Montana Withholding laws & HR compliance analysis

Montana Withholding: What you need to know

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 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.
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Withholding applies to:
• 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 NR-2, Employee's Certificate of North Dakota residence.
Withholding applies to all wages, including cash payments such as salaries, commissions, and bonuses, as well as the market value of noncash payments such as meals, ...

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