Individuals who reside in Montana for a portion of the tax year are considered part-time residents of the state. Taxpayers are considered residents the moment they establish a home within the state, and consequently lose resident status if they relinquish their home in the state and create a domicile in a different state. While you are considered a resident, all qualifying income is taxable, regardless of where it was earned. Nonresidents are only subject to Montana state income tax if they earned any income sourced from within the state.

Typically, income sourced in-state means that work was physically performed in Montana, or income generated from property located in Montana (rent), or income received as payment for business services in the state. Additionally, state sourced income includes distributive shares of S corporation, partnership, or similar entity. Part-year residents may also include income from interest, dividend, annuities and pensions that were obtained while residing in Montana. As a Montana resident, even if it’s only for a portion of the year, all income is subject to Montana tax regardless of where it is earned.

North Dakota Residents

If you reside in North Dakota but work in Montana, your wages are not taxable by the state of Montana. Wages that are covered by reciprocity that have had Montana income tax withheld should be reported on a Montana income tax return, filed at the conclusion of the tax year, in order to receive a refund of the withheld tax.