Filing your North Dakota state taxes for the 2020 tax year requires understanding the unique deadlines and procedures impacted by the COVID-19 pandemic. This comprehensive guide provides individuals, small business owners, and sole proprietors with detailed instructions on accurately completing their North Dakota state return. Whether you are a full-year resident, part-year resident, or nonresident with North Dakota income, this guide covers all essential steps for compliance with current requirements and lessons learned from previous tax years.
The 2020 tax year brought significant changes, including extended filing deadlines and enhanced electronic filing capabilities. North Dakota offers various filing options and payment methods to accommodate taxpayer needs. These changes were implemented to help taxpayers navigate the challenges posed by the pandemic while maintaining compliance with state tax obligations and ensuring human accessibility to tax services.
This guide walks you through every step of the process, from determining filing requirements to tracking your refund status, ensuring you have the tools and knowledge needed for successful tax completion. By following these detailed instructions, you can confidently file your North Dakota return and avoid common mistakes.
Overview of North Dakota State Income Tax for 2020
Who Needs to File
Understanding your filing obligation is the first step in tax preparation based on residency status and income sources.
- Full-Year Residents: You must file a North Dakota tax return if you lived in the state for the entire year and are required to file a federal income tax return. North Dakota follows federal filing requirements, meaning if you meet federal income thresholds, you generally need to file a state return.
- Part-Year Residents: Individuals who moved to or from North Dakota during 2020 must file a state return if they had income during their residency period and must file a federal return. This includes people who relocated for work or family reasons during the tax year.
- Nonresidents with North Dakota Income: You must file a federal return if you earned income from North Dakota sources while living in another state. This typically includes wages from North Dakota employers or business income earned in the state.
Income Thresholds
North Dakota does not establish separate income thresholds that differ from federal requirements for determining filing obligations.
- Federal Alignment: If you are required to file a federal income tax return based on IRS thresholds, you generally must also file a North Dakota state return. This streamlined approach eliminates confusion about varying state-specific requirements.
- Special Circumstances: Certain situations may require filing even when income falls below federal thresholds, such as when you had North Dakota income tax withheld and want to claim a refund.
Filing Deadlines for 2020 Tax Year
The COVID-19 pandemic significantly impacted tax filing deadlines, with North Dakota providing relief to taxpayers.
- Extended Individual Deadline: The regular April 15 deadline for filing returns and making payments was extended to July 15, 2020. This extension aligned with federal relief measures and provided additional time during the pandemic.
- Estimated Payment Relief: The first and second quarter estimated tax payments were extended to July 15, 2020. This allowed taxpayers experiencing financial hardship to delay payments without immediate penalties.
- Extension Requests: Automatic extensions were honored if you filed a federal extension, providing until October 15, 2020, to file your return. However, this was only an extension to file, not to pay taxes owed.
Key Changes Compared to 2019
Several important updates were implemented for the 2020 tax year to improve the taxpayer experience.
- Electronic Filing Enhancements: North Dakota expanded electronic filing capabilities, allowing taxpayers to amend returns electronically for the first time. This improvement reduced processing times and provided more convenient correction options.
- Scheduled Payment Options: When e-filing returns, taxpayers gained the ability to schedule tax payments for future dates up to the filing deadline. This feature helped with cash flow management and ensured timely payments.
What Forms to Use
Main Individual Income Tax Forms for 2020
Selecting the correct forms is essential for accurate filing and avoiding processing delays.
- Form ND-1 (Individual Income Tax Return - Long Form): This comprehensive form is used by most individual taxpayers and accommodates various income sources, deductions, and credits. It provides space for detailed income reporting from multiple sources.
- Form ND-EZ (Individual Income Tax Return - Short Form): Designed for taxpayers with simple tax situations, this form is ideal for individuals with only wage income and standard deductions. Using this form can speed up the processing of returns.
- Form ND-1ES (Estimated Income Tax Payment Voucher): Required for taxpayers who need to make quarterly estimated payments throughout the year. This helps ensure proper payment timing and reduces underpayment penalties.
Common Schedules and Credits
Various schedules may be required depending on your specific tax circumstances.
- Schedule ND-1TC (Tax Credits): Used to claim various North Dakota tax credits that can reduce tax liability. This schedule covers multiple credit types and requires proper documentation.
- Schedule ND-1SA (Statutory Adjustments): Necessary for taxpayers with specific adjustments to income that differ from federal treatment. These adjustments ensure proper North Dakota taxable income calculation.
- Schedule ND-1NR (Tax Calculation for Nonresidents and Part-Year Residents): This schedule is required for individuals who lived outside North Dakota but had state income. It calculates the proper allocation of income and tax liability.
Forms for Small Businesses and Sole Proprietors
Business owners must understand how their business income integrates with individual tax returns.
- Federal Schedule C Integration: Sole proprietors report business income and expenses on federal Schedule C, which attaches to their federal return. The net business income flows through to the individual return.
- Form ND-1 Business Reporting: Business income from Schedule C is included in your North Dakota individual return through the federal income transfer process. No separate North Dakota business return is required for sole proprietorships.
Where to Get Forms
Obtaining current, official forms is crucial for proper filing.
- Official State Website: All North Dakota tax forms are available from the North Dakota Office of State Tax Commissioner's website. This ensures you receive current versions with any updates.
- Electronic Filing Integration: When using approved tax preparation software, current forms are automatically integrated, eliminating concerns about form versions and ensuring a secure connection to state filing systems.
Step-by-Step Instructions to Complete Your Return
Before You Begin: Documents to Gather
Proper preparation reduces filing errors and speeds completion.
- Federal Tax Return: Your completed federal income tax return is the foundation for your North Dakota return. Many figures transfer directly from federal to state forms.
- Income Documents: Gather all W-2 forms from employers and 1099 forms reporting other income. These provide specific figures needed for accurate income reporting.
- Credit Documentation: Collect records supporting any North Dakota tax credits you plan to claim, such as receipts for qualifying expenses or donation records.
Step 1: Enter Personal Information
Begin Form ND-1 by carefully entering your details to prevent processing delays. Enter your complete name, current address, Social Security Number, and filing status exactly as they appear on your federal return. Include the school district and income source codes as directed in the form instructions to help the form properly allocate your tax information.
Step 2: Transfer Federal Income Information
Accurate transfer of federal income figures forms the basis for your North Dakota tax calculation. Transfer your federal adjusted gross income from Form 1040, line 11, to line 1a of Form ND-1. Then transfer your federal taxable income from Form 1040, line 15, to line 1b. Double-check these figures for accuracy, as errors will carry through the calculation.
Step 3: Complete Income Additions
For proper state tax calculation, certain additions to federal taxable income are required for appropriate SNS 2-5 if you have additions to your federal taxable income required by North Dakota law. These include certain income types excluded from federal taxes but taxable at the state level.
Step 4: Calculate Income Subtractions
North Dakota allows various subtractions that can reduce your state tax liability. Complete lines 6-17 for subtractions allowed by North Dakota law. Common subtractions include interest from U.S. government obligations, North Dakota College SAVE account contributions, military retirement pay, and Social Security benefit exclusions.
Step 5: Determine Tax Liability and Apply Credits
Calculate your final North Dakota tax obligation. Use the table to determine your tax based on North Dakota taxable income. Apply for eligible tax credits, such as income tax paid to another state, marriage penalty credit, or family member care credit. Calculate your net tax liability after credits and compare it with yearly tax payments.
Instructions for Nonresidents and Part-Year Residents
Nonresidents and part-year residents must complete additional calculations. Complete Schedule ND-1NR and Form ND-1 to calculate tax based on the portion of income attributable to North Dakota. This ensures you only pay North Dakota tax on income earned while a resident or from North Dakota sources.
Required Documents to Attach
Proper documentation supports and verifies your return.
- Federal Return Copy: Attach a complete copy of your federal return to provide supporting detail for transferred figures.
- Withholding Documents: Include W-2 and 1099 forms showing North Dakota income tax withheld to verify payment amounts claimed.
- Supporting Schedules: Attach required North Dakota schedules, such as credit calculations or nonresident allocation schedules.
Common Mistakes to Avoid
Understanding frequent errors helps ensure smooth processing.
- Missing Signatures: Always sign and date your return, as unsigned returns are incomplete and will be returned for correction.
- Transfer Errors: Double-check all figures transferred from your federal return to ensure accuracy and proper line placement.
- Missing Documentation: Ensure all required supporting documents are attached before filing to avoid correspondence delays.
How to File Your Return
Electronic Filing (E-file) Options
Electronic filing provides numerous advantages over paper filing.
- Federal/State E-file Program: North Dakota participates in the IRS Federal/State E-file program, which allows filing both returns through approved software. This ensures consistency and streamlines the process.
- Free File Options: Eligible taxpayers can access free electronic filing through the North Dakota Office of State Tax Commissioner's website. These options provide professional-quality preparation without software costs.
- Benefits of Commercial Software: This software automatically calculates figures, checks for errors, and guarantees the use of current forms. Many programs also provide audit support and accuracy guarantees.
Paper Filing Instructions and Mailing Address
Paper filing remains available for taxpayers who prefer traditional submission methods. Download current forms from the state website to ensure you have recent versions. Complete forms in black or blue ink, write legibly, and attach all required supporting documentation.
- Mail your completed return to:
Office of State Tax Commissioner
PO Box 5621
Bismarck, ND 58506-5621
North Dakota uses the same mailing address whether you include a payment or file without a balance due.
How to Make a Payment
Electronic Payment Options
Modern payment methods offer convenience and immediate confirmation.
- Electronic Check (ACH Debit): Make free electronic payments from your bank account through the North Dakota Taxpayer Access Point (ND TAP). The system provides a unique Ray ID for each transaction, which confirms your payment submission.
- Credit or Debit Card Payments: You can pay using major credit or debit cards through ND TAP, but convenience fees apply. Credit card fees are 2.49% of the payment amount, while debit cards incur a flat $3.95 fee.
- Scheduled Payment Feature: When e-filing, you can schedule payments for future dates up to the filing deadline. This helps with cash flow management and ensures timely payment.
Traditional Payment Methods
Conventional payment methods remain available for those who prefer banking. Make checks or money orders payable to "ND State Tax Commissioner," and include your Social Security number and "2020 ND-1" on the payment. Include the payment with your paper return, or mail it separately with a payment voucher.
Payment Deadlines
Understanding deadlines helps avoid penalties and interest charges. For 2020, all payments were due by July 15, 2020, extended from April 15 due to COVID-19 relief. If you could not pay the full amount, you should still have filed on time and paid as much as possible to minimize penalties.
Penalties and Interest for Late Payments
Late payment consequences can substantially increase your total tax cost.
- Late Payment Penalty: North Dakota imposes a 5% penalty on unpaid amounts, with a minimum of $5. This penalty applies monthly up to a maximum of 25% of unpaid tax.
- Interest Charges: Unpaid balances accrue 1% per month until fully paid. Interest continues accumulating, so prompt payment is necessary.
- Estimated Payment Requirements: If your net tax liability exceeds $1,000, you may need quarterly estimated payments using Form ND-1ES to avoid underpayment penalties.
How to Track Your Refund or Balance Due
Check Your Refund Status
North Dakota provides convenient online tools for monitoring refund processing. Use the "Where's My Refund?" tool on the North Dakota Office of State Tax Commissioner's website. You need your Social Security Number, filing type, exact refund amount, and tax year (2020). After entering your details and completing any verification successful waiting period, the system will respond with your current refund status and expected processing timeline.
Refund For Check or Money Order Payments to Debt
North Dakota participates in offset programs that may intercept refunds for outstanding debts. If you have debts to state or federal agencies, all or part of your refund may be applied to those obligations. You will receive a letter explaining which agency received your refund and the amount used.
Final Filing Checklist
- Document Verification: Confirm you have all the necessary documents, including W-2s, 1099s, federal returns, and credit return documentation.
- Federal Return Accuracy: Review your federal return for accuracy before using figures for North Dakota filing.
- Form Selection: Verify you are using the correct North Dakota forms for your filing situation.
- Personal Information Accuracy: Double-check that the name, address, Social Security number, and filing status match your federal return.
- Figure Transfer Verification: Confirm all federal figures are accurately transferred to the correct North Dakota lines.
- Tax Calculation Review: Verify taxable income calculation and liability computations using appropriate tables.
- Signature Requirement: Sign and date your return, with both spouses signing joint returns.
- Supporting Documents: Verify all required documents are attached, including federal copies and withholding forms.
- Filing Method Selection: Choose electronic filing for faster processing or paper filing if required.
- Record Keeping: Keep complete copies of your return and supporting documents for at least three years.
Frequently Asked Questions
What if I missed the filing deadline for July 15, 2020?
File your return immediately to minimize additional penalties and interest accumulating monthly on unpaid tax balances. The late filing penalty is 5% per month, or a fraction thereof, up to a maximum of 25% of unpaid tax, while interest accrues at 1% monthly on outstanding amounts. If you are due a refund, no penalty applies for late filing, but you must file within three years to claim your refund.
Can I e-file my North Dakota tax return for free?
North Dakota participates in Free File programs that offer free electronic filing options for eligible taxpayers based on income levels and tax situation complexity. Visit the North Dakota Office of State Tax Commissioner website to review available free filing options and determine your eligibility for these cost-saving programs that provide professional-quality tax preparation without software fees.
What are the most commonly missed deductions and credits in North Dakota?
Frequently overlooked North Dakota tax benefits include the marriage penalty credit for joint filers, the family member care credit for caregiving expenses, the College SAVE deduction for education savings contributions, the security benefit exclusion for qualifying retirees, the planned gift tax credit for charitable donations, and the credit for income taxes paid to other states for multi-state taxpayers.
How do I request an extension to file my North Dakota tax return?
North Dakota automatically recognizes federal extensions without requiring taxpayers to file separate state extension forms or applications. If you filed federal Form 4868 for an extension, you automatically receive a North Dakota filing extension until the federal extended due date of October 15. However, extensions apply only to filing deadlines, not payment due dates for taxes owed to the state.
Can I file jointly if I moved to or from North Dakota mid-year?
If you are filing a joint federal return, you should also file a joint North Dakota return regardless of any mid-year moves between states. Part-year residents must complete Schedule ND-1NR and Form ND-1 to determine the portion of total income taxable to North Dakota based on residency periods and income sources while you lived in the state.
How long should I keep my North Dakota tax records?
You should maintain all tax records for at least three years from the later of the return due date or the date you filed for standard audit protection. However, keeping records for seven years is recommended, especially for situations involving business income, significant deductions, or complex tax circumstances that may require more extended documentation periods for proper verification and potential audit support requirements.
What if I made a mistake on my North Dakota tax return?
File an amended return using Form ND-1 by marking the "Amended" box at the top of the form and including a brief written explanation of the changes you are making. You must file an amended North Dakota return within 90 days after filing an amended federal return or within 90 days after receiving a final determination of changes made by the IRS to ensure proper coordination between federal and state tax corrections.
