Schedule ND-1FA: Schedule ND-1FA - 3-year Averaging Method for Elected Farm Income (2024)
North Dakota · ND Tax Commissioner · Used for tax years 2024
North Dakota Schedule ND-1FA calculates 2024 income tax using the elective 3-year averaging method for elected farm income. It uses elected farm income from federal Schedule J and amounts from your 2021, 2022, and 2023 North Dakota returns.
Who files this form
Schedule ND-1FA is optional. You are eligible to use it to calculate your 2024 North Dakota tax if you used Schedule J (Form 1040) to calculate your 2024 federal income tax.
You do not have to use Schedule ND-1FA just because you used federal Schedule J. Attach it to Form ND-1 only if you choose to pay the tax calculated using this schedule.
What you'll need
- Your 2024 Form ND-1 and Schedule J (Form 1040).
- Copies of your 2021, 2022, and 2023 North Dakota income tax returns, including Schedule ND-1FA if you used it for those years.
- Corrected amounts from any amended returns or changes made by the Office of State Tax Commissioner for those base years.
- The tax table in the 2024 Form ND-1 instructions and the 2021, 2022, and 2023 tax rate schedules included with Schedule ND-1FA.
- Your 2024 Schedule ND-1NR, if you are required to use it.
If you need copies of past returns, see the back cover of the 2024 Form ND-1 instruction booklet for information on obtaining them.
How to file
Attach Schedule ND-1FA to your 2024 Form ND-1 only if you choose to pay the tax calculated using it.
- If you and your spouse, if filing jointly, were full-year residents, enter Schedule ND-1FA, line 23, on your 2024 Form ND-1, line 20.
- If you must use Schedule ND-1NR, enter Schedule ND-1FA, line 23, on your 2024 Schedule ND-1NR, line 22. Then complete the rest of Schedule ND-1NR to calculate your actual tax liability.
Common mistakes
- Assuming averaging always lowers your tax. The tax calculated using Schedule ND-1FA may be higher than the tax calculated without it.
- Entering too much elected farm income. Line 2 must not exceed line 1. If your elected farm income includes a net long-term capital gain, follow the line 2 instructions.
- Skipping the instructions for zero or negative base-year income. If line 5, 9, or 13 is zero or less, see the instructions for those lines.
- Treating line 23 as your final tax when Schedule ND-1NR is required. You must transfer it to Schedule ND-1NR, line 22, and complete that schedule.
Questions people ask
Which years are used for the three-year averaging calculation?
The 2024 schedule uses the base years 2021, 2022, and 2023.
What if I was not required to file a North Dakota return for a base year?
Complete the applicable North Dakota return for each such year through the line where tax is calculated. Use those figures to complete the applicable lines of your 2024 Schedule ND-1FA.
What if a base-year return was amended or changed by the tax office?
Use the corrected amounts when completing Schedule ND-1FA.
Does a capital gain exclusion affect elected farm income on line 2?
Yes, if you claimed an exclusion on your 2024 Form ND-1, line 6, attributable to a net long-term capital gain included in your federal elected farm income. Subtract that portion of the exclusion from your federal elected farm income before entering the result on line 2.