Schedule ND-1CR: Schedule ND-1CR - Credit for Income Tax Paid to Another State (2024)
North Dakota · ND Tax Commissioner · Used for tax years 2024
Schedule ND-1CR calculates the North Dakota credit for income tax paid to another state or its local jurisdictions. It reports income taxed by both jurisdictions, the tax paid to the other jurisdiction, and the credit to enter on Form ND-1.
Who files this form
Use 2024 Schedule ND-1CR to claim a credit for income tax paid to another state or its local jurisdictions. You may qualify if:
- You were a North Dakota resident for all or part of 2024.
- You paid income tax to North Dakota and the other state or local jurisdiction on the same income.
For part-year residents, the eligible income must have been earned or received while you were a North Dakota resident and reported on Schedule ND-1NR, line 18.
The credit requires an income tax return filed with the other state or local jurisdiction, either by you or by a pass-through entity for qualifying composite or entity-level income tax. Withholding or estimated tax payments alone do not qualify.
What you'll need
Have these forms and returns available to complete the schedule:
- Form ND-1: You will use amounts from lines 1a and 20. Full-year residents also use line 5.
- Schedule ND-1NR, if you were a part-year resident: You will use line 18.
- The other state's income tax return: Use the net income tax shown on that return.
- A local jurisdiction's income tax return, if applicable: Include its net income tax, whether shown on the local return or the other state's return.
- A qualifying composite or pass-through entity income tax return, if applicable: Include your share of the income and income tax paid.
The schedule also asks for your name, Social Security number, and the name of the other state.
How to file
The supplied text explains how to complete the schedule, but does not give a mailing address or e-file directions.
- Enter the other state's name and complete lines 1a through 6. If there is no eligible income on line 1b or 1c, stop. You are not eligible for the credit.
- Full-year residents: Complete line 7 using the smaller of line 5 or line 6. For joint filers, this route applies only if both spouses were full-year residents.
- Part-year residents: Skip line 7 and complete lines 8 through 11. The credit on line 11 is the smaller of line 5 or line 10. For joint filers, this route applies if either spouse was a part-year resident.
- Enter the credit on Form ND-1, line 21.
Complete a separate Schedule ND-1CR for each other state. Include local income tax on the schedule for the state where the local jurisdiction is located. Add the credits from all schedules and enter the total on Form ND-1, line 21.
Common mistakes
- Using withholding or estimated payments on line 6. Use net income tax after credits but before withholding and estimated taxes, not the withholding shown on Form W-2 or estimated payments.
- Including deductions that do not belong on line 1b. Do not include personal or dependency exemptions, standard or itemized deductions, or other state-law adjustments to federal adjusted gross income.
- Including income earned outside your North Dakota residency period on line 1c. This line includes only the portion of line 1b earned or received while you were a North Dakota resident.
- Using the wrong residency route. Complete line 7 only for full-year residents. If either spouse on a joint return was a part-year resident, use lines 8 through 11 instead.
- Missing the rounding instructions. Round the ratios on lines 3 and 9 to four decimal places. Enter 1 when the numerator is equal to or greater than the denominator.
Questions people ask
Which taxes qualify for the credit?
Income taxes paid to another U.S. state, the District of Columbia, a U.S. territory, or a local jurisdiction within a state may qualify. Foreign income taxes and taxes that are not income taxes, such as property or sales taxes, do not qualify.
What if Montana tax was withheld from my wages?
Wages for work in Montana while you were a North Dakota resident are not taxable by Montana under the states' reciprocity agreement. Do not use this schedule for those wages. File a Montana individual income tax return to obtain a refund of the withholding. Montana tax on income other than wages, such as business or rental income, may qualify for this credit.
What if Minnesota tax was withheld from my wages?
If you worked in Minnesota while a North Dakota resident and maintained a North Dakota home to which you returned at least once every month, those wages are not taxable by Minnesota under reciprocity. Do not use this schedule for those wages. File a Minnesota individual income tax return to obtain a refund. Minnesota tax on income other than wages may qualify for this credit.
Can joint filers qualify if they have different residency statuses?
Yes. The credit is available to either or both spouses if they meet the eligibility requirements.