The following credits are currently supported for the Montana Tax Return. Please review the credit information to determine if you qualify for the credit.
Elderly Homeowner/Renter Credit
The Montana elderly homeowner/renter credit is a property tax relief program that provides you with a refundable credit of up to $1,000 if you are age 62 or older, have resided in Montana for at least nine (9) months during the year, occupied a Montana residence for at least six (6) months during the year, and your gross household income is less than $45,000.
For further instructions on the elderly homeowner/renter credit, see Form 2EC Instructions.
You can claim a credit against your income tax liability if you finalized the adoption of an eligible child in 2016. An eligible child is:
* any child under age 18, or
* any disabled person physically or mentally unable to take care of himself or herself.
The amount of the credit is $1,000 per child. If the amount of the credit exceeds your tax liability for 2016, you can carry forward the unused credit to the next five tax years. For Montana purposes, this carry forward applies only to adoptions that were finalized on or after January 1, 2007. Also, the legal adoption of a stepchild does not qualify for the federal or Montana credit. Include a copy of federal Form 8839 with your tax return.
Credit for Taxes Paid to Another State or Country
This credit is available for Montana taxpayers filing as a full-year or part-year resident. This credit will be automatically calculated within your Montana Resident return if you have a Nonresident return created on your account. If you have Part-Year Montana return, you will need to manually enter the information asked within the Montana state program.
If you are a full-year resident and you paid income tax to another state or country on income that is also taxable to Montana, you may be entitled to a credit against your Montana income tax liability. If you claimed the foreign tax credit on your federal tax return, you can claim this credit for foreign taxes on your Montana tax return only if you have unused federal credit that is not eligible to be carried back or carried forward to another tax year. If you are a resident and have unused federal credit or paid tax to another state, please refer to Form 2, Schedule VI.
Wages for work performed in North Dakota – If you worked in North Dakota while a resident of Montana,
the wages you receive for this work are not taxable by North Dakota under the income tax reciprocity agreement between the two states. If this applies to you, but your employer withheld North Dakota income tax from the wages, you should not take this credit. Instead, file a North Dakota individual income tax return to obtain a refund of the North Dakota income tax withheld.
If you are a part-year resident and you paid an income tax to another state or country on income that is also taxable to Montana and if you included it as Montana source income on Form 2, Schedule IV, lines 1 through 16, you may be entitled to a credit against your Montana part-year resident income tax liability for these income taxes paid to another state or country. If you claimed the foreign tax credit on your federal tax return, you can claim this credit for foreign taxes on your Montana tax return only if you have unused federal credit that is not eligible to be carried back or carried forward to another tax year. If you are a part-year resident and have unused federal credit or paid tax to another state, please refer to Form 2, Schedule VII.
College Contribution Credit
You can claim a credit against your income tax liability for contributions that you made in 2016 to a foundation or general endowment fund of the Montana university system, a Montana private college, a community college or a tribal college. Your credit is equal to 10% of the contribution that you made with a maximum credit allowed of $500.
In order to qualify for this credit, you have to make your contribution to a Montana college or university that offers an associate or baccalaureate degree level education program. In addition to this credit, your contribution may also be claimed as an itemized deduction on Form 2, Schedule III, line 16.
Qualified Endowment Credit
You can claim a credit against your income tax liability for contributions made to a qualified Montana endowment
held by a Montana corporation or established organization that is tax-exempt under 26 USC 501(c)(3) or is held by a bank or trust company in Montana on behalf of the tax exempt organization.
Geothermal Systems Credit
If you are a resident of Montana, you can claim a credit against your income tax liability for the cost of purchasing and installing a geothermal system in your principal home. The amount of the credit cannot exceed $1,500 and is applied in the year that you installed your geothermal system. The balance of your credit that is not used can be carried forward and applied against subsequent income tax liabilities for a period of seven years. You are not allowed to claim both the alternative energy systems credit and the geothermal systems credit for the same investment. For further instructions on the geothermal systems credit, and to calculate this credit, see Montana Form ENRG-A. When you claim this credit, you will have to include a copy of Form ENRG-A with your tax return.
Alternative Energy Systems Credit
If you are a resident of Montana, you can claim a credit against your income tax liability for the cost of purchasing and installing an energy system that uses a recognized nonfossil form of energy such as, but not limited to, solar energy, wind energy, solid waste and organic waste in your principal home. Your total credit cannot exceed $500 per taxpayer. Any balance of your credit that is not used in 2014 can be carried froward and applied to future income tax liabilities for a period of 4 succeeding tax years. You are not allowed to claim both the alternative energy systems credit and the geothermal sysetms credit for the same purchase.
Elderly Care Credit
You can claim a credit against your income tax liability for paying certain expenses in order to provide care to an elderly family member. Your credit cannot exceed $5,000 for one qualifying family member, or $10,000 for the care of two or more qualifying family members. In order to qualify for this credit, you need to care for an elderly family member, who is at least 65 or has been determined to be disabled for the Social Security Administration, and who has a family income of $15,000 or less if not married, or $30,000 or less if married. In addition, your Montana adjusted gross income must be less than $55,000 if your filing status is married filing separately. For further instructions you can see Montana Form ECC.
Student Scholarship Educational Credit
You can claim a credit against your tax liability for donations made to a Student Scholarship Organization. Your credit cannot exceed $150. If you file a joint tax return, each taxpayer can receive up to $150. You are not allowed to take this credit if you deducted the same amount as a charitable contribution on Schedule III.
Energy Conservation Installation Credit
If you are a resident of Montana, you can claim a credit against your tax liability for energy conservation investments that you made to your home or other buildings. Your credit is equal to 25% of your expenses for a maximum credit of up to $500 for the capital investments you made to your home or another building for energy conservation purposes or for the installation or replacement of a hot water heater or household heating or cooling system. If you are married your spouse may also qualify for a credit of up to $500 as long as you both made qualifying capital investments. You will not qualify for this credit by simply switching to an energy source that is less expensive or free. For further instructions and a list of investments that qualify see Montana Form ENRG-C.