Questions & Answers

Am I eligible for the Credit for Income Taxes Paid to Another State?

You may be eligible for a credit for income tax paid to another state or local jurisdiction, if both of the following apply:
  • You were a North Dakota resident for all or part of the tax year.
  • You are required to pay income tax for the tax year to North Dakota and to another state or local jurisdiction on the same income.

Part-year resident: If you were a part-year resident of North Dakota, the credit is available only if the income taxed by both North Dakota and the other state was earned or received during the time you were a North Dakota resident.

Definition of state: For purposes of this credit, "state" means any of the other 49 states, the District of Columbia, and a U.S. territory.

Definition of local jurisdiction: For purposes of this credit, "local jurisdiction" means a city, township, county, etc., within a state.

This credit isn't allowed for income tax paid to a foreign country or its local jurisdictions, nor is it allowed for any tax that isn't an income tax (e.g. property or sales taxes).

Other state's return: The credit is allowed only if you file an income tax return with the other state. The credit is not allowed based on the amount of the other state's income tax withheld from your wages or the amount of estimated income tax paid to the other state. Part or all of the other state's income tax withholding or estimated tax paid may be refunded to you depending on the actual income tax liability calculated on the other state's income tax return.

Joint filers having different residency statuses: If you are filing a joint return and you and your spouse had different residency statuses, the credit is available to either or both spouses, provided you both meet the eligibility requirements.

Composite return: If you owned an interest in a partnership or other type of passthrough entity, and you elected to be included in a composite return filed in another state on your behalf by the passthrough entity- which satisfied your income tax filing and payment requirements in that state--your share of the income and related tax reported on the composite return is eligible for this credit if you meet the eligibility requirements for this credit.

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