain and complete Schedule ND-1CS to calculate your tax. Attach Schedule ND-1CS.

Worksheet for calculating net long-term capital gain exclusion (for line 8 of Form ND-1)

Capital gain distribution - If you reported capital gain distributions on Form 1040A, line 10, or on Form 1040, line 13 (and you did not have to complete Schedule D), skip lines 1 and 2 and enter the distributions on line 3 of this worksheet.

1. Enter amount from 2013 Schedule D (Form 1040), line 15. If zero or less, stop here; no exclusion is allowed _____
2. Enter amount from 2013 Schedule D (Form 1040), line 16. If zero or less, stop here; no exclusion is allowed _____

3. Enter the smaller of line 1 or line 2

  • If a full-year resident, enter the amount from line 3 on line 5 and go to line 6.
  • If a full-year nonresident or part-year resident, go to line 4.
_____
4. Complete lines 4a through 4d using only the capital gains and losses reportable to North Dakota: _____
a. North Dakota net short-term capital gain (loss) _____
b. North Dakota net long-term capital gain (loss) _____
c. Combine lines 4a and 4b. If zero or less, enter -0- . _____
d. Enter the smaller of line 4b or line 4c _____
5. If a full-year resident, enter amount from line 3. Otherwise, enter smaller of line 3 or line 4d _____
6. Portion of line 5 included in an amount entered on Form ND-1, line 9, 11, or 16 _____
7. Subtract line 6 from line 5 _____
8. Multiply line 7 by 40% (.40). Enter this amount on Form ND-1, line 8 _____

Line 21 -Credit for income tax paid to another state

If you were a full-year resident or part-year resident of North Dakota and you paid income tax to another state on income also taxed by North Dakota, you may be eligible for an income tax credit. Obtain Schedule ND-1CR for more information. Attach Schedule ND-1CR.

Line 22 -Marriage penalty credit

You may be eligible for a tax credit if all of the following apply:

  • You are married and filing a joint return with your spouse.
  • Your joint North Dakota taxable income on line 19 of Form ND-1 is more than $60,744;
  • Both you and your spouse have qualified income. See "What's included in qualified income?" below.
  • The qualified income of the spouse with the lower qualified income is more than $34,494.

Although you meet all of the above conditions, your fact situation may not produce a credit under the calculation formula prescribed by law. Complete the Marriage Penalty Credit Worksheet on this page to calculate the credit amount, if any, allowed to you.

What's included in qualified income? For purposes of lines 3a and 3b of the worksheet, add the following amounts separately for you and your spouse:

  • Wages, salaries, tips, etc. reported on line 7 of Form 1040 or Form 1040A, or line 1 of Form 1040EZ.
  • Net self-employment income reported on Schedule SE (Form 1040), line 3 (short or long method), reduced by the self-employment tax deduction reported on Form 1040, line 27.
  • Taxable portion of IRAs, pensions, annuities, and social security benefits reported on lines 15b, 16b, and 20b of Form 1040, or on lines 11b, 12b, and 14b of Form 1040A. Reduce this total by any taxable benefits from the U.S. Railroad Retirement Board entered on Form ND-1, line 10.

Line 23 - Unused 2008 residential and agricultural property tax credit

Enter any remaining unused residential and agricultural property tax credit that you elected to carryforward from your 2008 Form ND-1, line 24b, or Form ND-2, Tax Computation Schedule, line 6b.

Important: DO NOT make an entry on this line if you elected on your 2008 return to receive a Property Tax Relief Certifi cate for the amount of your unused residential and agricultural property income tax credit.

Line 24 -Unused 2008 commercial property tax credit

Enter any remaining unused commercial property tax credit from your 2008 Schedule PT, Section 2, line 10.

Line 25 -Other credits

If you have any of the tax credits below, obtain and complete Schedule ND-1TC. For information about each credit, see the instructions to Schedule ND-1TC.

  • Family member care credit
  • Renaissance zone credit
  • Agricultural commodity processing facility investment credit
  • Seed capital investment credit
  • Planned gift credit
  • Biodiesel fuel supplier credit
  • Biodiesel fuel seller credit
  • Employer internship program credit
  • Microbusiness credit
  • Research expense credit
  • Angel fund investment credit
  • Endowment fund credit from passthrough entity
  • Workforce recruitment credit
  • Carryover of unused 2009 retroactive property tax credit
  • Long-term care "partnership plan" insurance credit
  • Geothermal energy device credit
  • Credit for wages paid to a mobilized employee
  • Endowment fund contribution credit
  • Housing incentive fund credit
  • Automation credit

Enter on this line the total credits from Schedule ND-1TC, line 21. Attach Schedule ND-1TC.

Line 28 -Withholding

Enter the North Dakota income tax withholding shown on a 2013 Form W-2, Form 1099, or North Dakota Schedule K-1. Also enter North Dakota income tax withholding shown on a 2012 North Dakota Schedule K-1 if the tax year of the partnership, S corporation, estate, or trust shown on the Schedule K-1 is a fiscal year ending in your 2013 tax year. Be sure the state identified on the Form W-2 or Form 1099 is North Dakota. Do not enter on this line North Dakota extraction or production taxes withheld from mineral interest income, such as an oil or gas royalty, because they are not income taxes. Attach a copy of the Form W-2, Form 1099, or North Dakota Schedule K-1.

Line 29 -Estimated tax payment

If you made an advance payment of your North Dakota income tax using Form ND-1ES or Form ND-1EXT, you paid estimated income tax to North Dakota. Enter any estimated income tax paid to North Dakota on this line. If you overpaid your income tax on your 2012 North Dakota income tax return, and you elected to leave part or all of it on deposit to be applied as an estimated income tax payment for 2013, also enter that amount on this line. Do not enter on this line any North Dakota income tax withholding shown on a Form W-2, Form 1099, or North Dakota Schedule K-1. Income tax withholding must be entered on line 28.

Line 32 -Application of overpayment to 2014

If you have an overpayment on line 31, you may elect to apply part or all of it as an estimated payment toward your 2014 income tax liability. If you make this election, you may not change the election or the amount you applied after you file your return.

Line 33 -Voluntary contribution of overpayment

If you have an overpayment on line 31, you may make a voluntary contribution of part or all of your overpayment to the Watchable Wildlife Fund or the Trees For

Do not include the check number as part of the account number.

North Dakota Program Trust Fund (or both) by entering on the applicable line the amount you wish to contribute. If contributing, you must contribute at least $1.00. A contribution will reduce your refund.

Line 34 -Direct deposit of refund

If you want us to directly deposit your refund into your bank account, complete items a, b, and c. You may want to check with your financial institution to see if it will accept direct deposit and to obtain the correct routing and account numbers.

Routing number (Item a) - Enter your 9-digit routing number. The first two digits must be within the range of 01 through 12 or 21 through 32. If depositing into a checking account, see the sample check on this page for where to find this number. If depositing into a savings account without a check writing feature, ask your financial institution for the correct routing number to use.

Account number (Item b) - Enter your account number. It may have up to 17 digits (both letters and numbers). Include hyphens, but omit special symbols. If depositing into a checking account, see the sample check on this page for where to find this number. If depositing into a savings account without a check writing feature, check your bank statement or ask your financial institution for the correct account number to use.

Please note:

  • Do not use the number shown on a deposit slip for the routing or account number.
  • You will not receive notification of when the deposit is made by our office. Contact your bank or review your bank statement to see if your refund has been direct deposited.
  • If the routing or account number is incorrect, or if your bank does not accept the direct deposit, a paper check will be issued.
  • Due to changes in the electronic banking rules, the Office of State Tax Commissioner will not allow a direct deposit to or through a foreign financial institution. In this case, a paper check will be issued.

Line 36 -Penalty and interest

Our office will notify you of any penalty and interest owed for late filing or late payment, or interest owed on tax due during an extension period. However, you may calculate the amount of penalty, interest, or both, that you owe and pay it with your return.

See Penalty and interest on page 7 for how to calculate penalty and interest. Enter the separate penalty and interest amounts, and the total of the two amounts, on the applicable lines.

Line 37 -Voluntary contribution

If you have a tax due on line 35, you may make a voluntary contribution to the Watchable Wildlife Fund or the Trees For North Dakota Program Trust Fund (or both) by entering on the applicable line the amount you wish to contribute. If contributing, you must contribute at least $1.00 to a fund. A contribution will increase your balance due.

Line 38 -Balance due

The balance due (which includes the amount, if any, from line 39) must be paid in full with your return. Make your check or money order payable to the "ND State Tax Commissioner."

Electronic payment options. Instead of paying by paper check or money order, you may pay the balance due electronically by phone or online through Link2Gov Corporation, a national electronic payment service. Through this service, you may pay by credit or debit card, or by electronic check. To pay electronically -

Link2Gov charges a fee for this service, which varies depending on the payment method used. North Dakota does not receive any part of this fee. You will be informed about the fee during the transaction and will have the option to continue or cancel the transaction.

Line 39 -Interest on underpaid estimated tax

If you were required to pay estimated North Dakota income tax for 2013, but you did not pay enough or you paid it late, interest is charged on the underpayment or late payment. To determine if you owe interest, obtain and complete the 2013 Schedule ND-1UT.

Signatures

Sign and date your return. If you are filing a joint return, both spouses must sign.

Disclosure authorization

You may authorize the Office of State Tax Commissioner (Tax Department) to directly contact your tax return preparer to discuss your 2013 return by checking the box to the right of the signature area on the return. This allows the Tax Department to ask questions and request missing information needed to process your return. It also allows your preparer to respond to the questions and provide the requested information, to check on the status of your return's processing, and to respond to notices that you received. (Note: The Tax Department will only send notices directly to you.)

This authorization only applies to the individual whose printed name and signature appear in the preparer's signature area (and not to any firm). It only applies to your 2013 return and automatically expires on the due date (excluding extensions) for filing the 2014 return. It does not allow your preparer to receive your refund check, to bind you in any way, or to otherwise represent you before the Tax Department.

Before you file, did you -  

Write your social security number on return? We use this number to identify your return.

Check your math?

This is one of the most common errors made.

Sign your return?

An unsigned return is incomplete and will be sent back to you.

Include all Form W-2s?

Also include a copy of a 1099 or Schedule K-1 showing North Dakota withholding.

Include a copy of your federal return?

Your return is incomplete without it and will be sent back to you.

Use the right address?

Use the preprinted envelope or see page 7 for address.

Use the correct postage?

Avoid mailing problems and possible late filing charges by using the correct postage.

Missing a signature or copy of federal return? If your return is missing your signature or a copy of your federal return, it will be sent back to you. This may result in late filing and payment charges if you resubmit it after the due date.