Exclusions and Deductions

Changes in Montana Medical Savings Accounts

December 19, 2018 by Montana Department of Revenue

There are some changes for Tax Year 2018 for holders of Montana Medical Savings Accounts.

Increased Deduction Allowed

For 2018, account holders can deduct up to $3,500, or $7,000 per couple.

Each spouse must have his or her own account.

New Contribution Limit Beginning in 2018

Contributions to an MSA account are now capped at $3,500, the amount that is deductible on the 2018 Montana individual income tax return.

This is a change from previous years when contributions could be more than the deductible amount.

Special Rule for Prior-years’ Excess Contributions

In 2018, and up until January 15, 2019, account holders with excess contributions from prior years may withdraw this excess from their MSA tax-free.

Excess contributions are the total amount contributed before January 1, 2018 minus the total amount of contributions that were deducted on Montana returns. They do not include earnings.

Taxpayers may choose to keep excess contributions in their account. However, starting in 2019, any withdrawal made to pay for ineligible expenses will be deemed to have been deducted in prior years and subject to recapture.

New Eligible Expenses

Beginning in Tax Year 2018, eligible expenses in addition to medical costs include:

long-term care expenses;
bank fees related to the administration of the account; and
family leave expenses (withdrawals made to approximate wages lost for caring for an immediate family member.)

Also, beginning in Tax Year 2018, eligible expenses include the medical costs of any individual. Withdrawals are no longer limited to the medical expenses attributed to the account holder and dependents.

Learn more about Medical Savings Accounts.

Forms

Montana Department of Revenue forms are available in My Revenue

This is where you will find your Form:

AB-23 Application for Residential Appraisal of Property for Taxation Purposes
AB-26 Request for Informal Classification and Appraisal Review
AB-63 Withdrawal Form for Informal Review or Appeal
APLS102F Notice of Referral to the Office of Dispute Resolution
CAB-1 New or Expanding Industry Classification Application
CT-203 Insignias Refund Application
CT-207 Exempted Sales Refund Application
CTAB Property Tax Appeal Form
IE-MO Motel Income and Expense Reporting Form
RW-3 Montana Annual Mineral Royalty Withholding Tax Reconciliation
TP-101 Other Tobacco Products and Moist Snuff Tax Return
TP-103 Tobacco Product Tax Credit for Returned Products
Form 2EZ Montana Individual Income Tax Return (Short Form)
Form 2 Montana Individual Income Tax Return (Long Form)
TAP TransAction Portal
RCC-4 Railroad Car Company Time/Speed Studies
IE-AR Apartment Rental Income and Expense Reporting Form
IE-MW Mini-Warehouse Income and Expense Reporting Form
IE-MH Mobile Home/RV Park Income and Expense Reporting Form
IE-MU Multiuse Income and Expense Reporting Form
IE-NH Nursing Home/Assisted Living Income and Expense Reporting Form
IE-SF Square Foot Rental (Office, Retail, Warehouse and Restaurant) Income and Expense Reporting Form
CAB-8 Request for Informal Review for Centrally Assessed Companies
CAB-2 Air or Water Pollution Control and Carbon Capture Equipment Certification Application
CONTENT — RCR Codes Railroad Car Reporting Codes
AB-30A Ammunition Manufacturing Tax Exemption Application
AB-14 Application for Tax Incentive Assessment of Energy Generating Property
AB-30P Personal Property Tax Exemption Application
AB-30R Real Property Tax Exemption Application
AB-30T Temporary Tribal Tax Exemption Application
AB-56A Application for Tax Exemption and Reduction for the Remodeling, Reconstruction or Expansion of Existing Commercial Buildings or Structures
AB-74 Gray Water System Application for Tax Abatement
PIRA Purchase Incentive Rental Agreement Reporting Form
Form 488 (RTC) Realty Transfer Certificate
AB-38 Ownership Change Request for a Pre-1977 Mobile Home
AB-3 Agricultural Lands Classification Application
AB-13 Nonproductive, Patented Mining Claim Application
AB-25 Natural Disaster Application
CIT Montana Corporate Income Tax Return
CLT-4S Montana S Corporation Information and Composite Tax Return
Schedule K-1 Montana Schedule K-1 (CLT-4S and PR-1)
PT-AGR Pass-Through Entity Owner Tax Agreement
PR-1 Montana Partnership Information and Composite Tax Return
DER-1 Montana Disregarded Entity Information Return
FID-3 Montana Income Tax Return for Estates and Trusts
FID-3 Schedule K-1 Montana Schedule K-1 (FID-3) – Beneficiary’s Share of Income (Loss), Deductions, Credits, etc.
CGR Guide Montana Business Tax Guide Public Contractor’s 1% Gross Receipts Tax
CGR-1 1% Contractor’s Gross Receipts Contract Award Registration
CGR-2 1% Contractor’s Gross Receipts Gross Receipts Withholding Return
CGR-3 1% Contractor’s Gross Receipts Application for Refund of Personal Property Taxes and Motor Vehicle Fees Paid
Form 2EC Montana Elderly Homeowner/Renter Credit
Form 2 Schedule I Schedule I – Montana Additions to Federal Adjusted Gross Income
Form 2 Schedule II Schedule II – Montana Subtractions from Federal Adjusted Gross Income
Form 2 Schedule III Schedule III – Montana Itemized Deductions
Form 2 Schedule IV Schedule IV – Nonresident/Part-year Resident Tax
Form 2 Schedule V Schedule V – Montana Tax Credits
Form 2 Schedule VI Schedule VI – Credit for Income Tax Liability Paid to Another State or Country
Form 2 Schedule VIII Schedule VIII – Reporting of Special Transactions
ETM Enrolled Tribal Member Exempt Income Certification/Return
MT-R Reciprocity Exemption from Withholding for North Dakota residents who work in Montana
MW-1 Montana Withholding Tax Payment Voucher
MW-3 Montana Annual W-2 1099 Withholding Tax Reconciliation
RW-1 Montana Mineral Royalty Withholding Tax Payment Voucher
CT Voucher Montana Corporate Income Tax Payment Voucher
FID Montana Estate or Trust Tax Payment Voucher
DER Montana Disregarded Entity Tax Payment Voucher
IT Montana Individual Income Tax Payment Voucher
SB Montana Small Business Corporation Tax Payment Voucher
ESA Estimated Tax Annualization Worksheet
EXT Extension Payment Worksheet
ESW Montana Individual Estimated Income Tax Worksheet
EST-I Underpayment of Estimated Tax by Individuals, Estates and Trusts
ESA-FID Fiduciary Estimated Tax Annualization Worksheet
EXT-FID Fiduciary Extension Payment Worksheet
Form 2 Worksheet II Worksheet II – Tax Benefit Rule for Federal Income Tax Refund
Form 2 Worksheet III Worksheet III – Qualified Capital Gain Exclusion
Form 2 Worksheet V Worksheet V – Standard Deduction, Worksheet VI-IDL – Itemized Deuction Limitation
Form 2 Worksheet VII Worksheet VII – Calculation of Interest on Underpayment of Estimated Taxes – Short Method
Form 2 Worksheet VIII Worksheet VIII – Taxable Social Security Benefits for Form 2
Form 2 Worksheet IX Worksheet IX – Tax Benefit Rule for Recoveries of Itemized Deductions
BCT Beer Connoisseur’s Semi-Annual Tax Report Return and Instructions
BET Beer Wholesalers/Brewers Monthly Tax Return
BET-3 Foreign Brewery Monthly Report For Sales to Retailers Located Within Montana
BSM Monthly Report of Beer Shipments into the State of Montana
ELT Excise and License Taxes
POA Power of Attorney Authorization to Disclose Information
HCT Hard Cider Distributors/Brewers Tax Return
LCT Quarterly Common Carrier Tax Report for Distilled Spirits Served In/Over Montana
PGR Proof Gallon Report
PROMO Promotional Agreement
SAMPLE REQ Samples Request
Standard Quotation & Specification Form Standard Quotation & Specification Form
WIT Wine Distributors and Wineries Monthly Tax Return
WIT-3 Monthly Sales Report for Sales to Retailers, Consumers and Sacramental Wine Licensees Located Within Montana
WSM Monthly Report of Wine Shipments into the State of Montana
ADD-MFG Add an Additional Manufacturing Location to an Existing Brewery/Distillery/Winery License
BS-DEPOT Brewery Storage Depot License Application
DBLA Domestic Brewery License
DDWHAPP Domestic Distillery Storage Warehouse License Application
DSE Direct Shipment Endorsement Application
DWL Domestic Winery License
MDLA Domestic Distillery License
WINSPEC Montana Application for Special Permit to Sell Table Wine
F-1 Floor Plan
30A Location Manager Application
G-1 Grocery Inventory
OFF PREM Beer and Wine License Application (Retail Off-Premises Consumption)
AABLCAT Application to Add Catering Endorsement to All-Alcoholic Beverages License
BBWL-CAT Application to Add Catering Endorsement to On-Premises Beer or Beer/Wine License
Form 5 Alcoholic Beverages – Gambling Operator Combined On-Premises License Application
Form 37/39 Alcoholic Beverages Gambling Operator Short Form
FORM 39 Liquor and/or Gambling Short Form
NON-BTW Nonprofit Arts Organization Beer and Table Wine License Application
WINAMD Wine Amendment Application for On-Premises Beer License
MTAB Montana Tax Appeal Board
SUBAPP Beer Wholesaler and Table Wine Distributor Sub-Warehouse License
WHOLAPP Beer Wholesaler and Table Wine Distributor License
AIRLESS Public Airport Lessee Application
AIRPORT Public Airport All-Beverages License Application
BEERSS Sworn Statement that Products Over 8.75% Alcohol by Volume Meet Beer Requirements (Brewery or Beer Importer Application Supplement)
CONAPP Beer Connoisseur’s License Application
FBLA Foreign Brewer or Beer Importer License
LIQINFOREQ Liquor Licensing File/Information Request
OWAP Out-of-State Winery License Application
PASCA Passenger Carrier License Application
SACWINE Retail Sacramental Wine License Application
PPRF Personal Property Reporting Form
SPECPERM Special Permit Application to Sell Beer and Table Wine
SPECPERM-AUTH Special Permit Law Enforcement Authorization
ALTRET Alteration Request
Form 30 Business Statement
Livestock Reporting Livestock Reporting Form
CON-AGREE Concession Agreement Request
Form 10 Personal/Criminal History Statement
LAPSEREQ Lapse Request
LIQ-AUTH Liquor Division Authorization to Disclose Tax Information
Form M-1 Secured Party Addition
M-2 Secured Party Termination
CATERINGRPT Monthly Catering Report
Form 13 Reporting Form For A Non-Institutional Loan
NONUSE REQ Nonuse Request/Resume Operations Instructions
RESDET Resort Determination
SURVEY Certified Survey Affidavit
TOA Temporary Operating Authority/Temporary Gambling Authority
UCH-1 Report of Property Presumed Unclaimed
UCH Montana Unclaimed Property Holder Payment Voucher
UCH-1 Multiple Holder Payment Voucher Payment Voucher for Unclaimed Property Holder Report
EXPT Tax-Exempt Status Request Form
CR-T Application for Tax Certificate
INH-4 Application for Determination of Estate Tax
AEPC Alternate Energy Production Credit
AFCR Alternate Fuel Credit
AMD Montana Individual Income Tax Amended Return Reconciliation Worksheet
APLS101F Request for Informal Review
CC College Contribution Credit
CCT Consumer Counsel Fee
CGP Assessment of Gross Proceeds of Coal Mines
CIT-UT Underpayment of Estimated Tax By Corporation
C-MFG-1 Manufacturer Cigarette Tax
CST Coal Severance Tax
CT-201 Cigarette Tax Decals Order Form
CT-205 Cigarette Tax
CT-206 Cigarette Tax Exempt Sale Certificate
DCAC Dependent Care Assistance Credits
DS-1 Disability Income Exclusion
ECC Elderly Care Credit
EEL Electricity and Electrical Energy License Tax Report
ELC Emergency Lodging Credit
ENRG-A Geothermal System Credit
ENRG-B Alternative Energy System Credit
ENRG-C Energy Conservation Installation Credit
EREC Renewable Energy Credit Report
ESL Extension of Statute of Limitations
ESW-FID Montana Fiduciary Estimated Income Tax Worksheet
ETR Montana ACH Credit Payment Registration
FIRELTR Fire code requirements and information
FRM Montana Farm and Ranch Risk Management Account
FTB Montana First-time Home Buyer Savings Account
PTAP Property Tax Assistance Program (PTAP) Application
MDV Montana Disabled Veteran (MDV) Property Tax Relief Application
PR Montana Partnership Tax Payment Voucher
PSR Public Service Regulation Fee
PWR Partnership E-File Waiver Request
RCC-1, RCC-2, & RCC-3 Railroad Car Company Annual Reporting Form
RCYL Recycle Credit/Deduction
RDF-CT Application to be Considered a Research and Development Firm
RIT-1 Resource Indemnity Trust Tax – Industrial Mineral Producers
RIT-3 Resource Indemnity Trust Tax – Metal Mines
RIT-4 Resource Indemnity Trust Tax – Coal Producers
RSCH Increase Research and Development Activities Credit
RVT Rental Vehicle Sales And Use Tax Return
Credit Form Credit Form for Defective Merchandise/Transportation Breakage/Shortage
Return Request Merchandise Return Request
TDD Telecommunications Service Fee
TEC Telecommunications Service Exemption Certificate
Trainer Application State Trainer Application – Liquor Control Division
Trainer Application Questions State Trainer Supplemental Questions – Liquor Control Division
Trainer Criteria Responsible Alcohol Sales and Service Training – How To Become A State Trainer
UCH-2 Report of Property Presumed Unclaimed Inventory Listing Sheet to Report Contents of Safe Deposit Boxes
ASA Request to Purchase Non-Beverage Ingredients Containing Alcohol
ASA-1 Importing Bulk Spirits for Manufacturing
Underground Storage Tanks Notification for Underground Storage Tanks
VT Veterans’ Program Contribution/Deduction
WE-ELECT Water’s Edge Election
WET Wholesale Energy Transaction Tax
SPVetFr Montana Application for Special Permit (Veterans’/Fraternal Organizations)
SUPAVP-2 Supplement to Application for Montana Vendor Representative Permit
Credit Form for Out of Stock Sales Items Credit Form for Out of Stock Sales Items
STFIR Information Referral
AB-27 Property On-Site Review Authorization
MA eStop Business Licenses Master Application and Online Service
BET-2 Beer Retailer Monthly Report For Purchases from a Brewery Located Outside of Montana
HCT-2 Hard Cider Retailer Monthly Report For Purchases from a Winery or Brewery Located Outside of Montana
WIT-2 Wine Retailer Monthly Report For Purchases from a Winery Located Outside of Montana
FWIR Montana Foreign Winery or Importer Registration
CONTENT – Centrally Assesed Frequest for Utility Forms
CONTENT – Report Your Livestock Livestock Reporting Application Inforamtion
BBSC Biodiesel Blending and Storage Credit
HI Health Insurance for Uninsured Montanans Credit
MINE-CRED Mineral and Coal Exploration Incentive Credit
QEC Qualified Endowment Credit
IUFC Infrastructure User Fee Credit
CONTACT – Web Developers Contact: Web Developers
VRRA Vendor Representative Renewal Application
AVP-2 Application for Montana Vendor Representative Permit
CONTACT – Utility Forms Contact: Utility Forms
CAB-9 Notice of Referral to the Office of Dispute Resolution for Centrally Assessed Companies
CAB MTAB Centrally Assessed Property Tax Appeal
ADD-CH Change of Address
CONTACT – Citizen Services Call Center Contact: Call Center
CONTACT – Contact Us Contact: Contact Us (Not Used?)
GenReg Montana Department of Revenue Business Registration
NOL Montana Net Operating Loss (NOL)
AB-NonDisc Request for Nondisclosure of Property Record Information
LFT Lodging Facility Sales and Use Tax
NFBT Nursing Facility Utilization Fee
ICFUF Intermediate Care Facility Utilization Fee
HUF Hospital Facility Utilzation Fee
911 Emergency Telephone Service Fee
RTE Retail Telecommunication Excise Tax
RTI Request for Copies of Tax Information
INA-CT Affidavit of Inactivity for Corporations, Partnerships and Disregarded Entities
CONTENT – Property Appeals The Formal Property Appeals Process
CAB-4 Value-added Manufacturing Machinery Certification Application
ATL Assumption of Montana Tax Liabilities
FPC Film Production Credit
FPC-AF Film Production Credit Application Fee
FPC-PP Film Production Credit Submission of Costs – End of Principal Photography
FPC-RD Film Production Credit Residency Declaration
MHPE Mobile Home Park Exclusion
MINE-CERT Application and Affidavit for Certification and Approval of Mineral and Coal Exploration Incentive Credits
NEXUS Nexus Questionnaire
OSC Oilseed Crushing and Biodiesel/Biolubricant Production Facilities Credit
Garnishment Formula for Wage Levy Garnishment Formula for Wage Levy
Form 2M Individual Income Tax Form 2M
Form 2M Worksheets Calculation Worksheets for Individual Income Tax Return Form 2M
2101 W-2 Withholding Declaration
2441-M Child and Dependent Care Expense Deduction
MSA Montana Medical Care Savings Account
NOL-Pre-99 Net Operating Loss Worksheet for 1998 and Prior Years
MRW Reg Registration for Mineral Royalty Withholding
BEN Bentonite Production Tax
CGT Cement and Gypsum Producers License Tax
MMG Statement of Gross Proceeds of Metal Mines
MML Metalliferous Mines License Tax
MMM Micaceous Mineral Mines License Tax
MMN Statement of Net Proceeds of Mines
MMN-2 Statement of Net Proceeds of Mines – Talc Producers Only
MMN-3 Statement of Net Proceeds of Mines – Vermiculite Producers Only
MMN-4 Statement of Net Proceeds of Mines – Garnet Producers Only
MMN-5 Statement of Net Proceeds of Mines – Limestone Producers Only
AB-8 Application for Separate Assessment of Undivided Interest in Mining Claim Property
AB-10 Request for Townhome Classification
NAUPA NAUPA Holder Request for Reimbursement
Decedent’s Family History Decedent’s Family History
MSR Employee Certificate of Status under the Military Spouses Residency Relief Act (MSRRA)
Medical Marijuana Provider Tax Return Medical Marijuana Provider Tax Return
CONTENT – Which Individual Income Tax Form Do I Need? Which Individual Income Tax Form do I need?
CIT Booklet Montana Form CIT Corporate Income Tax Booklet
CLT-4S Booklet Montana Form CLT-4S Small Business Corporation Booklet
Oil and Gas Production Tax Return Oil and Gas Production Tax Return
Withholding Tax Guide with Tax Tables Withholding Tax Guide with Tax Tables
eStop Guide eStop Business Licenses Guide
FID-3 Worksheets I & II Worksheets I and II – Credit for an Income Tax Liability Paid to Another State or Country
FID-3 Booklet Montana Form FID-3 Income Tax Booklet for Estates and Trusts
Form 2 Booklet Montana Form 2 Individual Income Tax Forms and Instructions (Includes Form 2EC)
Form 2 Worksheet IV Worksheet IV – Partial Pension and Annuity Income Exemption
Form 2 Worksheet VI Worksheet V – Standard Deduction, Worksheet VI-IDL – Itemized Deduction Limitation
Form 2EZ Booklet Montana Form 2EZ Individual Income Tax Forms and Instructions, EZ, 1040EZ
Form 2M Booklet Montana Form 2M Individual Income Tax Forms and Instructions (Includes Form 2EC)
Medical Marijuana Provider Tax Payment Voucher Medical Marijuana Provider Tax Payment Voucher
PR-1 Booklet Montana Form PR-1 Partnership Booklet
Agricultural Processing Facilities Exemption Application Agricultural Processing Facilities Exemption Application
CONTENT – Rail Car Reporting Codes Rail Car Reporting Codes for Montana
SECURED Secured Party/Security Interest Form
Montana Tax Rates Montana Individual Tax Rates
Customer Survey My Revenue Customer Survey
TRL/MSC Transfer of Location Application for Montana Domestic Brewery, Winery, Distillery, Storage Depot, Beer Wholesaler, and/or Table Wine Distributor
Alt Prop Alternating Proprietor on a Manufacturer’s Premises
Contract Mfg Contract Manufacturing Application
Land Value PTARP Land Value Property Tax Assistance for Residential Property
Gifting Statement Gifting Statement
Sub W-9 Taxpayer Identification Number (TIN) Verification
Retail Alcoholic Beverage Competitive Bid Form Retail Alcoholic Beverage Competitive Bid Form
Resale Montana Business Registry Resale Certificate
Forms
MW-4 Montana’s Employee’s Withholding Allowance and Exemption Certificate

My Revenue is an ePass Montana service designed to help you find the best filing, reporting, and payment options to meet your needs.

A current version of Adobe Reader is needed to ensure compatibility with PDF files on this site.

You may update or download Adobe Reader from http://get.adobe.com/reader/.

Department of Revenue Administrative Rule Update

May 2, 2018 by Montana Department of Revenue

The department adopted the following proposed amendments and new rules effective April 28, 2018.

Pension and Annuity Income Exclusions, Dependent Exemptions, and Medical Care Savings Accounts

MAR Notice 42-2-989

The proposed amendments included minor housekeeping changes, however, amendments to rules pertaining to dependent exemptions clarify the meaning of a “child” and provide better guidance on how to claim the additional exemption for a dependent child with a disability. Amendments related to Montana Medical Savings Accounts largely implement House Bill 175, enacted by the 2017 Legislature.

Withholding Taxes

MAR Notice 42-2-990

The proposed amendments included minor housekeeping changes, revise the due date for filing the annual reconciliation and wage statements in accordance with House Bill 63, L. 2017, and clarify how a pass-through entity treats a credit for mineral royalty withholding, including how it distributes the credit to owners.

Pass-through Entities

MAR Notice 42-2-991

The proposed amendments and New Rule I (42.9.112, ARM) related to the allocation and apportionment of income earned by a pass-through entity, in general, and with respect to the new sourcing rules provided in House Bill 511, L. 2017. New Rule II (42.9.303) provides guidance on how guaranteed payments made to a partner are sourced to the state.

Read more about Sourcing Guaranteed Payments.

Montana Medical Care Savings Accounts

Montana residents can establish a Montana medical care savings account (MSA) to reduce the cost of saving for medical expenses and long-term health care.

The 2017 legislature passed a bill (House Bill 175) that changed the rules for Montana MSAs beginning with tax year 2018. The information provided on this page applies to deposits and withdrawals made in 2018. For information related to a prior tax year, please read the instructions for Montana Medical Savings Account (Form MSA) for the applicable tax year.

Benefit

Deposits: For tax year 2018, you may exclude up to $3,500 of your contribution to an eligible Montana MSA ($7,000 for those married, filing jointly) in computing Montana state income tax.
Withdrawals and Earnings: Withdrawals of contributions and earnings from a Montana MSA are not taxable to you if you withdraw them to pay for eligible medical expenses.

Beginning January 1, 2018: Account holders will not be able to contribute more than they can deduct on their Montana income tax return.

Any contribution made before January 1, 2018 exceeding the total contributions deducted from previous tax years’ adjusted gross income may:

Be deducted up to $3,500, or
Withdrawn free of tax or penalties if withdrawn before January 15, 2019.

After January 15, 2019, account holders cannot deduct any excess principal remaining in the MSA and all unqualified withdrawals will be taxed as ordinary income, subject to penalties.

Eligibility

The exclusion is allowed for residents for:

Contributions that you make to a Montana MSA owned by you.
Contributions that your spouse makes to a Montana MSA owned by your spouse.
Earnings on the account to the extent that, when distributed, they are used to pay for eligible medical expenses.

You can only claim the exclusion for the tax year the contribution is made.

Eligible Medical Expenses

You do not have to pay tax on money withdrawn from your Montana MSA if it is used for:

Paying eligible medical expenses of the account holder or anyone he or she chooses
Purchasing long-term care insurance or a long-term care annuity for the long-term care of the MSA account holder or anyone he or she chooses.
Family leave expense
Expenses paid to administer the account (bank fees, for example).

A list of eligible medical expenses for a Montana MSA is available in IRS Publication 502, “Medical and Dental Expenses.”

Family Leave Expense

Family leave expense is an expense, calculated monthly, of approximate wages lost while caring for parents, spouse, or children for the purposes allowed under the Family Medical Leave Act of 1993.

Money held in a Montana MSA may not be used to pay any medical expenses that have already been reimbursed under some other type of pre-tax health savings account or other insurance coverage, including an automobile insurance policy; workers’ compensation; or a self-insured plan.

Transfers

A transfer of the entire balance of a Montana MSA to another account you designate as your new Montana MSA or to a Montana MSA of an immediate family member (parent, spouse or child) is exempt from tax.

Immediate family members of a deceased taxpayer may inherit funds from the decedent’s Montana MSA tax free if the funds are transferred to a Montana MSA held by the immediate family member.

Recapture Tax and Penalties

If you withdraw contributions and earnings for purposes other than to pay for eligible medical expenses, related contributions and earnings are reported as income on Schedule I – Montana Additions to Federal Adjusted Gross Income (Form 2, Schedule I).

If you move from Montana to another state or country, any unused funds in your Montana MSA are considered a nonqualified withdrawal and must be reported as income on your final Montana Income Tax Return on Form 2, Schedule I.

Unqualified withdrawals are subject to a 10% penalty.

Forms

You must attach Montana Medical Savings Account (Form MSA) to your individual income tax return.

This form provides information about your starting and ending balances, annual deposits, earnings and withdrawals.

Other Resources

Montana Medical Care Savings Account – MontGuide

Related Laws

Quick Information

Taxes

Individual Income Tax

Additional Resources

Montana ABLE Accounts

A person can establish an Achieve a Better Life Experience account, also known as an ABLE account to provide funding for the costs related to permanent disability.

To establish your Montana ABLE account or for additional information, call the Montana ABLE Program at (888) 609-3461 or visit https://savewithable.com/mt/home.html.

Benefit

Deposits: You may exclude up to $3,000 of your contribution per year ($6,000 for those married, filing jointly) in computing Montana state income tax.
Withdrawals and Earnings: Withdrawals of contributions and earnings from an ABLE account are not taxable to you if you withdraw them to pay for expenses related to the blindness or disability of the account owner.

Eligibility

The exclusion is allowed for:

Contributions that you make to an ABLE account owned by you or jointly with your spouse.
Contributions you make to an ABLE account owned by your child or stepchild if your child or stepchild is a Montana resident.
Earnings on the account to the extent that, when distributed, they are used to pay for qualified disability expenses.

You can only claim the exclusion for the tax year the contribution is made.

Contributions to another state’s ABLE program do not qualify for the exclusion.

Qualified Expenses

Qualified disability expenses include any expenses related to the blindness or the disability of the account owner such as:

Education
Housing
Transportation
Personal support services
Assistive technology
Health

Recapture Tax and Penalties

If you withdraw contributions and earnings for purposes other than to pay for qualified disability expenses, related contributions may be subject to a recapture tax of 6.9%, and related earnings are included in gross income.

Other Resources

Montana ABLE Program

Related Laws

15-30-2110 and 53-25-101 to 53-25-121, MCA

Quick Information

Taxes

Individual Income Tax

Additional Resources

Montana ABLE Program

First-time Home Buyer Savings Account

A person can establish a first-time home buyer savings account to reduce the cost of purchasing their first single-family home in Montana.

Benefit

Deposits: You may exclude up to $3,000 of your contribution each year ($6,000 for those married, filing jointly) for up to 10 years.
Withdrawals and Earnings: Interest and other income earned on the account are not taxable to you if you withdraw them to pay for eligible expenses.

Eligibility

Any individual who is a resident of Montana and who has never owned or purchased a single-family residence in Montana or out-of-state.

Qualified Expenses

Examples of eligible expenses include:

Down payment
Closing costs
Realtor’s fees
Appraisal costs
Credit history report
Points
Pro-rated property taxes
Home inspections
Loan origination fees

You must use the funds in your account to pay for eligible expenses within 10 years of opening the account.

Recapture Tax and Penalties

Recapture of non-qualified withdrawals: If you withdraw funds from the account for any purpose other than paying eligible expenses for the purchase of a single-family home in Montana, these funds are taxed as ordinary income. The recapturable amount must be reported on Form 2, Schedule I.
Recapture after 10 years or when you move out of state: Any principal, interest, or other earnings accumulated on the account and not used within 10 years of opening the account, must be reported as ordinary income on Form 2, Schedule I of the tax year the 10 year period ends.; The same rule applies when you move out of state. The ordinary income must be reported on the last tax return you file as a Montana resident or part-year resident.
Penalty: Any recapture is subject to a 10% penalty, unless you withdraw funds on the last business day of the year. You must report the penalty on the “Other Penalties” line of Form 2.; For further instructions on the Montana first-time home buyer savings account, see Montana First-Time Home Buyer Savings Account (Form FTB).

Forms

Montana First-Time Home Buyer Savings Account (Form FTB) needs to be included each year with the account holder’s individual income tax return.
The excluded contributions and earnings must be reported on Schedule II – Montana Subtractions from Federal Adjusted Gross Income (Form 2, Schedule II).

Payment Options	File Options
TransAction Portal	TransAction Portal
Income Tax Express	My Revenue
Business Tax Express	Free File Alliance

Changes in Montana Medical Savings Accounts

Exclusions and Deductions

Pension and Annuity Income Exclusions, Dependent Exemptions, and Medical Care Savings Accounts

Withholding Taxes

Pass-through Entities

Benefit

Eligibility

Eligible Medical Expenses

Family Leave Expense

Transfers

Recapture Tax and Penalties

Forms

Other Resources

Related Laws

Quick Information

Taxes

Additional Resources

Benefit

Eligibility

Qualified Expenses

Recapture Tax and Penalties

Other Resources

Related Laws

Quick Information

Taxes

Additional Resources

Benefit

Eligibility

Qualified Expenses

Recapture Tax and Penalties

Forms

Other Resources

Related Laws

Quick Information

Taxes

Additional Resources

Footer

Quick Contact

Quick Menu