Schedule II: Schedule II – Tax on Montana Source Income (2024)
Montana · Montana DOR · Used for tax years 2024
Montana Form 2 Schedule II calculates tax on Montana source income. It reports Montana source ordinary income and net long-term capital gains and uses income ratios to calculate the Montana tax attributable to each.
What you'll need
Have these forms and details available to complete Schedule II:
- Federal Form 1040: Line 17a uses the amount from Form 1040, line 9.
- Federal Schedule D: Lines 17c and 21 use net long-term capital gains from Schedule D, line 15.
- Montana Form 2: You need the tax amounts from page 2, lines 11 and 12.
- Form DE, for business income or loss: Line 6 says to attach Form DE, and line 6a uses Montana source business income from that form.
- Montana source income and expense information: The schedule asks for income by type and certain additional expenses.
- Residency details, if applicable: The form asks part-year residents for the date of residency change and the states moved to and from. It also asks for each spouse’s Social Security number when one spouse is a Montana resident and the other is a nonresident or part-year resident.
Common mistakes
- Not following the ratio limits: For lines 18 and 23, round to six decimal places and do not enter more than 1.000000.
- Missing Form DE: The business income or loss line says to attach Form DE.
- Missing a residency checkbox: Mark the specified box if one spouse is a Montana resident and the other is a nonresident or part-year resident.
- Missing the suspended-loss checkbox: Line 10 says to mark the box if you have Montana source suspended losses.
- Not carrying the total to Form 2: Line 26 says to enter the total both there and on page 1, line 8.
Questions people ask
What is Montana source ordinary income?
The form defines it as all Montana source income that is not considered a net long-term capital gain. Add lines 1 through 15 to get the total on line 16.
How do I calculate everywhere ordinary income?
On line 17a, enter Form 1040, line 9. Subtract the certain federal adjustments entered on line 17b and the net long-term capital gain from federal Schedule D, line 15, entered on line 17c. The result goes on line 17.
How is Montana source ordinary income tax calculated?
Divide line 16 by line 17. Round the ratio to six decimal places and do not enter more than 1.000000 on line 18. Multiply that ratio by the Montana ordinary tax from Form 2, page 2, line 12, entered on line 19. Enter the result on line 20.
How is the tax on Montana source net long-term capital gains calculated?
Divide Montana source net long-term capital gains on line 22 by net long-term capital gains on line 21. Round to six decimal places and do not enter more than 1.000000 on line 23. Multiply that ratio by the Montana net long-term capital gains tax from Form 2, page 2, line 11, entered on line 24. Enter the result on line 25.
Where does the total tax go?
Add lines 20 and 25. Enter the total on Schedule II, line 26, and on Form 2, page 1, line 8.