If you are a Native American and you have a filing requirement, you must file a Montana individual income tax return. If you have exempt income, you will also need to file an Enrolled Tribal Member Exempt Income Certification/Return (Form ETM), available through our TransAction Portal (TAP).
Your income may be exempt from Montana income tax if:
- You are enrolled as a member of a federally recognized American Indian tribe,
- You live on the Indian reservation where you are enrolled, and
- You derive all of your income from sources on the Indian reservation where you are enrolled.
If you are a tribal member and all of your income is exempt from Montana income tax, you do not need to file a Montana income tax return, but you should still file Form ETM.
If only part of your income is exempt from Montana income tax, you’ll need to include Form ETM with your Montana income tax return.
Be sure to keep your documents showing your tribal source income and establishing your physical residence. We may need this information if you are selected for a state tax examination.
If you receive payments or debt relief from a settlement, you may owe Montana taxes. We recommend consulting a tax professional to help determine if your payment or relief is tax exempt.
We have provided a few general guidelines, as well as information on specific settlements, below.
Tribal Trust Accounting and Management Settlement (Not Cobell)
The IRS considers your individual per capita share of the Tribal Trust Accounting and Management Settlement are not included in your federal gross income, but there are times when the interest is.
Montana’s income tax laws closely follow the federal laws. Generally, any amount excluded from your federal taxable income is also excluded from your Montana taxable income.
If a portion of your payment is federally taxable, it may be exempt or taxable in Montana based on several factors.
We suggest consulting a tax professional to help determine if the federally taxable portion is taxable in Montana for your situation.
Keepseagle v. Vilsack Settlement
Income from the Keepseagle v Vilsack settlement, or any funds sent to the federal government on your behalf, is taxable income.
If you received debt relief instead of a payment, you may owe taxes on the amount forgiven. Because your situation is unique to you and there are several factors to consider. We suggest consulting a tax professional to help determine if you qualify for an exemption.
With the Keepseagle settlement, payments may be considered lost farming income from alleged discrimination.
If you file a federal Schedule F and report the Keepseagle payment as other farming income, we’ll assume the farm is the same as the farm where the alleged discrimination occurred. This means the farming income reported on the Schedule F is exempt from income tax if you are an enrolled tribal member living on your reservation and the farming income comes from reservation resources or from allotted or restricted trust lands on your reservation.
Your farming income isn’t exempt if you live outside the boundaries of your reservation even if you live in a different reservation.
See ARM 42.15.220 for more information on tax exempt tribal income.
If you report Keepseagle settlement payments as other income on your federal Form 1040, we’ll assume the individual is generating income on the original farm. You’ll need to provide additional information demonstrating the location of the farming activity when the alleged discrimination occurred.
You should consult a tax professional to analyze factors related to the location of the farm and submit this information if you believe the income is exempt.
If you determine your income is taxable, you should consult your tax preparer or use the Montana Individual Estimated Income Tax Worksheet (Form ESW) to see if you need to make an estimated payment or adjust the estimated payments you are currently paying.
Even if you don’t need to increase your estimated payment, you may want to make a payment now to account for the additional tax you will owe when you file your Montana individual income tax return.