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Montana Free Printable  for 2020 Montana Credit for Income Tax Liability Paid to Another State or Country - Full Year Resident Only and Part Year Resident Only

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Credit for Income Tax Liability Paid to Another State or Country - Full Year Resident Only and Part Year Resident Only
Worksheets I and II

2019 Montana Form FID-3 Income Tax Instructions for Estates and Trusts M O N TA N A D E PA R T M E N T O F R E V E N U E It’s Easy to File and Pay Electronically! Call us at (406) 444-6900 MTRevenue.gov Check our online services at MTRevenue.gov. Choose e-file and direct deposit for a faster refund! Dear Montana Taxpayer, Thank you for filing your Montana tax return To make filing of your tax return as easy as possible, we have made some changes. Please see the What’s New section for the changes to our 2019 tax forms. It is important for Montanans to know where your tax dollars go. In the graphs below, you can see where tax revenues come from and how they are used to support important services and infrastructure. We are committed to assisting you with any questions you may have about your filing requirements. If you need more information or would like help, please visit MTRevenue. gov visit or call our help line at (406) 444-6900. Also, we encourage you to file electronically. Last year more than 84 percent of business taxpayers filed electronically. Taxpayers find that e-filing is easy, convenient, and helps ensure accurate processing. It can also help you get any refund you are owed more quickly. Best regards, Your Montana Department of Revenue Your Tax Dollars at Work What are Montana’s Public Revenues? Total Montana State and Local Revenue, Fiscal Year Ending 2016 Motor Fuel Taxes 3% Natural Resource Taxes Utility and Liquor Sales 2% 3% Interest Earnings and Other 8% Other Taxes 8% Federal Revenue 31% Individual and Corporate Income Taxes 13% Tuition and Other Charges for Services 15% Where Do Your Public Dollars Go? Total State and Local Spending in Montana, Fiscal year Ending 2016 Interest on Debt 2% Public Safety 8% Environment, Housing, Natural Resources, Parks 8% Transportation 11% Higher Education 12% Property Taxes 18% Health and Human Services 27% Administration, Judiciary, and Other 12% Public Schools 21% Contents What’s New for 2019?.....................................................................................................1 Form Changes.........................................................................................................1 Interest Rate for 2020..............................................................................................1 Form FID-3 Instructions...................................................................................................1 Entity Information.....................................................................................................1 Specific Line Instructions.........................................................................................2 Worksheets I and II..................................................................................................4 Schedule A – Schedule of Additions.......................................................................10 Schedule B – Schedule of Deductions/Subtractions...............................................11 Schedule C – Montana Distributable Net Income (MDNI) and Montana Income Distribution Deduction (MIDD)............................................................................................13 Schedule D – Beneficiaries and Montana Income Distributions.............................14 Schedule E – Resident Capital Gains Tax Credit Calculation.................................15 Schedule F – Nonresident/Part-Year Resident Estate and Trust Tax.....................15 Schedule G – S Portion Tax Calculation of an ESBT..............................................16 Schedule H – Special Transactions, NOL Election, and Amended Return Information...........................................................................17 Montana Schedule K-1 Instructions........................................................................18 FAQs – Frequently Asked Questions.............................................................................19 This booklet is designed to address the laws for the majority of tax filing situations. If you have a unique situation that is not addressed in the booklet, please refer to Title 15 of Montana law found at leg.mt.gov or call us with your questions. What’s New for 2019? Form FID-3 Instructions Form Changes Entity Information Form FID-3 was changed to clarify the determination of income and tax retained by the estate or trust. Changes include: ●● The federal income tax deduction has been removed from schedule B. It is now included on page1, line 22, for federal taxes paid or accrued on undistributed income. ●● Schedule F was changed to apply only to the income that is retained in the estate or trust. ●● The calculation of capital gains credit matches the calculation for individuals. ●● Schedule G was simplified to match the calculation flow of the non-S share of income on Form FID-3. Interest Rate for 2020 Effective January 1, 2020, the annual interest rate assessed on outstanding balances is 5 percent. This rate also applies to underpayment of estimated taxes. Interest is calculated daily. Tax Year You must use the same tax year used for federal income tax purposes (as indicated on the federal tax return) for Montana income tax purposes. If the estate or trust has a fiscal year, enter the beginning and ending dates of the fiscal year. Use a 2018 Form FID-3 if the estate’s or trust’s tax year began in the 2018 calendar year. Name and Address Enter the legal name of the estate or trust on the first line. Enter the name and title, if any, of the fiduciary on the second line and include the fiduciary’s mailing address on the third and fourth lines. Federal Employer Identification Number (FEIN) Enter the FEIN from page 1 of federal Form 1041. Date Entity Created Enter the date the estate or trust was created from page 1 of federal Form 1041. Schedule K-1 and Beneficiary Information Enter the number of Montana Schedules K-1 included and the number of each type of beneficiary: resident, nonresident, or other. An example of another type of beneficiary would be a corporation or pass-through entity. Checkbox Items: Mark the “Initial return” box if this is the first return filed in Montana for this estate or trust. Mark the “Final return” box if this is the last return to be filed in Montana for this estate or trust. Mark the “Amended return” box if this return is being filed to correct a previously filed Form FID-3. See FAQ f page 22 for more information. Mark the “Refund return” box if this return is being filed to receive a refund. Mark the “Estate or filing trust made a 645 election” box if the estate and filing trust has a valid Internal Revenue Code § 645 election to treat the trust as part of the estate for federal purposes. 2019 Montana Form FID-3 Instructions Page 1 Entity Type Mark the applicable box for the same entity type checked on page 1 of federal Form 1041 unless the trust is a qualified funeral trust. If a fiduciary files a federal Form 1041-QFT for a trust, the fiduciary needs to file a Montana Form FID-3 and mark the “Qualified funeral trust” box. If the entity type is not identified, processing of the return will be delayed. Often, the fiduciary must then provide additional information to complete the filing. Residency Status Mark the applicable box to indicate the residency status of the estate or trust, see FAQ w on page 19 for more information. If the residency status is not identified, processing of the return will be delayed. Often, the fiduciary must then provide additional information to complete the filing. Specific Line Instructions Lines that need additional instructions are listed below. Income Lines 1 through 8 Enter the amount of income reported on federal Form 1041, lines 1 through 8. Line 2 – Ordinary Dividends. Enter the total amount reported on line 2a of federal Form 1041. Montana taxes dividends as ordinary income and does not apply the federal tax rate on qualified dividends. Line 9 – Total Federal Income. Add lines 1 through 8. This total federal income must match the total federal income reported on federal Form 1041. If the trust is an electing small business trust (ESBT), see FAQ k on page 23 for more information. Deductions and Exemption Allocation of Deductions for Tax-Exempt Income Deductions entered on lines 10 through 15 include the total deductions related to taxable income reported on federal Form 1041. See federal Form 1041 instructions, “Allocation of Deductions for Tax-Exempt Income,” for information on how to determine the allocable amount to enter on lines 10 through 15. The tax-exempt income included on lines 10 through 15 must be reduced by any deductions attributed to the tax-exempt income. Lines 10 through 15 Enter the amounts from federal Form 1041, lines 10 through 15, on the corresponding lines. Line 11 – Taxes. Enter the taxes deducted on federal Form 1041, line 11. These may include state and local income taxes, real or personal property taxes, foreign or U.S. possession income taxes, state and local general sales taxes, and generationskipping taxes. Adjustments to this line are made on Schedules A and B. Line 15 – Other Deductions. Examples of deductions include casualty and theft losses or federal net operating loss deduction. Line 17 – Federal Adjusted Total Income or (Loss). Subtract line 16 from line 9. Line 20 – Add lines 17 and 18, then subtract line 19. This is Montana adjusted total income or (loss). If line 20 is a loss, you may have an NOL. See FAQ l on page 25 for more information. Line 21 – Montana Income Distribution Deduction. Enter the Montana income distribution deduction from Schedule C, line 13. If an amount greater than zero is entered on this line, you must include Schedule C with the return even if the Montana income distribution deduction is equal to the federal deduction. Do not enter an amount less than zero. Line 22 – Federal Taxes Paid or Accrued on Undistributed Income. If the estate or trust paid federal taxes, including federal income taxes, estate tax, or certain generation-skipping taxes on undistributed income, report these taxes on this line. Estates and trusts must choose whether they deduct federal taxes paid or accrued, but they cannot deduct both. Once a method has been used for one return, the same method must be used for the following returns. Line 23 – Exemption. Each estate or trust is allowed one exemption of $2,510. 2019 Montana Form FID-3 Instructions Page 2 Taxes and Credits Line 26 – Tax from Tax Table. For bankruptcy estates, leave lines 26 through 28a blank and enter the tax computed on Form 2 on line 30 of this form (FID-3). For all other estates and trusts, compute the tax using the following tax table: If the Taxable Income is More Than Multiply But Not the Taxable More Than Income By $0 $3,100 1% (0.010) $0 $3,100 $5,400 2% (0.020) $31 $5,400 $8,200 3% (0.030) $85 $8,200 $11,100 4% (0.040) $167 $11,100 $14,300 5% (0.050) $278 $14,300 $18,400 And Subtract This is Your Tax 6% (0.060) $421 6.9% More Than $18,400 $587 (0.069) For example: Taxable income $6,800 x 3% (0.03) = $204 $204 minus $85 = $119 tax Line 28 – Resident Tax After Capital Gains Tax Credit. If the estate or trust is a resident, subtract line 27 from line 26. This is resident tax after capital gains tax credit. Skip line 28a and go to line 29. If the estate or trust is a nonresident or part-year resident, complete this line and go to line 28a. Line 28a – Nonresident, Part-Year Resident Tax after Capital Gains Tax Credit. Enter the nonresident, part-year resident tax after capital gains tax credit from Schedule F, line 18. See the instructions for Schedule F on page 15. Line 29 – Tax on Lump-Sum Distributions. If the estate or trust qualifies on its federal tax return for special averaging of a lump-sum distribution and the distribution is not included as ordinary pension income in federal adjusted gross income, the estate or trust will need to pay Montana income tax on this distribution. The Montana tax liability on the lumpsum distribution is 10 percent of the federal tax calculated on federal Form 4972. Line 30 – Total Tax. If the estate or trust is a resident, add lines 28 and 29. If it is a nonresident or partyear resident, add lines 28a and 29. Line 31 – Credit for Taxes Paid to Other States or Countries (residents and part-year residents only). Enter the amount from Worksheet I, line 10, if the estate or trust is a resident or the amount from Worksheet II, line 10, if the trust is a part-year resident. Resident estates and trusts are allowed a credit for income taxes paid to another state or country on net income that is also taxable to Montana. Partyear resident estates and trusts are allowed a credit for income taxes paid to another state or country on net income that is also taxable to Montana and if the income is included on Schedule F, line 14, column B. A credit is allowed against Montana income tax only if the tax paid to a state or foreign country was based on net income of the same taxable year and the income taxed by the state or foreign country was derived from sources outside of Montana. Unless you file the Montana tax return electronically, you must include a copy of the other state’s or country’s income tax return with Form FID-3. If you file the tax return electronically and you cannot include a copy of the other state or country’s income tax return, retain the copy so that you can provide it to the department upon request. If the estate or trust had income from a state that has no state income tax, make no entry on line 31 and go to line 32. Note: Nonresident estates and trusts may not claim this tax credit against their Montana tax liability. 2019 Montana Form FID-3 Instructions Page 3 Worksheets I and II Resident and part-year resident estates and trusts are allowed a credit for income taxes paid to another state or country. The credit is a nonrefundable single-year credit and is limited to an income tax liability paid on net income that is also taxed by Montana. It cannot reduce the Montana tax liability below zero. No unused credit amount can be carried forward. If the estate or trust is filing as a full-year resident and paid income tax to another state or country, use Worksheet I to determine the amount of nonrefundable credit that you may be able to claim on your Montana tax return. If the estate or trust is filing as a part-year resident, use Worksheet II. If the estate or trust is required to file an income tax return in more than one state or country and it is entitled to the credit, complete a separate Worksheet I for residents or Worksheet II for part-year residents for each state or country in which an income tax return was filed and tax was paid on the income that is also taxed to Montana. Additionally, credits may exist for both the S portion of an ESBT and the S portion of an non-ESBT reported on the same return. The fiduciary will need to complete a separate worksheet for each state or country to which the estate trust has paid an income tax liability. Complete a separate worksheet for each state or country to which the S portion of an ESBT has paid an income tax liability. The fiduciary cannot combine payments on one worksheet. If more than one worksheet is used, enter the total of all worksheets for estates and non-ESBTs on Form FID-3, line 31. Enter the total of all worksheets for ESBTs on Schedule G, line 11. You are not entitled to this credit if the other state or country in which you filed an income tax return has allowed you a credit against the taxes that they have imposed on your net income because you are also subject to tax on the same income by Montana. Shareholders of an S corporation or Partners in a Partnership. If the estate or trust is a shareholder of an S corporation or a partner in a partnership, and the S corporation or partnership pays an income tax, excise tax, or franchise tax that was measured by and imposed on net income to another state (including composite tax paid on your behalf) or country, you can claim a credit for your share of these income taxes paid by the entity. Other taxes paid by the S corporation or partnership. Other taxes paid – such as, but not limited to, franchise or license taxes, fees that are not imposed on or measured by net income, gross receipt taxes, or gross sales taxes – are not allowed. When the estate or trust claims this credit for the taxes paid by a pass-through entity, it will have to add back to Montana income its share of the S corporation or partnership’s federal tax deduction that is included in total income. This is required whether or not the S corporation or partnership separately or nonseparately stated the income tax deduction on the federal Schedule K-1. “Sourced and Taxable.” In the instructions that follow, “sourced and taxable” means any income included in your Montana taxable income that must be reported to another state or foreign country in accordance with the other state’s or country’s rules, and that is not subject to an exemption. If the income is partially exempt, only the part that is non-exempt can be used for the calculation of this credit. On a practical level, income that is sourced and taxable to another state is found on the line after state specific additions and subtractions to federal adjusted gross income. In general, this line is labeled for the state-specific adjusted gross income. Taxes Paid to Another Country. The estate or trust is not entitled to a Montana tax credit for taxes paid to a foreign country unless it has an unused federal foreign tax credit that is not eligible to be carried back or carried forward to another tax year. You cannot claim this credit and deduct the foreign tax from your Montana adjusted gross income. Specific Line Instructions If the trust is a part-year resident, the fiduciary needs to allocate income using Form FID-3, Schedule F, before completing this worksheet. Line 1. This amount may differ from what you calculated as your total taxable income on the other state’s form. For example, a trust had rental income in both Utah and Montana during the year. The trust’s total rental income was $50,000, with $10,000 earned in Utah. Enter only the Utah sourced rental income of $10,000 on line 1. Do not include income on this line that is not taxable in Montana. Line 2. Enter the total income sourced and taxable to the other state or country. See “sourced and taxable” above to find the appropriate amount of income on another state’s return. Line 4. Tax Paid to Another State or Country – Enter the actual tax liability paid by you or on your behalf to the other state or country. This amount comes from either a fiduciary tax return you filed or a composite tax return filed on your behalf by a partnership or S corporation. 2019 Montana Form FID-3 Instructions Page 4 Do not include any penalties and interest paid to the other state or country. Line 7. If the estate or trust claimed a credit for taxes paid to another country for federal tax purposes, the estate or trust cannot claim a state credit for taxes paid to another country. Worksheet I – Credit for an Income Tax Liability Paid to Another State or Country Full-year Resident Only 1 Enter the income sourced and taxable to another state or country (see instructions) that is included in Montana 1 2 Enter the total of all income sourced and taxable to the other state or country. 2 income on Form FID-3, line 25, or, if the S portion of an ESBT trust, on Schedule G, line 4. Indicate state’s abbreviation 3 Enter the total Montana income from Form FID-3, line 25, or, for the S portion of an ESBT, from Schedule G, line 4 4 Enter your total income tax liability paid to the other state or country 5 Enter the Montana tax liability from Form FID-3, line 28, or, for the S portion of an ESBT, subtract Schedule G, line 12, from line 7 6 Divide line 1 by line 2. Enter the percentage, but not more than 100% 7 Multiply line 4 by line 6 and enter the result. (When calculating credit for taxes paid to another country, see instructions.) 8 Divide line 1 by line 3. Enter the percentage, but not more than 100% 9 Multiply line 5 by line 8 and enter the result 10 If an estate or trust with no ESBT S portion, enter here and on Form FID-3, line 31, the smaller of the amounts 3 4 5 6 7 8 9 reported on line 4, 7, or 9 above. For the S portion of an ESBT, enter here and on Schedule G, line 11, the smaller of the amounts reported on line 4, 7, or 9 above. This is the estate’s or trust’s credit for an income tax paid to another state or country. 10 Worksheet II - Credit for an Income Tax Liability Paid to Another State or Country Part-year Resident Only 1 Enter the income sourced and taxable to another state or country (see instructions) that is included in 1 2 Enter all income sourced and taxable to the other state or country. 2 Montana income on Schedule F, line 14, or, if the S portion of an ESBT, on Schedule G, line 8. Indicate state’s abbreviation 3 Enter the total Montana income retained from Schedule F, line 14, or for the S portion of an ESBT, from Schedule G, line 8 4 Enter your total income tax liability paid to the other state or country 5 Enter the Montana tax liability from Form FID-3, line 28a, or, for the S portion of an ESBT, subtract line 12 from line 10 6 Divide line 1 by line 2. Enter the percentage, but not more than 100% 7 Multiply line 4 by line 6 and enter the result. (When calculating credit for taxes paid to another country, see instructions.) 8 Divide line 1 by line 3. Enter the percentage, but not more than 100%. 9 Multiply line 5 by line 8 and enter the result 10 If a trust with no ESBT S portion, enter here and on Form FID-3, line 31, the smaller of the amounts reported on 3 4 5 6 7 8 9 line 4, 7, or 9 above. For the S portion of an ESBT, enter here and on Schedule G, line 11, the smaller of the amounts reported on line 4, 7, or 9 above. This is the trust’s credit for an income tax paid to another state or country. 10 2019 Montana Form FID-3 Instructions Page 5 Line 32 – Other Nonrefundable Credits. If the estate or trust is claiming one or more of the nonrefundable credits listed below, identify each credit it is claiming and include the amounts of the nonrefundable credits in the total for line 32. If more than one credit is claimed, include a list of credits and credit amounts claimed and enter the total. Include all applicable credit forms. In order to claim any credit, you must include the appropriate forms with the estate’s or trust’s tax return unless you file the return electronically. If you file the return electronically and you cannot attach a copy of a credit form, retain the copy so you can provide it upon request. The forms do not specifically address estates and trusts, but estates and trusts are allowed to claim the credits listed below. The forms and instructions are available at MTRevenue.gov. Nonrefundable/Noncarryover Credits: ●● Alternative fuel credit (Form AFCR) ●● College contribution credit (Form CC) ●● Energy conservation installation credit (Form ENRG-C) ●● Health insurance for uninsured Montanans credit (Form HI) ●● Qualified endowment credit (Form QEC) ●● Recycle credit (Form RCYL) ●● Innovative educational program credit ●● Student scholarship organization credit ●● Apprenticeship tax credit Nonrefundable/Carryover Credits: ●● Alternative energy system credit (Form ENRG-B) ●● Alternative energy production credit (Form AEPC) ●● Biodiesel blending and storage credit (Form BBSC) ●● Contractor’s gross receipts tax credit ●● Empowerment zone credit ●● Geothermal system credit (Form ENRG-A) ●● Historic property preservation credit (federal Form 3468) ●● Infrastructure user fee credit (Form IUFC) ●● Mineral and coal exploration incentive credit (Forms MINE-CERT and MINE-CRED) Line 35 – Endowment Credit Recapture Tax. If the estate or trust previously claimed an endowment credit and has also taken a charitable deduction for a gift that it contributed to a qualified endowment and the estate or trust has now received the gift back, the estate or trust is required to recapture the previous credit to the extent the credit reduced an income tax liability in a previous year. Enter the amount of the endowment credit recapture tax. If, in addition to the recapture tax, part of the amount that is recaptured was claimed as a charitable contribution in a prior year, the estate or trust will have to include in income on Form FID-3, Schedule A, line 4, any recoveries of this prior-year deduction that reduced the tax liability in the year of that deduction. Payments and Refundable Credits Line 37a – Total Montana Income Tax Withheld. Enter the amount of Montana income tax withheld. This amount is usually reported in Box 17 of the federal Form W-2, or in Box 12 of federal Form 1099-R. When the estate or trust claims Montana income tax withheld, it must include a copy of the withholding statements, such as federal Forms W-2 or 1099-R. Do not report on this line Montana mineral royalty tax withheld or income tax withheld as a result of an ownership interest in a passthrough entity. Line 37b – Montana Income Tax Withheld Allocable to Beneficiaries. Enter the amount of Montana income tax withheld reported on line 37a and allocable to beneficiaries. Line 37 – Montana Income Tax Withheld Allocable to the Estate or Trust. Subtract line 37b from 37a. This is the amount of Montana income tax withheld that is allocable to the estate or trust. Line 38a – Total Montana Pass-Through Entity Withholding from Montana Schedules K-1 (PTE), Part 5, line 3. If the estate or trust has an ownership interest in a pass-through entity that had Montana source income, and the pass-through entity paid Montana pass-through withholding on behalf of the estate or trust, enter the amount here. This amount is reported to the estate or trust on a Montana Schedule K-1, and should not be confused with any Montana mineral royalty tax withheld that passed through to the estate or trust from a pass-through entity. Attach copies of the Montana Schedules K-1 you received that report amounts withheld on your behalf. 2019 Montana Form FID-3 Instructions Page 6 Line 38b – Montana Pass-Through Entity Withholding Allocated to Beneficiaries. Enter the amount of Montana pass-through entity withholding reported on line 38a and allocable to beneficiaries. Pass-through withholding must be distributed to the beneficiaries if the associated income is distributed to the beneficiaries Line 38 – Montana Pass-Through Entity Withholding Allocable to the Estate or Trust. Subtract line 38b from 38a. This is the amount of Montana pass-through entity withholding that is allocable to the estate or trust. Line 39a – Total Montana Mineral Royalty Tax withheld from federal Forms 1099 or Montana Schedule K-1 (PTE), Part 5, line 4. If the estate or trust paid Montana mineral royalty tax withholding, enter the withholding on this line. If the estate or trust receives a distributive share of Montana mineral royalty tax withholding from a pass-through entity, enter the withholding on this line. This is generally reported on federal Form 1099. Royalty payments made to owners of Montana mineral rights are subject to state tax withholding if certain thresholds are met. This amount should not be confused with the production taxes that are also subtracted from royalty payments. If the mineral rights are held by a pass-through entity in which the estate or trust has an ownership interest in, or from which the estate or trust receives a distribution, enter the amount reported to the estate or trust as its share of the withholding. Include a schedule detailing the calculation of the estate’s or trust’s portion of the withholding and any supporting documents, such as a Montana Schedule K-1, issued to the estate or trust, or a copy of Form 1099 issued to the pass-through entity. For more information, visit “Mineral Royalty Withholding” at MTRevenue.gov. Line 39b – Montana Mineral Royalty Tax Withheld Allocated to Beneficiaries. Enter the amount of Montana mineral royalty tax withheld reported on line 39a and allocable to beneficiaries. Mineral royalty withholding must be distributed to the beneficiaries if the associated royalty income is distributed to the beneficiaries. Line 39 – Montana Mineral Royalty Tax Withheld Allocable to the Estate or Trust. Subtract line 39b from 39a. This is the amount of Montana mineral royalty tax withheld that is allocable to the estate or trust. Line 40 – Estimated Tax Payments. If a fiduciary has made estimated income tax payments for Tax Year 2019, enter the amount of these estimated tax payments. Include in this amount the 2018 refund that was requested to be applied to the 2019 estimated income tax payments. Do not include in this total any income taxes paid for a previous year because these are not estimated taxes paid for Tax Year 2019. If a fiduciary makes estimated income tax payments to be allocated to a beneficiary, do not include these payments on this line. Instead, apply these payments to the beneficiary’s account. When estimated income tax payments allocable to beneficiaries are sent to the department, include the beneficiary’s name and Social Security Number or Federal Employer Identification Number, as well as an explanation that the payment is to be applied to the beneficiary’s account. Line 41 – Extension Payments. If a fiduciary made an extension payment on or before April 15, 2020, enter that amount on this line. Beginning with Tax Year 2017, an extension payment is not required to receive an extension of time to file this return. If a fiduciary would like to make an extension payment, calculate the difference between the amount of tax you think the estate or trust will owe and payments already made, including amounts withheld on behalf of the estate or trust. You may pay by e-check or credit card through our TransAction Portal at https://tap.dor.mt.gov or send the payment with the extension box checked and remember to include a Montana Estate or Trust Tax Payment Voucher (available at MTRevenue.gov or call us at (406) 444-6900 to request one). Line 42 – Refundable Credits. If a fiduciary is claiming a refund of one or more of the refundable credits listed below, identify each credit being claimed and the amounts of the refundable credits in the total for line 42. If more space is needed, make a list showing each credit and its amount and include the list with the tax return. Also include all applicable credit forms: ●● Emergency lodging credit (Form ELC) ●● Unlocking public lands credit 2019 Montana Form FID-3 Instructions Page 7 Penalties and Interest Line 46 – Interest on Underpayment of Estimated Taxes. A fiduciary is required to pay an estate’s or trust’s income tax liability throughout the year if the estate or trust expects to owe an income tax liability of at least $500 after subtracting tax credits and withholding payments. Payments can be made through withholding, installment payments of estimated taxes, or a combination of both. If a fiduciary did not pay in advance at least 90 percent of the 2019 income tax liability (after applying credits) or 100 percent of the 2018 income tax liability (after applying credits), the fiduciary may have to pay interest on the underpayment of estimated tax. To calculate the interest, complete Form EST-I (2019 Underpayment of Estimated Tax by Individuals and Fiduciaries), available at MTRevenue.gov or call us at (406) 444-6900. Line 47 – Late File, Late Payment Penalties and Interest. Late File Penalty. If a fiduciary files the estate and trust tax return after October 15, 2020, the fiduciary must pay a late file penalty if there is tax due on line 44. The penalty is equal to the greater of $50 or 5 percent per month on the unpaid amount. The penalty is calculated from the extended due date until the return is filed or the tax is paid and cannot exceed 25 percent of the fiduciary’s tax liability on line 44. Late Payment Penalty. The late payment penalty is equal to 0.5 percent per month, calculated daily, on the unpaid amount from April 15, 2020, until it is paid. The daily rate is 0.0164 percent. Your late payment penalty will never exceed 12 percent (24 months x 0.5%) of the unpaid tax. Late pay penalty is automatically waived if you pay all the tax and interest with your return, or within 30 days of the first notice from the department. Interest. Compute interest on any tax liability (line 44) that the estate or trust has not paid by the due date of the tax return and enter the total on this line. Effective January 1, 2020, the interest rate is 5 percent. To calculate the interest, multiply line 44 by 0.0137 percent (0.000137), and then multiply that result by the number of days between April 15, 2020, and the day the estate’s or trust’s income tax is paid. A valid extension of time to file the estate’s or trust’s tax return does not extend the due date to pay the estate’s or trust’s income tax liability after April 15, 2020. If the estate or trust owes more than one of the items listed above, enter each amount on the following worksheet. Type Amount Late file penalty Late payment penalty Interest Total Enter the total on line 47. (The fiduciary may wish to keep this worksheet as part of the estate’s or trust’s tax records for future reference.) Line 48 – Other Penalties. Include on this line the following penalty if it applies to the estate or trust: ●● Farm and Ranch Risk Management Account - 10 Percent Penalty. If the estate or trust has not distributed deposits and income from its farm and ranch risk management account within three years, the deposits and income are now considered distributed. The fiduciary must pay a 10 percent penalty on the amount of tax due on the amount that is considered distributed. On this line, enter the farm and ranch risk management account 10 percent penalty. For more information, refer to Form FRM, available at MTRevenue.gov or call us at (406) 444-6900. 2019 Montana Form FID-3 Instructions Page 8 Amount the Entity Owes or Its Refund Line 50 – Amount the Estate or Trust Owes. If the estate or trust has a tax due (amount on line 44), add lines 44 and 49; or, if the estate or trust has a tax overpayment (amount on line 45) and it is less than line 49, subtract line 45 from line 49. This is the amount the estate or trust owes. A fiduciary can pay the amount an estate or trust owes by: ●● Electronic funds withdrawal when e-filing return. You can schedule your withdrawal for a later date. ●● E-check or credit/debit card. Visit TransAction Portal (TAP) https://tap.dor.mt.gov. and select “Make a Payment.” There is a small fee when paying with a credit or debit card. ●● Personal check, money order, or cashier’s check. Be sure to include the payment voucher available at MTRevenue.gov or call us at (406) 444-6900 to request a voucher. Make your check payable to the Montana Department of Revenue, sign your check, and write your FEIN and “Tax Year 2019” on the memo line. Note: We may need to adjust your payment if it is not in U.S. funds. For more information about e-pay options, visit MTRevenue.gov. Interest and penalties will be assessed on any amount not paid when due. If a fiduciary cannot pay the entire amount that an estate or trust owes with the tax return, we encourage the fiduciary to file the estate and trust tax return on time and pay as much as possible. By filing and paying as much as possible by April 15, 2020, you can reduce the amount of late payment penalty and interest. If a fiduciary needs to establish a payment plan, visit our TransActional Portal at https://tap.dor.mt.gov or, call us at (406) 444-6964, option 1, as soon as possible to make payment arrangements. Line 51 – Overpayment. If an estate or trust has a tax overpayment (amount on line 45) and it is greater than line 49, subtract line 49 from line 45 and enter the result. This is the estate’s or trust’s overpayment. Line 53 – Refund. Subtract line 52 from line 51. This is the amount of the estate’s or trust’s refund. Only refunds more than $1 will be issued. If a fiduciary would like to use direct deposit, enter the estate’s or trust’s financial institution’s routing number (RTN#) and the estate’s or trust’s account number (ACCT#) in the space provided. The routing number will be nine digits, and the account number can be up to 17 characters, including numbers and letters. Mark whether the account is a checking or savings account and if the estate’s or trust’s refund will go to a bank outside of the United States and its territories (Midway Islands, Puerto Rico, American Samoa, U.S. Virgin Islands, Federated States of Micronesia, and Guam). If the estate’s or trust’s financial institution does not accept direct deposit, we will mail a refund check. A sample of a personal check is provided for reference: Sign the Return If a fiduciary is filing an estate and trust tax return electronically, a signature is not required. The act of filing electronically signifies the fiduciary’s declaration, under the penalty of false swearing, that: ●● The fiduciary is authorized to file the return, and ●● The information in the return is true, correct and complete. The act of filing electronically is the fiduciary’s signature. If a fiduciary is filing the estate and trust tax return on paper, the tax return is not considered valid unless the fiduciary or an officer representing the fiduciary signs the tax return. Unsigned returns cannot be processed and require us to contact the fiduciary for a signature. Paid Preparer A paid preparer must sign the tax return and include his or her address and Preparer Tax Identification Number (PTIN) in the space provided. If applicable, include the firm’s name, address, FEIN and telephone number. 2019 Montana Form FID-3 Instructions Page 9 Assemble the Return If a fiduciary is filing an estate and trust tax return on paper, the fiduciary must include any applicable federal forms and schedules we requested. Assemble the return, without using staples, in the following order. Include all Forms W-2 and 1099. * Only include a copy of the returns from another state if the estate or trust is a resident of Montana and claims the credit for taxes paid to another state. File the Return We encourage a fiduciary to efile the tax return for estates and trusts. See FAQ o on page 22 for more information. If a fiduciary files the return on paper, mail the return to the following address: Montana Department of Revenue PO Box 8021 Helena, MT 59604-6577 Schedule A – Schedule of Additions Line 2 – Dividends Not Included in Federal Total Income. Enter the amount of any dividends that the estate or trust received that are not already included in total federal income. Do not include qualified dividends since these dividends are already in the total ordinary dividends reported on Form FID-3, line 2. Line 3 – Taxable Federal Refund. If the estate or trust claimed a federal tax deduction, either by withholding or by paying an estimated tax in a prior year, any refund of that tax is income in the year it is received. Enter the taxable refund. Line 4 – Other Recoveries. If the estate or trust claimed a deduction in a prior year that reduced Montana taxable income and the deduction was subsequently reimbursed, enter that reimbursement. Line 5 – All state and local taxes included on page 1, line 11. Enter all state and local taxes you deducted on line 11. The allowable state and local deduction is re-calculated on Schedule B to exclude state income tax. Line 6 – Expenses Allocated to U.S. Obligations. If an estate or trust has tax-exempt interest income, report the adjustment for deductions related to the tax-exempt interest income. Enter only the amount deducted for federal purposes that is not allowed as a deduction for Montana purposes. Deductions allocable to tax-exempt interest income must be used only against tax-exempt interest income. Although subject to federal tax, interest in federal bonds, notes and other U.S. obligations is exempt from Montana income tax. Therefore, if interest in federal bonds, notes and other U.S. obligations is excluded on the Montana estate and trust tax return, expenses related to such tax-exempt interest income must be included in taxable income for Montana purposes. Line 1 – Interest and Mutual Fund Dividends from State, County, or Municipal Bonds from Other States. Enter the interest and mutual fund dividend income that the estate or trust received from bonds and obligations of another state, territory, or political subdivision of another state (county, municipality, district, etc.). 2019 Montana Form FID-3 Instructions Page 10 To compute the expenses allocable to tax-exempt interest income, divide tax-exempt interest income by total gross income (including tax-exempt interest income). Multiply the resulting percentage by total expenses not directly allocable to any item of income. Report the portion of expenses allocated to tax-exempt interest income on the appropriate line. Example: 1 Gross income from $6,190 (reported on Form FID-3, Schedule B, line 1) 2 Total gross income $73,496 (total federal income on Form FID-3, line 9, plus any capital losses plus the gross tax-exempt income from federal Form 1041, Schedule B, line 1) 3 Line 1 divided by line 2 0.084222 U.S. obligations $21,987 4 Total indirect expenses 5 Indirect expenses allocated to $1,852 (reported on Form FID-3, U.S. obligations income (line 3 x line 4) Schedule A, line 6) Line 7 – Federal Net Operating Loss, Carryover. The federal net operating loss carryover that you reported on your Form FID-3, line 15b, may be different from the amount of your Montana net operating loss carryover. On this line, you should enter the amount of your federal net operating loss carryover from line 15b, and then compute your Montana net operating loss carryover using Montana Form NOL. The Montana net operating loss carryover is reported on Schedule B, line 7. Line 8 – Other Income. Include a detailed schedule listing types and amounts. If the trust or estate took the Qualified Business Income deduction on line 15a, add this amount back on this line. Schedule B – Schedule of Deductions/Subtractions Line 1 – Exempt Interest and Mutual Fund Dividends from Federal Bonds, Notes, and Other Obligations. Enter the interest on United States government obligations and mutual fund dividends attributable to that interest that an estate or trust received if these amounts are included in total federal income on Form FID-3, line 9. In addition, enter the interest on obligations from U.S. territory or government agency obligations that are specifically exempt under federal law or any mutual fund dividends attributable to this interest that an estate or trust received if these amounts are included in total federal income on Form FID-3, line 9. Interest on obligations that are only guaranteed by the United States government is not tax-exempt. If an estate or trust received interest or mutual fund dividends attributable to Government National Mortgage Association (Ginnie Mae) bonds, Federal National Mortgage Association (Fannie Mae) bonds, or Federal Home Loan Mortgage Corporation (FHLMAC) securities, a fiduciary cannot subtract these interest amounts or mutual fund dividends. United States Obligations that are exempt include: ●● Series E, EE, F, G, and H savings bonds ●● U.S. treasury bills ●● U.S. government notes ●● U.S. government certificates ●● Refer to Form 1099-DIV to determine what percentage of the dividends received qualify for this exemption. Line 2 – State Tax Refunds. If a state tax refund is included as other income on Form FID-3, line 8, subtract it on this line. Line 3 – Other Recoveries. If a recovery was shown as income on Form FID-3, line 8, but the original deduction did not reduce Montana taxable income, deduct it on this line. Line 4 – Partial Pension and Annuity Income Exemption. If an estate or trust reported taxable retirement income on FID-3, line 8, the estate or trust may be entitled to a partial exemption of this income. Qualifying pension and annuity income is reported on federal Form 1099-R with distribution code 7. Premature distributions and early withdrawals of retirement income do not qualify for the retirement income exemption. Early distributions, which required payment of the federal 5 percent or 10 percent additional tax, do not qualify for this exemption. Tier I and Tier II Railroad Retirement benefits received from the Railroad Retirement Board are exempt from Montana tax. Enter the full amount of Tier I and Tier II annuity or pension benefits reported on Form FID-3, line 8, as a reduction to income on Schedule B, line 5. 2019 Montana Form FID-3 Instructions Page 11 When total federal income is $35,800 or less, the retirement exemption is limited to the taxable retirement income that an estate or trust received or $4,300, whichever is less. When total federal income exceeds $35,800, the retirement exemption is reduced $2 for every $1 that total federal income is over $35,800. For example, if total federal income is $36,800, the retirement exemption is $2,300 ($4,300 – ($1,000 x $2) = $2,300). The estate or trust is not entitled to this retirement income exemption if total federal income is greater than $37,950 ($4,300 – ($2,150 x $2) = $0). To calculate the pension and annuity income exemption, use this worksheet: Partial Pension and Annuity Income Exemption Worksheet 1 Enter total federal income from Form FID-3, line 9. Do not include disability income if you are also eligible to claim the Disability Income Exclusion calculated below. 2 Phase-out limitation $35,800 If line 1 is smaller than line 2, enter the smaller of the pension and annuity income or $4,300 on Schedule B, line 4. Stop here; do not complete the remainder of this worksheet. 3 If line 1 is larger than line 2, subtract line 2 from line 1 and enter the result 4 Enter the smaller of the pension and annuity income or $4,300 5 Double the amount on line 3 and enter the result 6 Pension and annuity exclusion. Subtract line 5 from line 4. If the result is zero or negative, there is no exclusion. If the number is positive, enter the result and exclude this amount on Schedule B, line 4. This is the partial pension and annuity exemption. If an estate or trust received a disability pension, which is identified as Distribution Code 3 on federal Form 1099-R, the estate or trust should use the worksheet that follows to determine the disability income exemption: Disability Income Exemption Worksheet 1 Retirement disability benefits received 2 Multiply $100 by the number of weeks you received benefits 3 Enter the smaller of line 1 or line 2 4 Enter the total of Schedule B, line 10 without this exemption 5 6 7 8 Deduct line 4 from Form FID-3, line 17 Add Form FID-3, line 18, to line 5 Your income limitation $15,000 Subtract line 7 from line 6 and enter the result, but not less than zero 9 Subtract line 8 from line 3 and enter the result, but not less than zero. This is your partial retirement disability income exclusion. Add line 6 from the Partial Pension and Annuity Income Exclusion worksheet and line 9 from the Disability Income Exemption worksheet and enter the sum on Schedule B, line 4. Line 5 – Subtractions for Federal Taxable U.S. Railroad Retirement Board Benefits. Tier I and Tier II Railroad Retirement benefits received from the Railroad Retirement Board are exempt from Montana tax. Enter the full amount of Tier I or Tier II annuity or pension benefits reported on Form FID-3, line 8. Line 6 – Expenses Allocated to Other States’ Interest and Mutual Fund Dividends. If an estate or trust has tax-exempt income, report the adjustment for additional expenses allocated to the tax-exempt income. Enter only the additional deductible expenses for Montana on this line. Although exempt from federal tax, interest on nonMontana state and municipal securities is taxable to Montana. Therefore, if interest in non-Montana municipal securities is included on the Montana estate and trust tax return, expenses related to such tax-exempt income must be subtracted from taxable income for Montana purposes. 2019 Montana Form FID-3 Instructions Page 12 To compute the expenses allocable to tax-exempt income, divide tax-exempt income by total gross income (including tax-exempt income). Multiply the resulting percentage by total expenses not directly allocable to any item of income. Report the portion of expenses allocated to tax-exempt income on the appropriate line. Example: 1 Gross taxable municipal interest $4,575 (reported on Form FID-3, Schedule A, line 1) 2 Total gross income $73,496 (total federal income on Form FID-3, line 9, plus any capital losses, plus the gross tax-exempt income from federal Form 1041, page 2, Other Information, line 1) 3 Line 1 divided by line 2 4 Total indirect expenses 5 Indirect expenses allocated to 0.062248 out-of-state municipal income (line 3 x line 4) $21,987 $1,369 (reported on Form FID-3, Schedule B, line 6) Line 7 – Montana Net Operating Loss Carryover. The Montana net operating loss (NOL) carryover may be different from the amount of your federal net operating loss carryover. On this line, you should enter the amount of the Montana net operating loss carryover from Montana Form NOL. For further instructions, and to calculate the net operating loss, see Montana Form NOL. If you included deferred foreign income on Form FID-3, line 8, and you elected to not use your deferred foreign income in the determination of an NOL for 2019, you must subtract it on this line. Line 8 – State and Local Taxes Limited to $10,000. Add all state and local taxes, except state income tax, paid or accrued in 2019. Enter the result on this line but not more than $10,000. Line 9 – Other Subtractions. Please specify. Include additional information if necessary. Schedule C – Montana Distributable Net Income (MDNI) and Montana Income Distribution Deduction (MIDD) Lines 1 through 5 compute Montana distributable net income (MDNI). MDNI serves the same purpose as the federal DNI. MDNI, adjusted for items not included in the gross income of an estate or trust in accordance with 26 U.S.C. §§ 651 and 661, limits the deduction an estate or trust may claim for distributions to beneficiaries. MDNI may also limit the amount of Montana income a beneficiary or trust owner must report on his or her Montana tax return. Line 1 – Montana Adjusted Total Income (Loss). Enter the amount from Form FID-3, line 20. If line 20 is a loss and line 4 is a loss, enter the smaller loss. Line 2a. Enter the gross amount of tax-exempt interest income from federal Form 1041, Other Information, line 1. Do not use the amount reported on federal Form 1041, Schedule B, line 1, which normally has been adjusted for allocation of expenses. Line 2c. Enter the gross exempt interest and mutual fund dividends from federal bonds, notes, and other U.S. government obligations reported on Form FID-3, Schedule B, line 1. Line 2d. Enter the expenses allocated to U.S. government tax-exempt income reported on Form FID-3, Schedule A, line 6. Line 2e. Enter the expenses allocated to out-ofstate municipal tax-exempt income. These expenses are reported on Form FID-3, Schedule B, line 6. Line 2f. Enter the gross taxable out-of-state municipal tax-exempt income. This income is reported on Form FID-3, Schedule A, line 1. Line 2 – Montana Tax-Exempt Interest Income. Enter the sum of lines 2a through 2f. This is Montana adjusted tax-exempt interest income. 2019 Montana Form FID-3 Instructions Page 13 Line 3a. Enter the amount from federal Form 1041, Schedule B, line 3. This is total net gain from federal Form 1041, Schedule D, line 15, column (1) Beneficiaries. Line 3b. Enter the amount from federal Form 1041, Schedule B, line 4. This is the amount from federal Form 1041, Schedule A, line 4, (capital gains allocated to corpus and paid or permanently set aside for charitable purposes). Line 3c. Enter the amount from federal Form 1041, Schedule B, line 5. This is the amount from federal Form 1041, Schedule A, line 1 (amount paid or permanently set aside for charitable purposes from gross income). Line 3 – Total Net Capital Gains. Enter the sum of lines 3a through 3c. This is the sum of total net capital gains reported on federal Form 1041, Schedule B, lines 3 through 5. Line 4. If the amount on Form FID-3, line 4 is a net gain, enter the gain as a negative. If the amount on Form FID-3, line 4, is a net loss, enter the loss as a positive number. Line 5 – Montana Distributable Net Income. Enter the sum of lines 1 through 4. The computations on lines 6 through 13 of Schedule C adjust MDNI and compute certain limits for Montana income distribution deduction (MIDD). The MIDD is generally computed in accordance with 26 USC §§ 651 and 661. Line 6. This line applies to complex trusts only. Enter the accounting income of the trust for the tax year determined under the terms of the governing instrument and Montana income tax law. Line 7. Enter the amount of income required to be distributed currently, whether distributed or not. This amount is also reported on federal Form 1041, Schedule B, line 9. Line 8. This line only applies to a decedent’s estate or complex trust. These distributions consist of any other amounts paid, credited or required to be distributed and are referred to as second-tier distributions. Line 9 – Actual Total Distributions for the Year. Enter the sum of lines 7 and 8. This is actual total distributions to beneficiaries for the tax year. Line 11. Subtract line 10 from line 9. This is the tentative income distribution deduction based on total actual distributions. Line 12. Subtract line 2 from line 5. Enter zero if equal to zero or less. This is the tentative income distribution deduction based on MDNI less Montana adjusted tax-exempt interest income. Schedule D – Beneficiaries and Montana Income Distributions Complete Schedule D for all beneficiaries who received an income distribution if an estate or trust was required to distribute income currently or if it paid, credited, or was required to distribute any other amounts to beneficiaries during the tax year. List the name, SSN or FEIN (enter nine digits and no dashes), and residency status of the beneficiary. For each beneficiary: ●● Line a, enter the beneficiary’s share of federal distribution. In general, this is the amount of distribution that is includable in gross income for federal tax purpose, boxes 1 through 11 of the federal Schedule K-1 (Form 1041). ●● Line b, enter the beneficiary’s share of Montana distribution. This is the beneficiary’s share included in the Montana income distribution. ●● Line c, subtract line b from line a and enter the difference. If the result is a negative number enter a negative number. This difference represents the effect of Montana adjustments to the beneficiary’s distribution includable in gross income. Follow the Montana Schedule K-1 (FID) instructions to report this difference on the Montana Schedule K-1 (FID). ●● Use the dollar amount and not the percentage. If there are more than eight beneficiaries, complete additional copies of Schedule D. You can make copies of the included Schedule D or download additional copies from MTRevenue.gov. If Schedule D is incomplete, the processing of the return will be delayed until we receive this information. 2019 Montana Form FID-3 Instructions Page 14 Schedule E – Resident Capital Gains Tax Credit Calculation An estate or trust can claim a capital gains tax credit against the Montana income tax liability of up to 2 percent of net capital gains. The net capital gains eligible for the capital gains tax credit is the amount reported on Form FID-3, line 4, less the amount of net capital gains distributed to a beneficiary. Example: A capital gain of $46,675 is reported on Form FID-3, line 4. The income distribution deduction to the beneficiary included $12,482 of the capital gain. The 2 percent capital gains tax credit is computed on the undistributed capital gain of $34,193. This credit is nonrefundable. It is applied directly against the income tax liability and it cannot reduce the liability below zero. This credit is applied before any other credits and cannot be carried back or carried forward. If an estate or trust is a nonresident or a partyear resident, apply this credit to the Montana income tax computed on Form FID-3, line 26, as if it were a resident. Schedule F – Nonresident/Part-Year Resident Estate and Trust Tax Schedule F applies only to nonresident and partyear resident estates and trusts that have Montana source income. A fiduciary will use this schedule to compute the ratio of Montana source income to total income. This ratio is then multiplied by the resident tax from Form FID-3, page 2, line 28, to determine the nonresident or part-year resident tax to be reported on Form FID-3, page 2, line 28a. Column A – Total Undistributed Income Enter in column A the total income from Form FID-3, lines 1 through 8, and Schedule A. Income retained by the estate or trust is the income on which the estate or trust can be taxed after taking the Montana Income Distribution Deduction. Do not include any net operating losses reported on Schedule A, nor any federal taxes deducted on Form FID-3, page 1, line 22. Column B – Montana Source Income included in column A Enter the Montana source income included in undistributed income for each line of this column. If the estate or trust received a Montana Schedule K-1 from a pass-through entity, include Montana source adjustment on line 13. For a nonresident trust, Montana source income means all income attributable to a non-contingent resident beneficiary in future distributions and all income that would be sourced to Montana if the income was distributed to beneficiaries who were nonresidents during the year or are contingent beneficiaries. Line 1 – Interest Income. Enter the interest income retained from an installment sale of real property in Montana. Include any interest retained from a business or commercial property located in Montana. Also include taxable Montana source interest income that the estate or trust received from a pass-through entity. Line 2 – Ordinary Dividends. Enter the amount of dividends retained while a resident. Generally, dividends that nonresident estates or trusts receive are not considered Montana source income. Line 3 – Business Income or (Loss). Enter the net income or loss received from any trade, business, profession, or occupation carried on in Montana and retained by the estate or trust. If an estate or trust has more than one business, complete a separate federal Schedule C for each business activity. Line 4 – Capital Gain or (Loss). Enter the gains or losses retained on the sale or transfer of tangible property used or held in connection with the trade, business, or occupation located in Montana. Line 5 – Rental Real Estate, Royalties, Partnerships, S Corporations, Other Estates or Trusts, etc. Enter the following income or losses that are retained by the estate or trust: ●● Net rental income or loss from real property and tangible personal property located in Montana ●● Net royalties to the extent that the income retained is for production, fabrication, manufacturing, or other processing in Montana, or the patented product is produced in Montana ●● Net copyright royalties to the extent that the printing and other publication originated in Montana ●● Partnership income derived from a trade, business, occupation, or profession carried on in Montana ●● S corporation income derived from a trade, business, occupation, or profession carried on in Montana ●● Estate and trust income derived from a trade, business, occupation, or profession carried on in Montana 2019 Montana Form FID-3 Instructions Page 15 Line 6 – Farm Income or (Loss). Enter the farm income or (loss) retained from the farming activity carried on in Montana. Include a separate federal Schedule F if necessary, showing only the Montana farm activity. Line 7 – Ordinary Gain or (Loss). Report any ordinary gain or (loss) retained from the sale or exchange of business property located in Montana and reported on federal Form 4797. Line 8 – Other Income. Enter any other income attributed to Montana that is not identified on lines 1 through 7. This includes, but is not limited to: ●● Montana lottery winnings ●● Nonemployee compensation Line 9 – Interest and Mutual Fund Dividends from Other States’ State, County, or Municipal Bonds. Enter the interest and dividend income from bonds and obligations of other states, territories, or political subdivision of another state (county, municipality, district, etc.). Line 10 – Dividends Not Included in Total Federal Income. Enter the amount of the dividends that the estate or trust retained that is not already included in total federal income. Line 11 – Taxable Federal Refund. If the estate or trust claimed a federal tax deduction in a prior year, any refund of that tax is income in the year it is received. Line 12 – Other Recoveries. If a deduction in a prior year was claimed and reduced Montana taxable income, and the estate or trust was subsequently reimbursed, enter that reimbursement here. Line 13 – Other Additions to income and adjustments. Enter any other source of Montana income that has not been included or identified in the lines above. Do not include net operating losses reported on Schedule A, line 7. Schedule G – S Portion Tax Calculation of an ESBT Complete Schedule G if a trust or a portion of a trust is an electing small business trust (ESBT). Only report on Schedule G the activity of the ESBT. Report activity of the non-ESBT portion of the trust on Form FID-3 and other applicable schedules. Line 1 – Total Federal Adjusted ESBT Income. Enter total federal adjusted ESBT income as determined on the separate schedule prepared for the federal estate and trust income tax return. Include the federal schedule with the Montana tax return. Line 2 – Montana Additions to ESBT Income. Enter total Montana additions to ESBT income. Montana additions to ESBT income include dividends not included in total federal income, taxable federal refund, Montana income taxes paid or accrued, and expenses allocated to U.S. obligations. Include a statement that separately lists the additions. If the ESBT received Montana Schedules K-1, include on this line the amounts from Part 3, column I, line 1. Line 3 – Montana Deductions to ESBT Income. Enter total Montana deductions to ESBT income. Montana deductions to ESBT income include federal income tax deductions, exempt interest and mutual fund dividends from federal obligations, state tax refunds if included in total federal income, and expenses allocated to other states’ interest and mutual fund dividends. If the ESBT received Montana Schedules K-1, include on this line the amounts from Part 3, column I, line 2. Include a statement that separately lists the deductions. Line 7 – Tax from Tax Table. If line 6 is zero or less, enter 0. Compute the tax using the following tax table: If the Taxable Income is More Than But Not More Than Multiply the Taxable Income By $0 $3,100 1% (0.010) $0 $3,100 $5,400 2% (0.020) $31 $5,400 $8,200 3% (0.030) $85 $8,200 $11,100 4% (0.040) $167 $11,100 $14,300 5% (0.050) $278 $14,300 $18,400 And Subtract 6% (0.060) 6.9% More Than $18,400 (0.069) For example: Taxable income $6,800 x 3% (0.03) = $204 $204 minus $85 = $119 tax 2019 Montana Form FID-3 Instructions This is Your Tax $421 $587 Page 16 Line 8 – Montana Source Income. Complete this line if the ESBT is a nonresident or part-year resident. If the ESBT is a resident, skip this line. If the ESBT is a nonresident, enter the Montana source income included in Montana adjusted ESBT income reported on line 3. Include with the return all Montana Schedules K-1 that the trust received. If you are a part-year resident, all your income received while a resident is Montana source income. You must source the everywhere income to Montana based on the number of days the ESBT was a resident of Montana during the tax year. Reduce any Montana source income by a corresponding ratio and add the result to the Montana source income received as a resident. Line 11 – Credit for Income Taxes Paid to Another State or Country. Complete this line if the ESBT is a resident or part-year resident. If the ESBT is a nonresident, skip this line. If the ESBT is a resident, complete Worksheet I on page 5 and enter the amount from line 10. If the ESBT is a part-year resident, complete Worksheet II on page 5 and ent
Extracted from PDF file 2019-montana-worksheets-i-and-ii.pdf, last modified October 2019

More about the Montana Worksheets I and II Individual Income Tax Tax Credit TY 2019

We last updated the Credit for Income Tax Liability Paid to Another State or Country - Full Year Resident Only and Part Year Resident Only in March 2020, so this is the latest version of Worksheets I and II, fully updated for tax year 2019. You can download or print current or past-year PDFs of Worksheets I and II directly from TaxFormFinder. You can print other Montana tax forms here.

Other Montana Individual Income Tax Forms:

TaxFormFinder has an additional 78 Montana income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form 2 Montana Individual Income Tax Return
Form IT Payment Voucher Individual Income Tax Payment Voucher
Form 2 Instructions Individual Income Tax Instructional Booklet
Form AMD Montana Individual Income Tax Amended Return Reconciliation
Form 2M-WKST Worksheets

Download all MT tax forms View all 79 Montana Income Tax Forms


Form Sources:

Montana usually releases forms for the current tax year between January and April. We last updated Montana Worksheets I and II from the Department of Revenue in March 2020.

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Worksheets I and II is a Montana Individual Income Tax form. States often have dozens of even hundreds of various tax credits, which, unlike deductions, provide a dollar-for-dollar reduction of tax liability. Some common tax credits apply to many taxpayers, while others only apply to extremely specific situations. In most cases, you will have to provide evidence to show that you are eligible for the tax credit, and calculate the amount of the credit to which you are entitled.

About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of Montana Worksheets I and II

We have a total of six past-year versions of Worksheets I and II in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:



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