Category: North Dakota
North Dakota Subtractions from Income
Interest from U.S. Obligations
Enter the following in this area:
- 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 that interest from which is exempted from state income tax by federal statute.
Common sources of interest income that may be entered here 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
Note: 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 federal income tax refund or repurchase agreement.
ND Net Long-Term Capital Gain Exclusion (Loss)
If your federal taxable income includes a net long-term capital gain (including a capital gain distribution from a mutual fund), you may exclude 40% of that gain from your North Dakota taxable income. However, if you were a full-year nonresident or part-year resident of North Dakota for the tax year, the exclusion is limited to a net long-term capital gain based on the capital gains and losses reportable to North Dakota.
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 2015, enter on this line income you derived from sources on any Indian reservation in North Dakota. Do not enter income derived from non-reservation sources in North Dakota. If you lived in North Dakota in 2015, but you did not reside on an Indian reservation for part or all of 2015, do not enter income earned or received while living off of the reservation.
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.
Income From Certain S Corporations
Enter on this line the amount of an income adjustment reported to you by an S corporation that elected to be taxed as a C corporation. For more information, obtain the Income Tax Guideline: Adjustment For Income (Loss) From An S Corporation Electing To Be Taxed As A C Corporation.
Loss From Certain S Corporations
Enter on this line the amount of a loss adjustment reported to you by an S corporation that elected to be taxed as a C corporation.
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.
If you are claiming a tax credit on Schedule ND-1TC, line 5 (planned gift credit), line 12 (endowment fund credit from pass through entity), line 17 (endowment fund contribution credit), or line 18 (housing incentive fund credit), and the contribution on which the credit is based was deducted on your 2016 federal income tax return, you must increase your North Dakota taxable income by the amount that the contribution reduced your federal taxable income.
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. You will attach a copy of your Title 10 orders.
College SAVE Contribution Deduction
If you made a contribution in 2016 to a North Dakota College SAVE account administered by the Bank of North Dakota, you are allowed a deduction for the total contributions made during the year, 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 for the deduction.
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.
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.
Renaissance Zone Income Exemption
If you qualified for the business or investment income exemption under the North Dakota renaissance zone
program, enter the sum of amounts from Schedule RZ, Part 7, lines 1c and 1h.
New or Expanding Business Income Exemption (included in Line 16 calculations)
If you operate a business as a sole proprietorship and were granted a new or expanding business income exemption under N.D.C.C. ch. 40-57.1, enter the portion of your net business income that is eligible for the exemption. For more information on how to calculate the amount of the exempt income, see North Dakota Administrative Code § 81-03-01.1-06. Include on this line a new or expanding business income exemption from a North Dakota Schedule K-1.
Organ Donor Deduction (included in Line 16 calculations)
If you or your dependent, while living, donates part or all of a liver, pancreas, kidney, intestine, lung, or bone marrow for transplantation into another human being, you may deduct up to $10,000 of qualified expenses related to the donation.
Qualified expenses means:
- Lost wages not compensated for by sick pay.
- Medical expenses (as defined for federal income tax purposes) that you did not deduct in calculating your federal taxable income. Medical expenses for which you receive reimbursement under an insurance plan or other source do not qualify for the deduction.
If the qualified expenses are incurred in more than one tax year, the expenses must be deducted in the tax year in which they are incurred. Medical expenses are incurred when the medical care giving rise to the expense is actually provided, and not when the expenses are billed or paid. Enter on this line qualified expenses incurred during the 2016 tax year.
Employee Workforce Recruitment Exclusion (included in Line 16 calculations)
If you receive a statement from your employer verifying that your employer qualified for the North Dakota workforce recruitment income tax credit based on your employment, enter on this line the amount of the signing bonus, moving expense payment, or non-typical fringe benefit payment shown on the statement, but only to the extent it is included in your 2015 federal taxable income.