Montana Individual Income Tax Forms And Instructions

2006 Montana Individual Income Tax Instructions

Tax Computation

federal Form W-2, or in Box 10 of your federal Form

1099R. When you claim Montana income tax withheld,

Line 41 – Compute your tax using the tax table below.

you are required to attach to your return a copy of your

withholding statement(s) (federal Forms W-2 or 1099R),

2006 Tax Brackets and Table

which show the amount(s) of Montana income tax that was

If your taxable income on Form 2M, line 40 is:

withheld from your payments. If you do not attach your

withholding statement(s) to your return, this will delay our

At least

But less than

Then your tax is

Less:

processing of your return.

$2,400

1% of your taxable income

Line 49 – Estimated Tax Payments. If you have made

$2,400

$4,300

2% of your taxable income

($24)

estimated income tax payments for tax year 2006, enter

$4,300

$6,500

3% of your taxable income

($67)

on line 49 the amount of these estimated tax payments.

Include in this amount the 2005 refund that you requested

$6,500

$8,800

4% of your taxable income ($132)

us to apply to your 2006 estimated income tax payments.

$8,800

$11,300

5% of your taxable income ($220)

Do not include in this total any income taxes paid for a

$11,300

$14,500

6% of your taxable income ($333)

previous year since these are not estimated taxes paid for

tax year 2006.

$14,500

or more

6.9% of your taxable income ($464)

For example: Taxable income $4,500 X .03(3%) = $135.

Line 50 – Extension Payment. If you paid an extension

$135 minus $67 = $68 tax

payment on or before April 16, 2007 in order to qualify for

an automatic six-month extension to file your income tax

Line 42 – Capital Gains Tax Credit. You can claim a

return, enter that amount on Form 2M, line 50. To

capital gains credit against your Montana income tax of up

determine whether you need to make an extension

to 1% of the net capital gains that you reported on Form

payment, complete the Six-Month Extension Payment

2M, line 9. This credit is nonrefundable since it is applied

Calculation Worksheet, Montana Form EXT-06.

directly against your income tax liability and it cannot

reduce this liability below zero. This credit cannot be

Line 51 – Elderly Homeowner/Renter Credit. For

carried back or carried forward and it is applied before any

detailed instructions on the elderly homeowner/renter

other credits.

credit and to calculate this credit see Form 2EC.

Nonrefundable Credits

After you have completed Form 2EC, enter the amount of

your elderly homeowner/renter credit on Form 2M, line 51.

Line 44 – Nonrefundable Single-year Credits. You may

be eligible for one or more of the 12 nonrefundable single-

The Amount You Owe

year credits that are available on your Montana income

Line 53 – Interest on Underpayment of Estimated

tax return. However, only 4 are available when you elect

Taxes. You are required to pay your income tax liability

to file Form 2M. Complete Schedule II, lines 1 through 5

throughout the year. You can make your payments through

to determine the amount of your nonrefundable single-

employer withholding, through installment payments of

year credits that you need to enter on Form 2M, line 44.

estimated taxes, or through a combination of employer

Refer to the section of instructions on Montana tax credits

withholding and estimated tax payments.

found on page 42 for a detailed explanation of these

nonrefundable single-year credits. If you are eligible for

If you did not pay in advance at least 90% of your 2006

any of the 8 other nonrefundable credits, you should file

income tax liability (after applying your credits) or 100% of

Form 2.

your 2005 income tax liability (after applying your credits)

you may have to pay interest on the underpayment of your

Line 45 – Nonrefundable Carryover Credits. You may

estimated tax.

be eligible for one or more of the 12 nonrefundable

carryover credits that are available on your Montana

To calculate your interest complete either Form W,

income tax return. However, only the Alternative Energy

Worksheet VII that is on page 52 of these instructions or

Systems credit is available when you elect to file Form

Form EST-I “Interest on Underpayment of Estimated Tax

2M. Complete Schedule II, line 6 to determine the amount

Payments.” You can access this form by visiting our web

of your nonrefundable single-year credit that you need to

site at or by calling us at (406) 444-

enter on Form 2M, line 45. Refer to the section of

6900.

instructions on Montana tax credits found on page 45 for a

Line 54 – Late File, Late Pay Penalties and Interest.

detailed explanation of these nonrefundable single-year

credits. If you are eligible for any of the 11 other

• Late File Penalty. If you file your return after April 16,

nonrefundable credits, you should file Form 2.

2007, or October 15, 2007 if you have a valid

extension, you will be assessed a late file penalty if

Payments and Offsets

your combined total tax due reported on Form 2M, line

Line 48 – Montana Income Tax Withheld. Enter on Form

47 is greater than your combined payments and offsets

2M, line 48 the amount of the Montana income tax

reported on Form 2M, line 52. The penalty is equal to

withheld from your income and reported in Box 17 of your

the lesser of $50 or the amount of tax you owe. If you

Montana Individual Income Tax Forms And Instructions - 2006 Page 5

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