--- oa_review_kit: v1 guide_slug: mt-income-tax guide_version: mt-income-tax@2026-05-22T08:03:40.576Z archetype: personal_income --- # Review kit: MT Income Tax Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/mt-income-tax/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("MT Income Tax", slug `mt-income-tax`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [intake_questions] A new personal-tax client sits down. What are your first five questions before you touch a number? 2. [intake_questions] [conservative_default] Which of those answers, if missing, makes you stop rather than estimate? 3. [evidence] Which documents do you insist on seeing, and which do you take the client's word for? 4. [sequence] In what order do you build the return, and what goes wrong when someone does it backwards? 5. [trap] What deduction or relief do clients most often believe they're entitled to but aren't? 6. [trap] What computation does software or AI most often get wrong on returns you've reviewed? 7. [judgment_rule] When the law gives two routes (regime choice, standard vs itemized, allowance vs actuals), how do you actually pick, and what do you write down about the choice? 8. [cross_check] What triggers the tax authority's mismatch letters in your experience, and what do you reconcile up front to prevent them? 9. [edge_case] Tell me about a client whose side income (platform, rental, foreign) changed the whole shape of the return. What did you do differently? 10. [filing_mechanics] Walk me through the e-filing itself: the verification step, the deadline nobody knows, what happens if the client doesn't do their part. 11. [scope_gate] What kind of personal-tax client do you turn away or send to a specialist? 12. [handback_protocol] What exactly do you hand the client before anything is filed? What's in your working paper? ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: mt-income-tax guide_version: mt-income-tax@2026-05-22T08:03:40.576Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: mt-income-tax description: Use this skill whenever asked about Montana individual income tax for self-employed persons, sole proprietors, or single-member LLCs. Trigger on phrases like "Montana income tax", "MT income tax", "Form 2", "Montana DOR", "MCA 15-30-2103". jurisdiction: US-MT domain: income-tax tax_year: 2025 --- # mt-income-tax ## Montana Individual Income Tax Skill — Self-Employed / Sole Proprietor > **Scope.** This skill covers Montana Form 2 for full-year Montana residents > who are sole proprietors or single-member LLC owners. Montana uses a > two-bracket graduated income tax: 4.7% on lower income and 5.65% on > higher income (TY 2026, per HB 337). Montana has NO general sales tax. > Montana also applies separate, lower rates to net long-term capital gains. > > **Quality tier.** Q3 — AI-drafted, not independently verified. All rates and > thresholds were researched on 2026-05-22 from official Montana Department > of Revenue publications. A qualified professional must review before filing. ## Section 1: Metadata **Section 1 metadata table** | Field | Value | | --- | --- | | Jurisdiction | Montana (US-MT) | | Tax type | Individual income tax | | Primary form | Form 2 (Montana Individual Income Tax Return) | | Tax year | 2025 (filed in 2026) / 2026 | | Authority | Montana Department of Revenue | | Statute | MCA 15-30-2103 et seq. | | Version | 0.1 | | Last updated | 2026-05-22 | | Validation | AI-drafted — Q3 | ### Sources consulted **Sources consulted** | # | Source | URL | | --- | --- | --- | | 1 | Montana DOR — HB337: 2026–2027 Income Tax Changes | https://revenue.mt.gov/news/recent-news/HB-337 | | 2 | Montana Income Tax Rates (TY 2025) | https://remotelaws.com/state-income-tax/us-states/montana/ | | 3 | PolicyEngine — Montana Reduces Top Rate (HB337 analysis) | https://www.policyengine.org/us/research/montana-tax-cuts-2026 | | 4 | MCA 15-30-2103 (rate statute) | https://leg.mt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0030/0150-0300-0210-0030.html | ## Section 2: Quick reference — rates and thresholds ### Ordinary income tax rates — TY 2025 (filed in 2026) **Ordinary income tax rates — TY 2025 (filed in 2026)** | Filing status | Lower bracket (4.7%) | Upper bracket (5.9%) | | --- | --- | --- | | Single / MFS | $0 – $21,100 | Over $21,100 | | Head of Household | $0 – $31,700 | Over $31,700 | | MFJ / Surviving Spouse | $0 – $42,200 | Over $42,200 | ### Ordinary income tax rates — TY 2026 (per HB 337) **Ordinary income tax rates — TY 2026 (per HB 337)** | Filing status | Lower bracket (4.7%) | Upper bracket (5.65%) | | --- | --- | --- | | Single / MFS | $0 – $47,500 | Over $47,500 | | Head of Household | $0 – $71,250 | Over $71,250 | | MFJ / Surviving Spouse | $0 – $95,000 | Over $95,000 | ### Net long-term capital gains rates **Net long-term capital gains rates** | Capital gains income | Rate | | --- | --- | | Within the lower bracket (after subtracting ordinary income) | 3.0% | | Above the lower bracket threshold | 4.1% | ### Standard deduction Montana uses the **federal standard deduction** amount. For TY 2025: **Standard deduction table** | Filing status | Amount | | --- | --- | | Single | $15,000 | | MFJ / Surviving Spouse | $30,000 | | Head of Household | $22,500 | | MFS | $15,000 | - **Personal exemption elimination** — Montana eliminated the personal exemption effective TY 2024. ### Other deductions / subtractions **Other deductions / subtractions table** | Item | Amount | Source | | --- | --- | --- | | Age 65+ subtraction | $5,660 from federal taxable income (TY 2025) | MCA 15-30-2110 | | Medical savings account deduction | Up to $4,600 | MCA 15-61-202 | ### Key thresholds **Key thresholds table** | Item | Value | Source | | --- | --- | --- | | Filing deadline | April 15, 2026 (for TY 2025) | MCA 15-30-2604 | | Extension | Automatic 6-month with federal extension | MCA 15-30-2604 | | Estimated tax threshold | $500 expected liability after withholding and credits | MCA 15-30-2512 | | No sales tax | Montana does not impose a general sales tax | — | ### Earned Income Tax Credit — TY 2026+ - **Montana EITC** — 20% of federal Earned Income Credit (refundable) (Doubled from 10% by HB 337, effective TY 2026.) _(HB 337)_ ## Section 3: How this skill works with the federal return Montana taxable income begins with **federal taxable income** from federal Form 1040, Line 15 (after the federal standard or itemized deduction). 1. **Additions** — Add back items Montana does not exclude (limited; Montana closely conforms to federal definitions). 2. **Subtractions** — Subtract items Montana excludes: - Interest on U.S. government obligations - Montana state income tax refund included in federal taxable income - Age 65+ subtraction ($5,660 for TY 2025) - Qualified medical savings account contributions 3. **Montana taxable income** — Federal taxable income + additions − subtractions. 4. **Separate capital gains** — Net long-term capital gains are taxed at preferential Montana rates (3.0% / 4.1%) rather than the ordinary rates. 5. **Tax** — Apply the two-bracket rates to ordinary income, and the capital gains rates to qualifying gains. 6. **Credits** — Apply applicable credits (EITC, elderly homeowner/renter credit, etc.). ## Section 4: Self-employed specific rules 1. **Self-employment income** flows through federal Schedule C → federal AGI → federal taxable income → Montana taxable income. No separate Montana schedule for self-employment income. 2. **Federal SE tax deduction** — Already reflected in federal AGI/taxable income. No separate Montana adjustment. 3. **Estimated taxes** — Self-employed taxpayers must make quarterly estimated payments (Form ESA) if expected liability exceeds $500 after withholding and credits. Due dates: April 15, June 15, September 15, January 15. 4. **Business equipment depreciation** — Montana generally conforms to federal depreciation, including IRC § 179. Montana conforms to bonus depreciation (IRC § 168(k)). 5. **Capital gains from business asset sales** — Net long-term capital gains (including from business asset dispositions) qualify for the preferential 3.0%/4.1% Montana rates. Short-term gains are taxed as ordinary income. 6. **Health insurance deduction** — Self-employed health insurance deduction is in federal AGI/taxable income. No Montana add-back. 7. **No sales tax** — Montana has no general sales tax, which means sole proprietors do not need to collect or remit sales tax on goods sold in Montana (some resort areas impose a local resort tax on specific goods/services). 8. **Montana EITC** — 20% of federal EITC (TY 2026+), refundable. Available to qualifying self-employed filers. ## Section 5: Tier 1 rules — deterministic **Tier 1 rules — deterministic table** | Rule ID | Rule | Source | | --- | --- | --- | | MT-T1-01 | Start with federal taxable income (Form 1040, Line 15) | MCA 15-30-2101 | | MT-T1-02 | Subtract interest on U.S. government obligations | MCA 15-30-2110 | | MT-T1-03 | Subtract state income tax refund included in federal income | MCA 15-30-2110 | | MT-T1-04 | Age 65+ subtraction: $5,660 from federal taxable income (TY 2025) | MCA 15-30-2110 | | MT-T1-05 | Apply ordinary rates: 4.7% / 5.9% (TY 2025) or 4.7% / 5.65% (TY 2026) | MCA 15-30-2103, HB 337 | | MT-T1-06 | Net long-term capital gains: 3.0% on gains within the lower bracket; 4.1% on gains above | MCA 15-30-2103 | | MT-T1-07 | Montana EITC: 20% of federal EIC (refundable, TY 2026+) | HB 337 | | MT-T1-08 | Personal exemption: eliminated effective TY 2024 | MCA 15-30-2114 | | MT-T1-09 | Standard deduction: uses federal standard deduction amount | MCA 15-30-2101 | | MT-T1-10 | No general sales tax in Montana | — | ## Section 6: Tier 2 rules — requires judgment **Tier 2 rules — requires judgment table** | Rule ID | Rule | Guidance | | --- | --- | --- | | MT-T2-01 | **Residency determination** — Montana uses a domicile test. A person domiciled in Montana or spending 180+ days in the state is presumed a resident. | If taxpayer has homes in multiple states, flag for professional review. | | MT-T2-02 | **Capital gains classification** — Determine which gains are long-term (held > 1 year) vs. short-term. Only net long-term gains qualify for the 3.0%/4.1% preferential rates. | Review holding periods for all disposed assets. | | MT-T2-03 | **Capital gains bracket interaction** — The 3.0% rate applies to capital gains that fall within the lower ordinary-income bracket (after subtracting Montana ordinary income from the threshold). | If ordinary income exceeds the lower bracket, all capital gains are taxed at 4.1%. | | MT-T2-04 | **Elderly homeowner/renter credit** — Available to Montana residents age 62+ with household income below thresholds. | Income-based calculation; flag for review if taxpayer qualifies. | | MT-T2-05 | **Credit for taxes paid to other states** — Non-refundable credit to prevent double taxation. | Requires the other state's return. | | MT-T2-06 | **Resort tax** — Some Montana resort areas impose a local resort tax (up to 3%) on certain goods and services. Not an income tax, but self-employed persons in resort areas may need to collect it. | Flag if taxpayer operates in a resort community. | ## Section 7: Supplier pattern library **Supplier pattern library table** | Pattern | Treatment | Notes | | --- | --- | --- | | W-2 wages from Montana employer | MT withholding applies; include on Form 2 | Most common | | Schedule C net profit (sole prop) | Flows through federal taxable income → Montana taxable income | No separate MT schedule | | Rental income (Schedule E) | Included in federal taxable income → Montana taxable income | MT-source if property in MT | | Interest on U.S. government bonds | Subtract from Montana taxable income | MCA 15-30-2110 | | Social Security benefits | Only the amount included in federal taxable income flows through; Montana does not add back | — | | Long-term capital gains | Preferential MT rates: 3.0% / 4.1% | Separate from ordinary income | | Short-term capital gains | Taxed as ordinary income (4.7% / 5.65%) | No preferential rate | | 1099-NEC freelance income | Flows through Schedule C → federal taxable income | Estimated payments likely needed | ## Section 8: Form mapping **Form mapping table** | Montana form / schedule | What it covers | Federal counterpart | | --- | --- | --- | | Form 2 | Montana Individual Income Tax Return | Form 1040 | | Schedule I (Form 2) | Additions and Subtractions to Federal Taxable Income | Schedule 1 (Form 1040) | | Schedule II (Form 2) | Tax Computation (ordinary + capital gains) | N/A | | Schedule III (Form 2) | Credits | N/A | | Schedule IV (Form 2) | Non-resident / Part-year Allocation | N/A | | Form ESA | Estimated Tax Payment Voucher | Form 1040-ES | | Form EITC | Montana Earned Income Tax Credit | Schedule EIC | ## Section 9: Refusal catalogue **Refusal catalogue table** | ID | Situation | Action | | --- | --- | --- | | MT-R-01 | Part-year or non-resident return (Schedule IV) | Refuse — out of scope | | MT-R-02 | Corporate income tax (Form CIT) | Refuse — out of scope | | MT-R-03 | Partnership / S-corp pass-through returns | Refuse — out of scope | | MT-R-04 | Multi-state income apportionment | Refuse — flag for professional review | | MT-R-05 | Amended returns | Refuse — out of scope | | MT-R-06 | Tax year other than 2025 or 2026 | Refuse — rates and thresholds may differ | | MT-R-07 | Resort tax / local accommodation tax | Refuse — separate local tax; out of scope | ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. 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