Montana Individual Income Tax Forms And Instructions

2006 Montana Individual Income Tax Instructions

and then include these additional dependents in the total

bonds and obligations of another state or territory or

on line 5c.

county, municipality, district or other political subdivision of

another state.

To determine who is your dependent refer to the detailed

instructions for Form 2, line 6c found on page 20 of these

Line 22 – Taxable Federal Refund. If you received a

instructions.

2005 federal income tax refund in 2006 and you claimed

federal income taxes paid as an itemized deduction, you

Disabled Dependent Child Exemption – In addition to

may need to report a portion or all of your federal refund

the dependent exemption above, you are entitled to an

as income on your 2006 Montana income tax return. This

additional exemption for a child who is disabled. If your

is called the “tax benefit rule.” To the extent that the

child is disabled and you qualify for this additional

federal tax deduction that you claimed on your 2005

exemption, place an “X” in the column and row of the

Montana income tax return reduced the amount of your

disabled child and add an additional exemption to your

2005 Montana income tax liability, any subsequent refunds

total on line 5c.

from this deduction are considered income in the year that

you received it. In order to determine whether any of your

To determine if you are eligible for the disabled dependent

refund is taxable in 2006, complete Form W, Worksheet II,

exemption refer to the detailed instructions for Form 2,

Tax Benefit Rule Worksheet on page 49.

line 6c found on page 20 of these instructions.

Line 23 – Addition to Federal Taxable Social Security/

Line 5d – Add lines 5a through 5c and enter the total

Railroad Retirement. Your social security benefits taxable

number on line 5d. These are your total exemptions.

to Montana may be different from the amount of taxable

Federal Adjusted Gross Income

benefits that you reported on Form 2M, line 13b. You

should determine your Montana taxable social security

Lines 6 through 20 – Your income on your Montana

benefits by completing Montana Form W, Worksheet VIII

individual income tax return begins with your federal

found on page 53 of the instruction booklet. Before you

adjusted gross income. On lines 6 through 20 enter the

can complete your social security worksheet, you will need

amount corresponding to your federal individual income

to complete your pension and annuity income worksheet,

tax return Form 1040, 1040A, or 1040EZ.

Form W, Worksheet IV found on page 50 of the instruction

Line 15 – Penalty on Early Withdrawal of Savings.

booklet.

Certain types of savings accounts require that some

When using Worksheet VIII when filing Form 2M, report

interest is forfeited if you withdraw the funds prematurely.

the amounts as indicated in the chart below:

The Internal Revenue Code allows a deduction for this

“penalty” when determining federal adjusted gross income.

On worksheet line:

Add the amounts from Form 2M, lines:

Please refer to federal income tax instructions and rules

6, 7a, 8a, 9, 10b, 11b and 12

for more information on this topic. This item is not the

same as the penalties imposed by Montana law for

21, 22, 24 and tax exempt interest in

unqualified withdrawals from special accounts such as the

line 7b not included in line 21

Medical Care Savings Account or the First-Time Home

Buyer Savings Account.

15, 16 and 18

Line 20 – Federal Adjusted Gross Income. Subtract line

After you have completed your social security worksheet

19 from line 14 and enter the result on line 20. This

and you find that your social security benefits taxable to

amount should correspond to the amount of the federal

Montana are greater than those that you reported on Form

adjusted gross income that you reported on your federal

2M, line 13b, enter that difference on your Form 2M, line

income tax return Form 1040, 1040A, or 1040EZ.

23. If your social security benefits taxable to Montana are

less than those that you reported on Form 2M, line 13b,

Detailed instructions for the remainder of lines 6 through

you should report that difference as a subtraction to

20 are not provided. You will need to refer to your federal

federal adjusted gross income on your Form 2M, line 32.

income tax instructions for detailed information on lines 6

through 20. In completing lines 6 through 20 you should

Line 24 – Medical Care Savings Account Nonqualified

include with your Form 2M the applicable federal

Withdrawals. Your nonqualified withdrawal from a

schedules that are identified on Form 2M.

Montana medical care savings account is a withdrawal

that you made during the tax year for any purpose other

Additions – Lines 21 through 24. You may need to add

than to pay for eligible medical expenses or long-term

additional items of income to your federal adjusted gross

care. You can refer to Montana Form MSA for further

income in order to arrive at your Montana adjusted gross

detailed instructions. You should report any nonqualified

income. Enter the following items of income on the

withdrawals from your Montana medical care savings

appropriate line.

account as an addition to federal adjusted gross income

on Form 2M, line 24.

Line 21 – Interest and Mutual Fund Dividends from

Other States’ State, County, or Municipal Bonds. Enter

the interest and dividend income that you received from

Montana Individual Income Tax Forms And Instructions - 2006 Page 2

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