QUESTION DETAIL
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I currently reside in Washington state. For 6 months of the 2012 tax year, I have relocated temporarily for work. Because Washington is my state of residency, and it has not state income tax, am I exempt from the North Dakota income tax?
ANSWER
Expert Carlton Melton's Answer:
No, you are not exempt from North Dakota Income Tax. You will be considered a full-year nonresident of North Dakota if you were not a resident of North Dakota for any part of the tax year and you do not meet the statutory 7-month rule. Since you were only working in North Dakota for 6 months the statutory 7-month rule obviously does not apply.
A full-year nonresident of North Dakota is required to file an individual income tax return if:
1. You are required to file a federal individual income tax return. AND
2. You derived gross income from North Dakota sources during the tax year.
For a nonresident, “gross income from North Dakota sources” includes:
1. Compensation for services performed in North Dakota, such as wages, salaries, tips, commissions, and fees.
2. Income from tangible property in North Dakota, such as rents, royalties, and gain from the sale or exchange of the property.
3. Income from a trade or business carried on in North Dakota, whether as a sole proprietorship, partnership, or S corporation.
4. Income from an estate or trust, but only to the extent the income is derived from tangible property or a trade or business in North Dakota.
5. Income from gambling activity carried on in North Dakota.
Exceptions that are not included as “gross income from North Dakota sources” are:
1. military pay,
2. interest, dividends, pensions, and annuities,
3. gain from the sale or exchange of intangible property,
4. compensation exempted under reciprocity with Minnesota or Montana, or compensation for services that is eligible for exemption from state income tax under federal military and interstate commerce laws.
However, interest, dividends, gains, and other income from intangible property are included in gross income from North Dakota sources if derived from a trade or business carried on in North Dakota, whether as a sole proprietorship, partnership, or S corporation.
