All employers doing business in, or having income in, Montana must withhold state income tax from the wages and salaries of resident and nonresident employees. Employers may use official wage bracket tables available from the Montana Department of Revenue (DOR) or the percentage method formulas for automated systems. Employees get the same number of exemptions shown on federal Form W-4.
An employee is an individual who performs a service for a person or organization. One of the tests applied to determine whether an individual is an employee is: Does the individual or organization for which the service is performed have the legal right to control the way in which the service is carried out? It is only the right to control that is important; it is not necessary that the control is ever actually exercised.
An employer is a person or organization that pays wages to an individual in exchange for the performance of a service by the individual. Individuals, corporations, partnerships, estates, trusts, associations, joint ventures, religious organizations, government agencies, and political subdivisions are among the entities that may be employers.
• Wages of residents, regardless of where earned
• Wages of nonresidents for income earned in Montana
Wages of North Dakota residents working in Montana are exempt from Montana's income tax. Montana employers do not have to withhold Montana income tax from North Dakota residents who give the employer Form MT-R, Reciprocity Exemption from Withholding. The employer must send a copy to the DOR by March 31 or within 30 days after receiving it from the employee.
Withholding applies to all wages, including cash payments such as ...