North Dakota Nonresident Filing Requirements
For nonresidents with North Dakota income, this guide clarifies state tax responsibilities and the process for properly attributing income for an accurate return.
Individuals who do not live in North Dakota can still be required to file a state income tax return if they earn income from sources within the state’s borders. Navigating these tax requirements involves understanding your residency status, identifying what income is taxable by North Dakota, and knowing which forms to use.
Determining Your Filing Requirement
A nonresident is defined as an individual who did not live in North Dakota for more than seven months of the tax year. You are required to file a North Dakota income tax return if you must file a federal return and you have any gross income from North Dakota sources. This filing threshold is not based on a specific dollar amount of North Dakota income.
North Dakota source income includes:
- Wages or salaries for services performed within the state.
- Income from property in North Dakota, such as rental income, royalties, or gains from real estate sales.
- Income from a business, partnership, or S Corporation operating in North Dakota.
- Gambling winnings from North Dakota establishments.
For individuals working remotely for a North Dakota-based company, income is sourced to where the work is physically performed. North Dakota has reciprocity agreements with Minnesota and Montana, so residents of those states who work in North Dakota are only taxed by their home state on their wages. To prevent withholding, these individuals can file Form NDW-R with their employer.
Information and Forms for Filing
You will need a completed copy of your federal income tax return (Form 1040) to complete the state form. You must also collect all documents reporting North Dakota source income, including:
- Form W-2 showing North Dakota income tax withheld.
- Form 1099-NEC for nonemployee compensation.
- Schedule K-1 from a partnership or S Corporation.
- Any other documents reporting North Dakota income.
The primary tax form for nonresidents is Form ND-1, the North Dakota Individual Income Tax Return. Nonresidents must also complete and attach Schedule ND-1NR, “Tax Calculation for Nonresidents and Part-Year Residents.” These forms and instructions can be downloaded from the North Dakota Office of State Tax Commissioner’s website.
Schedule ND-1NR is where you differentiate your North Dakota source income from your total income from all sources. You will report your federal adjusted gross income and then itemize the amounts attributable to North Dakota. This calculation produces the North Dakota income ratio used to determine your final tax liability.
Calculating Your North Dakota Tax
The tax calculation for a nonresident involves apportionment to ensure you only pay North Dakota income tax on income earned from North Dakota sources. The process begins with a preliminary tax calculation on your total income from all sources, using the state’s tax rates as if you were a full-year resident.
Using the North Dakota tax schedules or table, you first determine the tax you would owe on your entire federal taxable income. You then apply the North Dakota income ratio from Schedule ND-1NR, multiplying the total calculated tax by this ratio to find your North Dakota tax liability.
Deductions are also handled proportionally. You cannot claim the full amount of your standard or itemized deductions against your North Dakota income. The allowable deduction amount is prorated based on your North Dakota income ratio.
Submitting Your Nonresident Return
Once your Form ND-1 is complete, you have two primary methods for submission. The state encourages electronic filing through approved tax software providers listed on the Office of State Tax Commissioner’s website. E-filing is faster and can lead to quicker processing of any potential refund.
Alternatively, you can mail a paper copy of your return. If you file a paper return, you must attach a complete copy of your federal income tax return, including all related schedules. The mailing address is in the Form ND-1 instructions.
If you have a tax balance due, payment can be submitted with your mailed return via check or money order, or paid electronically through the state’s online portal. The deadline for filing and paying is April 15th. After filing, you can track your refund status on the tax commissioner’s website.