Montana Form 2M Line by Line Guide
Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what's the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they're all constructed differently. What follows is a breakdown of Form 2M, the Montana Individual Income Tax Return. If you don't live in Montana, not to worry, we'll be tackling the other 34 states soon enough.
Montana's Form 2M is massive primarily because it's repetitive. There's no need for you to refigure your Federal adjusted gross income on a state tax form, but that's exactly what happens here. Extra steps and more work matter when you're trying to complete one of these state returns. For these reasons, I'm giving the 2M a lowly 5 of 10 on our user friendly meter.
Begin by filling in your name, address, social security number, and filing status at the very top. When you get to the exemptions section, you'll declare how many dependents you have. Just be sure to include their relationship to you and their social security numbers on the lines provided. When you're ready, add Lines 6a through 6c and put the total on 6d.
Montana dedicates a whopping 31 lines to figuring your adjusted gross income. Heck that's almost as lengthy as the federal form. Start on Line 7 with wages, salaries, tips, etc from your W-2. Then include any taxable interest, dividends, IRA distributions, pensions/annuities, unemployment compensation, and social security benefits on the next 14 lines. When ready, add Lines 7 through 21, with your total income going on Line 22.
If things like educator expenses, student loan interest, and a tuition and fees deduction apply, enter those amounts on the next bunch of lines. Now add Lines 24 through 36 and put your total adjustments on Line 37. Finish the section by subtracting Line 37 from Line 23 to get your federal adjusted gross income, which gets recorded on Line 38a. Obviously, this number should match what's on your federal filing.
As if working through 38 lines to get you Federal adjusted gross income is bad enough, now you have to work through another 2 Schedules to figure your Montana adjusted gross income. It's a good thing Montana is beautiful, (I've been there), otherwise this form would single handedly decrease the state's population.
Once you carry forward your Montana AGI to line 41, you'll be ready to start entering deductions. If you're going use the standard deduction, check out the worksheet on page 46 and enter that amount on Line 42. But if you're going to itemize, you'll have to attach this form's Schedule 3 and record the amount on Line 42.
Now subtract Line 42 from Line 41 and put the balance on Line 43. Then you can multiply the number of your exemptions by $2,190 and include that number on Line 44. Now subtract Line 44 from Line 43 to get your taxable income, which goes on Line 45.
Look up your tax from the tax table on page 7 of the tax table. Basically, if your taxable income is more than $16,000 you will have to multiply it by a lofty 6.9% and subtract $512 from the total. I have no idea how the department of revenue came up with that arbitrary $512. But, basically this is done to get more tax out of residents who make the more money. Whether this is right or wrong is for you to decide.
If it applies, you could be eligible for a 2% capital gains credit on Line 47. Then you can subtract Line 47 from Line 46 to yield your resident tax ,which goes on Line 48.
On Line 55 record your Montana withholdings, just be sure to include your W-2. Then record any estimated tax or extension payments on the next two lines. And if an amended return applies to you, work through Lines 61 and 62. Now add Lines 55 through 61, and subtract line 62, to get your total payments.
If Line 54 is greater than Line 63, subtract Line 63 from Line 54 to yield your total remaining tax. But, if Line 63 is greater than Line 54, subtract Line 54 from Line 63 to reveal the amount you've already overpaid. If you have to pay any penalties, or if you want to make a contribution to some very good causes, work through Lines 66 through 69d. Once you've got that sorted out, add those Lines and put the sum on Line 70.
You owe the amount on Line 64, just add Line 70 to it to get your total tax, which goes on Line 71. But if you've overpaid, subtract Line 70 from Line 65 to get your refund and put that amount on Line 72. Just enter the amount you want applied to next year on Line 73 before recording your final refund on Line 65.
All that's left is to record your banks check and routing numbers for direct deposit, sign, date, and record a telephone number. If you needed a tax pro to help you (and I wouldn't blame you if you did), they'll have to do the same.
At 2 pages and over 70 lines Montana is a beast and will take some time to complete. So the best strategy is to be organized, take your time and a breath before you start moving through this monster. If after all this you've still got 30 seconds to burn, check out the Minnesota version to see how easy a state tax form should be.
