Form NDW-R lets a Minnesota or Montana resident who works in North Dakota tell their employer to stop withholding North Dakota income tax from each paycheck. File it, and only your home state takes a cut. You need to give a completed form to your employer by February 28 each year, or within 30 days of starting a new job or moving your permanent residence to Minnesota or Montana.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
Who Can Use the Form
North Dakota has reciprocity agreements with just two states: Minnesota and Montana. If you permanently live in either one and earn wages for work performed in North Dakota, you qualify to use NDW-R. Residents of any other state, and North Dakota residents themselves, cannot.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
Minnesota residents have one extra condition: you must return to your permanent Minnesota home at least once a month. Stay in North Dakota for weeks at a stretch without going back and you no longer qualify. Montana residents are not subject to that monthly-return rule; keeping a permanent home in Montana is enough.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
One boundary worth noting: the exemption covers personal service income, meaning wages, salaries, bonuses, tips, and commissions. Other North Dakota income such as rental income or business profits falls outside the agreement and may still be taxable in North Dakota.
Filling Out Form NDW-R
Download the current version from the Office of State Tax Commissioner at tax.nd.gov/forms.2North Dakota Office of State Tax Commissioner. Tax Forms Search It’s one page, but every field has to be filled in. A blank anywhere on the form and your employer is required to keep withholding North Dakota tax as if you never handed it in.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
In the employee section, use your full legal name, your Social Security number, and the address of the Minnesota or Montana home where you actually live. Not a temporary address near work, not a P.O. box. That address is the proof you live where you say you live.
In the employer section, you’ll need your employer’s full legal name, their North Dakota work-location address, their federal employer identification number, and a phone number. If you work for more than one North Dakota employer, fill out a separate NDW-R for each.
Then there’s the signature. You’re signing a declaration made under North Dakota Century Code Section 12.1-11-02, which makes a false statement in a government matter a Class A misdemeanor. Don’t sign if you’re unsure about your residency.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
Deadline and How to Submit It
Give the original to your employer’s payroll or HR department and keep a copy. The deadline is February 28 of the year you want the exemption to apply. If you start a new North Dakota job later in the year, you have 30 days from your first day of work. The same 30-day window applies if you move your permanent residence into Minnesota or Montana during the year.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
From there, your employer forwards the original to the Office of State Tax Commissioner.3North Dakota Office of State Tax Commissioner. Income Tax Withholding Check your next pay stub to make sure North Dakota tax has stopped coming out. If it hasn’t, call payroll. A missing field or a missed deadline is almost always the reason.
You Have to Renew Every Year
The form doesn’t carry over. You file a new NDW-R each calendar year to keep the exemption in place.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota Forget, and your employer must start withholding North Dakota tax again with the first paycheck of the new year.
If you move out of Minnesota or Montana at any point, the exemption ends. Tell your employer right away so they can resume withholding. Letting the exemption ride after a move leaves you with a tax bill, plus penalties and interest, at year-end.
If North Dakota Tax Was Already Withheld
Missed the deadline, or had tax withheld before the form took effect? You can get the money back by filing a North Dakota nonresident return at year-end.4North Dakota Office of State Tax Commissioner. Non-Resident File Form ND-1 with Schedule ND-1NR, report the North Dakota tax withheld from your wages on Line 26, and the overpayment flows through to your refund on Line 32. Attach your W-2s showing the withholding and a copy of your federal return.5North Dakota Office of State Tax Commissioner. Form ND-1 Individual Income Tax Return The Tax Commissioner’s office estimates 30 days to process refunds.6North Dakota Office of State Tax Commissioner. Individual Income Tax
You Still Owe Tax at Home
The exemption redirects your tax; it doesn’t erase it. Those North Dakota wages are still taxable income, just by your home state.
Minnesota residents report the wages on Form M1 along with any other income. As long as no North Dakota tax was withheld, no separate North Dakota return is needed.7Minnesota Department of Revenue. Reciprocity Income Tax Fact Sheet 4 Montana residents include the wages on Montana’s Form 2; the instructions have a specific section on North Dakota reciprocity.8Montana Department of Revenue. Montana Individual Income Tax Return Form 2 Instructions Montana taxes residents on income wherever earned, and the reciprocity agreement just stops the same wages from being taxed twice.
What Happens if You Claim It and Shouldn’t Have
Signing NDW-R when you don’t qualify, by misstating your state of residence or by ignoring the monthly-return rule in Minnesota, puts you on the wrong side of two things. First, the certification invokes North Dakota Century Code Section 12.1-11-02, a Class A misdemeanor for a false statement on a government form.1Office of State Tax Commissioner. Reciprocity Exemption From Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota
Second, the money. With no withholding for the year, the full North Dakota tax comes due at filing. A delinquent balance picks up a penalty of 5 percent of the unpaid tax (or five dollars, whichever is greater), plus 1 percent interest per month until paid.9Legal Information Institute. North Dakota Administrative Code 81-09-02-06.1 – Penalty and Interest on Delinquent Tax Over a full year of wages, that gets expensive fast.