Guide to filing a North Dakota state tax return

The State Capital grounds in Bismark, North Dakota are home to the states legislature, which establishes North Dakota state tax laws. Image:

In a Nutshell

If you live or work in the Peace Garden State, you’ll likely need to know how and when to file a tax return in the state. Here’s what you need to know about deadlines, penalties, deductions and credits.

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North Dakota’s pop culture claim to fame may be Fargo — the movie or TV series, not the city — but the state with one of the smallest U.S. populations also has a relatively simple state income tax system going for it.

The Peace Garden State (so named for the International Peace Garden that spans the border between North Dakota and Manitoba, Canada) has a progressive income tax with just five rates that top out at a low 2.9%.

If you need to file a North Dakota state tax return for 2018, here are some things to know about the state’s income taxes.


The basics of North Dakota state tax

If you live in North Dakota and have to file a federal income tax return, you must also file a state individual income tax return — even if part of your income comes from sources outside the state. If you don’t live in North Dakota, you should still file a North Dakota state tax return if you get income from sources within the state and you had to file a federal return (although there are some exceptions).

Taxing body

The North Dakota Office of State Tax Commissioner regulates the tax code for the Peace Garden State. If you have questions about North Dakota individual income taxes, you can call 1-701-328-1247 or send an email to individualtax@nd.gov.

You can also visit one of the agency’s remote offices in Dickinson, Fargo, Grand Forks, Minot and Williston. Call ahead though, to make sure they’re open.

Filing and payment deadline

The deadline for filing your state tax return and paying your bill is April 15. If the 15th falls on a weekend or holiday, the deadline moves to the next business day.

If you need more time to file your return, you can request it in two ways. The first is by requesting an extension for your federal return, which automatically applies to your state return. If you don’t also need an extension on your federal return, you can request one for your state return alone by filing Form 101.

Keep in mind though, that the state extension isn’t automatic — you’ll need a good reason to get it approved.

If you don’t file by the April 15 deadline or by the time your extension ends, and you owe taxes, there are penalties and interest. For 2017, the failure-to-file penalty was 5% ($5 minimum) per month or part of a month that balances remained unpaid. The maximum penalty was 25% of the tax due. And you’ll face interest charges of 1% per month on the unpaid balance.

 

Filing statuses

North Dakota recognizes the same filing statuses as the IRS and requires you to use the same status on your state return as your federal return. Those statuses include the following:

  • Single
  • Head of household
  • Married filing jointly
  • Married filing separately
  • Qualifying widow(er)

North Dakota income tax rate(s)

The Peace Garden State is one of the more tax-friendly states in the country, providing five tax brackets with relatively low rates. The tax rates for 2018 are 1.10%, 2.04%, 2.27%, 2.64% and 2.9%.

North Dakota subtractions

While North Dakota doesn’t offer a standard deduction of its own, the state uses federal taxable income as the starting point for calculating your state tax. So North Dakota state filers that took the standard deduction on their federal return can get the benefit of that deduction when calculating their state tax. The state also provide taxpayers with other deductions, also called subtractions.

Here are some of the more common ones that are available for 2018.

  • National Guard or reserve member exclusion — If you were a member of the North Dakota National Guard or the U.S. Army Reserve, and you were mobilized or activated for federal active-duty service, you can exclude from your taxable income the compensation you received from that service. If your compensation was exempted from federal income tax, or you received it for attending annual training, basic military training or professional military education, you can’t exclude it on your state return.
  • College SAVE contribution deduction — If you contributed to a North Dakota College SAVE account, you can deduct your contributions up to a set maximum amount that’s based on your filing status. You can take the deduction even if you’re not the owner of the account.
  • Organ donor deduction — If you or your dependent make a living donation of certain types of organs (such as liver or bone marrow), you may deduct unreimbursed medical expenses (as defined for federal income tax purposes) and lost wages not compensated by sick pay up to a maximum of $10,000 of qualified expenses. You can take the deduction for the tax year when you had the medical care that led to the expenses, regardless of when you were billed for or paid the expenses.
Learn the difference between a tax deduction vs. a tax credit

North Dakota credits

In addition to a handful of deductions, North Dakota also provides several tax credits to allow taxpayers to lower how much they owe. Here are a two of the more common ones that are available for 2018.

  • Family member care tax credit — If you paid qualifying care expenses for a qualifying family member, you may be able to take a credit of 20% to 30% of your expenses, depending on your federal taxable income. The maximum credit is worth up to $2,000 per family member, and up to $4,000 total.
  • Marriage credit — If you’re married and filing a joint return, and your income exceeds a certain threshold, you may qualify for a credit. The threshold and maximum credit amount can change each year, so use the worksheet in the instruction booklet to determine whether you qualify and for how much.

How to file your North Dakota state tax return

If you meet eligibility criteria, you may be able to e-file your federal and state tax returns for free through a Free File e-file service. Participating companies have varying criteria for free filing, so be sure to check out their requirements before choosing one.

You can also file your single-state and federal income tax returns for free through Credit Karma Tax®.

If you’d rather file a paper return, you can download and print out the applicable forms on the state’s website. Whether you owe money or you’re expecting a refund, mail your return, payment and voucher (if applicable) to …

Office of State Tax Commissioner
P.O. Box 5621
Bismarck, ND 58506-5621

If you owe and can’t pay

If you can’t pay your tax bill in full, you should pay as much as you can and then call the Accounts Receivables Section (Collections) at 1-701-328-1244 to find out if you’re eligible to set up a payment plan.

If you’ve already received a collection notice, calculation worksheet, statement of tax due or collection letter, you can request a payment plan online.

Keep in mind, though, that you’ll pay a failure-to-pay penalty and interest until your balance is paid in full. The penalty is 5% (minimum $5), and the interest rate is 1% per month or part of a month.

FAST FACTS

What are your options whey you can't pay your federal tax bill?

If you can’t pay your federal income tax bill by Tax Day, you have options. You may be able to …

  • Request a short-term payment plan with no set-up feethat gives you up to 120 days to pay the tax you owe. Interest and penalties will apply.
  • Ask for a longer-term installment agreement. Fees, penalties and interest will apply, and you must meet requirements.
  • Request an offer in compromise that could reduce the amount you owe. You’ll need to meet qualifications and can use the IRS Offer in Compromise Pre-Qualifier tool to see if you’re eligible.

Learn more about what to do when you can’t pay your federal tax bill.

Tracking your North Dakota tax refund

If you’re expecting a refund, you can check the status on the state’s website using the Where’s My Refund? tool. To get an update, you’ll need to provide your Social Security number or Individual Taxpayer Identification Number, filing status and the amount of the refund you’re expecting.


Bottom line

The Peace Garden State offers some different deductions and credits than other states do, but taxpayers can still look forward to low tax rates and a few deductions and credits. To avoid penalties and interest, be sure to file your return on time and pay what you owe by the deadline.