North Dakota Fiduciary Income Tax Booklet

Fiduciary Income Tax Booklet
Fiduciary Income Tax Booklet (2023)
FIDUCIARY
INCOME
TAX
Includes:
Form 38
Schedule K-1
Email Questions to: [email protected]

tax.nd.gov

Need help?

Contents
Where to get help and forms......................................................... This page
Changes for 2023....................................................................................1
General instructions.................................................................................2
	 Who must file......................................................................................2
	 When and where to file.........................................................................3
	 Extension of time to file........................................................................3
	 Penalty and interest.............................................................................3
	 Estimated tax requirement (for 2024 tax year)........................................3
	 Withholding from nonresident beneficiary................................................4
	 Composite filing...................................................................................4
	 Correcting a previously filed return.........................................................4
	 Reporting federal changes.....................................................................5
	 W-2/1099 reporting requirement...........................................................5
	 Disclosure notification..........................................................................5
	 Use of information...............................................................................5
General instructions for completing Form 38...............................................5
Specific line instructions...........................................................................5
	 Form 38, Page 1, Items A-H..................................................................5
	 Tax Computation Schedule....................................................................6
	 Schedule BI........................................................................................8
	 Schedule CR...................................................................................... 10
	 Form 38, Page 1, Lines 1-17................................................................ 10
	 Schedule K-1..................................................................................... 11
	 Before you file Form 38...................................................................... 12

Required forms

You can download forms and find other
information on our website at:

www.tax.nd.gov

Email
Individual, estate and trust income
tax:
	 [email protected]

Call
	 Questions	
	Forms	

701-328-1258
701-328-1243

Speech/hearing impaired
	TDD	800-366-6888

Write

Office of State Tax Commissioner
600 E. Boulevard Ave., Dept. 127
Bismarck, ND 58505-0599

Walk-in or appointment
service

State Capitol Building, 8th Floor
600 E. Boulevard Ave., Bismarck, ND
Monday through Friday
8:00 a.m. to 5:00 p.m.
(except holidays)
Walk-ins are welcome. To assure
availability and promptness of
service, call in advance to make an
appointment.

The following forms are needed to complete Form 38:
	
	

Form 38	
Schedule K-1	

Fiduciary return (3 pages)
Beneficiary’s share of North Dakota income (loss), 	
	 deductions, adjustments, credits, and other items

The following forms may be needed:
	
	
	

Form 38-TC	
Form 38-EXT	
Schedule 38-UT	

	

Form 101	

	
	

Form PWA	
Form PWE	

Tax credits
Fiduciary extension payment voucher
Underpayment or late p
	 ayment of estimated income 	
	 tax
Application for extension of time to file a North Dakota 	
	 income tax return
Passthrough entity withholding adjustment
Nonresident passthrough entity member exemption 		
	 and certification

Download these forms from our website at www.tax.nd.gov.

Taxpayer Bill of Rights
Obtain a copy of the North Dakota Taxpayer Bill of Rights on the
Office of State Tax Commissioner’s website at
www.tax.nd.gov

Privacy Act Notification

In compliance with the Privacy Act of 1974,
disclosure of a social security number or
Federal Employer Identification Number
(FEIN) on this form is required under
N.D.C.C. §§ 57-01-15 and 57-38-31, and
will be used for tax reporting, identification,
and administration of North Dakota tax
laws. Disclosure is mandatory. Failure to
provide the social security number or FEIN
may delay or prevent the processing of this
form.

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Changes affecting estates and trusts

Developments, updates, and items of interest relating to estate and trust income tax
REMINDER - Electronic Filing

Estates or trusts with 10 or more
beneficiaries are required to file the
North Dakota income tax return and
pay any tax due on it by electronic
means. If a fiduciary return with 10
or more beneficiaries is filed on paper,
the return will not be processed and
may be subject to penalties due to the
failure to file electronically.

NEW - Income tax rate
reductions

Effective beginning with tax year
2023, the existing five-bracket system
for individuals, estates, and trusts was
replaced with a three-bracket system
with overall lower rates, including a
substantial first bracket with a zero
rate and lowering the highest rate
from 2.90% to 2.50%. The reductions
are reflected on the 2023 income tax
forms and instructions.

North Dakota withholding

With the effective date of the rate
changes being January 1, 2023, new
wage withholding tables were made
available to employers. Because the
highest rate was lowered to 2.50%,
income tax withholding rates on
nonresident owners of passthrough
entities and nonresident royalty
owners were also lowered and are
reflected on the 2023 income tax
forms and instructions.

NEW - Contributions to
maternity home, child placing
agency, or pregnancy help
center

An income tax credit is allowed
for contributions to a child placing
agency licensed by the North Dakota
Department of Health and Human
Services (DHS), a nonprofit maternity
home located in North Dakota, or a
pregnancy help center recognized by
DHS.
The credit is equal to 100% of the
contribution. The credit is limited to
50% of a taxpayer’s tax liability. Any
credit earned in excess of the limit
may not be carried forward or back to
other tax years.
The credit is available to corporations,
individuals, estates, trusts, and
passthrough entities.

NEW – Tax credit for
compensation paid to an
apprentice

An income tax credit was created
for the employment of a qualified
apprentice in an apprenticeship
position in North Dakota.
The apprentice must be in an
apprenticeship program certified by
the U.S. Department of Labor or be an
electrical apprentice registered under
North Dakota law.
The credit is equal to 10% of the
stipend or salary paid to the qualified
apprentice. The maximum credit a
taxpayer can claim over all tax years
is $3,000 and limits the earning of a
tax credit to only five apprentices at
the same time. Any credit earned in
excess of the limit may not be carried
forward or back to other tax years.
The credit is available to corporations,
individuals, estates, trusts, and
passthrough entities. A tax credit
earned by a passthrough entity is
passed through and allowed to each
owner in proportion to their respective
interests in the passthrough entity.

UPDATE – Renaissance Zone
tax incentive changes

A variety of changes occurred to the
Renaissance Zone program. One of
the changes is the maximum length
of an income tax incentive was
changed from five years to eight
years for a project that meets certain
rehabilitation thresholds. Specifically,
for residential (except owner
occupied) and commercial property,
a rehabilitation level exceeding 75%
is required to allow for an exemption
up to eight years. Rehabilitation
exceeding 50% is required for an
exemption up to five years. For
owner occupied residential property,
rehabilitation exceeding 20% may
qualify for an exemption up to eight
years.
For additional RZ information, please
refer to our website:
www.tax.nd.gov/renaissancezone-incentives.

UPDATE – Automation tax
credit

The 2023 North Dakota Legislative
Assembly made changes to the
existing automation tax credit
program. The program was expanded
to include automation or robotic
equipment purchased to upgrade
or advance an animal agricultural
process.
The tax rate was changed from up
to 20% to now be 15% of the cost
of the qualifying equipment. The
annual maximum statewide tax credits
authorized was increased from $1
million to $3 million per year. Of the
$3 million annual total tax amount,
$500,000 of tax credits is reserved
each year for first-time claimants for
automation equipment and $500,000
of tax credits is reserved each year
for first-time claimants for animal ag
equipment.
The program was also made
permanent. Other provisions were
unchanged.
The changes are applicable for
purchases during calendar year 2023,
for which applications would be due
to the Department of Commerce by
January 31, 2024. The requirement
continues to exist for a claimant to
subsequently file with the Office of
State Tax Commissioner a report of
Improved Job Quality or Increased
Productivity.

UPDATE - Disabled
employment tax credit

In 2023, the North Dakota Legislative
Assembly reenacted and made
permanent the existing income tax
credit related to the employment
of an individual with developmental
disabilities or severe mental illness.
The existing provisions of the tax
credit were unchanged, except the
statewide limitation on the number of
eligible employees was removed and
there is no limit.

Stay informed of developments
Individuals, businesses, or other
interested persons may sign up to
receive email notifications when
a newsletter or other important
information is issued by the Office of
State Tax Commissioner. To sign up,
go to www.tax.nd.gov and select
“News Center” at the top of the page.
Then select “Email Sign-Up”.

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Form 38 Instructions	

2023

North Dakota Fiduciary Income Tax Return
“N.D.C.C.” references are to the North Dakota Century Code, which contains North Dakota’s statutes.
“N.D. Admin. Code” references are to the North Dakota Administrative Code, which contains North Dakota’s administrative rules.

General
instructions
Who must file

•	 Compensation, including
unemployment compensation,
received by an estate based on
services performed in North Dakota
by a decedent.

Resident estate or trust
A fiduciary for a resident estate
or trust must file a 2023 Form 38,
Fiduciary Income Tax Return, if the
fiduciary is required to file a 2023
Form 1041, U.S. Income Tax Return
for Estates and Trusts.

•	 Rental income from real and
tangible personal property located
in North Dakota.

A fiduciary for a resident estate
or trust is generally subject to the
same law provisions that apply to
a resident individual. The entire
income (loss) of a resident estate or
trust is reportable to North Dakota
regardless of its source. An estate or
trust is considered a resident if it has
a relationship to North Dakota that is
sufficient to create nexus for income
tax purposes. See North Dakota
Administrative Code (N.D.A.C.)
§ 81-03-02.1-04 for more information.

•	 Gain from the sale, exchange,
or other disposition of real and
tangible personal property located
in North Dakota.

Nonresident estate or trust
A fiduciary for a nonresident estate
or trust must file a 2023 Form 38,
Fiduciary Income Tax Return, if both
of the following apply:
	 • 	The fiduciary is required to file a
2023 Form 1041, U.S. Income Tax
Return for Estates and Trusts.
	 •	 The estate or trust derived any
gross income from North Dakota
sources during the 2023 tax year.
A fiduciary for a nonresident estate
or trust is generally subject to the
same law provisions that apply to
a nonresident individual. Only the
portion of the nonresident estate’s
or trust’s gross income from North
Dakota sources is reportable to North
Dakota.
For a nonresident estate or trust,
gross income from North Dakota
sources includes the following:

•	 Royalties, bonus or lease payments,
and other income from an interest
in oil, gas, coal, or other minerals
located in North Dakota.

•	 Income from a sole proprietorship,
partnership, S corporation, or other
trade or business carried on in
North Dakota. This includes farming
and ranching operations.
•	 Income from gambling activity
carried on in North Dakota.
•	 Income from another estate or
trust consisting of the same kinds
of income listed above.
For a nonresident estate or trust,
gross income from North Dakota
sources generally does not include
interest, dividends, pensions,
annuities, or income and gain from
intangible property. 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.
Grantor trust
A grantor trust is required to file a
2023 Form 38, Fiduciary Income Tax
Return, if the grantor is required to
file a 2023 Form 1041, U.S. Income
Tax Return for Estates and Trusts. This
applies even if a grantor trust elects to
use an alternative filing method under
the federal income tax regulations
in lieu of filing a Form 1041. See
the specific line instructions for
Form 38 (page 1), Schedule BI, and
Schedule K-1 for special instructions
that apply to a grantor trust.

Tax-exempt trust
A fiduciary for a trust that is taxexempt under Internal Revenue Code
§ 501(a) must file a 2023 Form 38
if (1) the fiduciary is required to file
a 2023 Form 1041 or Form 990‑T to
report the trust’s unrelated business
taxable income, (2) the federal
income tax is calculated using the tax
rates applicable to a trust, and (3) the
unrelated business taxable income
is reportable to North Dakota. The
unrelated business taxable income is
reportable to North Dakota if the trust
is a North Dakota resident trust or, in
the case of a nonresident trust, the
unrelated business taxable income has
a source in North Dakota.
Bankruptcy estate
A fiduciary that is required to file a
2023 Form 38 for a bankruptcy estate
must file it in a manner similar to
how the 2023 Form 1041 is filed. Use
Form 38 only as a transmittal form
for Form ND-1, Individual Income
Tax Return. In the top margin of
Form ND‑1, write “Attachment to
Form 38.” Complete and attach
Form ND-1 to Form 38. Complete
Items A through H at the top of
Form 38. Enter on Form 38, page 1,
line 7, the net tax liability from
Form ND-1, page 2, line 25. Then
complete lines 8 through 17 on page 1
of Form 38 as required.
Disaster recovery tax exemptions
Exemptions from state and local tax
filing and payment obligations are
available to out-of-state businesses
and their employees who are in
North Dakota on a temporary basis
for the sole purpose of repairing
or replacing natural gas, electrical,
or telecommunication transmission
property that is damaged, or under
threat of damage, from a state- or
presidentially-declared disaster or
emergency. For more information, go
to www.tax.nd.gov.

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Electronic Filing

Estates or trusts with 10 or more
beneficiaries are required to file the
North Dakota income tax return and
pay any tax due on it by electronic
means.

When and Where to file

The 2023 Form 38 must be filed on
or before (1) April 15, 2024, if filing
for the 2023 calendar year, or (2) the
15th day of the 4th month following
the end of the tax year, if filing for
a fiscal year beginning in the 2023
calendar year. If the due date falls
on a Saturday, Sunday, or holiday,
the return may be filed on or before
the next day that is not a Saturday,
Sunday, or holiday.
Note: Use the 2022 Form 38 if
filing for a fiscal year beginning in
the 2022 calendar year.
If not required to file
electronically, mail Form 38 and all
required attachments to:
	 Office of State Tax Commissioner 	
	 600 East Boulevard Ave., Dept. 127 	
	 Bismarck, ND 58505-0599

Extension of time to file

An extension of time to file Form 38
may be obtained in one of the
following ways:
	 •	 Obtain a federal extension.
	 •	 Separately apply for a North
Dakota extension.
Federal extension. If an extension
of time to file Form 1041 is obtained,
it is automatically accepted as an
extension of time to file Form 38. The
extended due date for North Dakota
purposes is the same as the federal
extended due date. A separate North
Dakota extension does not have to
be applied for, nor does the Office of
State Tax Commissioner have to be
notified that a federal extension has
been obtained prior to filing Form 38.
North Dakota extension. If a
federal extension is not obtained, but
additional time is needed to complete
and file Form 38, a separate North
Dakota extension may be applied
for by filing Form 101, Application
for Extension of Time to File a North
Dakota Tax Return. This is not an
automatic extension—there must
be good cause to request a North
Dakota extension. Form 101 must be
postmarked on or before the due date

of Form 38. Notification of whether
the extension is accepted or rejected
will be provided by the Office of State
Tax Commissioner.
Extension interest. If Form 38
is filed on or before the extended
due date, and any tax due is paid
with the return, no penalty will be
charged. Interest on the tax due will
be charged at the rate of 12% per
year from the original due date of the
return to the earlier of the date the
return is filed or the extended due
date.
Prepayment of tax due. If an
extension of time to file Form 38 is
obtained, any tax expected to be due
may be paid on or before the regular
due date to avoid paying extension
interest. For more information,
including payment options, obtain
the 2023 Form 38‑EXT. Alternatively,
a check or money order may be
sent with a letter containing the
following: (1) name of estate or
trust; (2) estate’s or trust’s FEIN;
(3) fiduciary’s name, address and
phone number; and (4) statement
that the payment is a 2023
Form 38‑EXT payment.

Penalty and interest

The tax due must be paid by the due
date (without extension) of Form 38
to avoid penalty and interest charges.
However, if an extension of time to
file Form 38 was obtained, the tax
due may be paid by the extended due
date of the return without penalty,
but extension interest will apply—see
“Extension interest” and “Prepayment
of tax due” on this page.
If Form 38 is filed on or before its due
date (or extended due date), but all
of the tax due is not paid by the due
date (or extended date), a penalty
equal to 5% of the unpaid tax due or
$5.00, whichever is greater, must be
paid.
If Form 38 is not filed on or before
its due date (or extended due date),
and there is an unpaid tax due on it, a
penalty equal to 5% of the unpaid tax
due or $5.00, whichever is greater,
for the month the return was due
plus 5% of the unpaid tax due for
each additional month (or fraction
of a month) during which the return
remains delinquent must be paid. This
penalty may not exceed 25% of the
tax due.

In addition to any penalty, interest
must be paid at the rate of 1% per
month or fraction of a month, except
for the month in which the tax was
due, on any tax due that remains
unpaid after the return’s due date.

Estimated tax requirement
(for 2024)

A fiduciary for an estate or trust must
pay estimated North Dakota income
tax for the 2024 tax year if all four of
the following conditions apply:
	 1.	 The fiduciary is required to
pay estimated federal income
tax for the 2024 tax year. This
condition applies whether or not
the fiduciary actually makes the
required payment(s) of estimated
tax to the Internal Revenue
Service.
	 2.	 The North Dakota net income tax 	
liability on the fiduciary’s taxable
income for the 2023 tax year
(as shown on the 2023 Form 38,
page 1, line 4) was equal to or
more than $1,000. Note: If the
fiduciary was not required to
file a North Dakota income tax
return for the 2023 tax year, the
fiduciary’s net tax liability is zero
for purposes of this condition.
	 3.	 The fiduciary expects to owe
(after subtracting any estimated
North Dakota income tax
withholding) North Dakota
income tax equal to or more than
$1,000 for the 2024 tax year.
Note: Do not include income tax
withholding from nonresident
individual beneficiaries or
composite income tax in this
estimation.
	 4.	 The fiduciary expects North
Dakota income tax withholding
(other than income tax
withholding from nonresident
individual beneficiaries) for the
2024 tax year to be less than the
smaller of:
	

a.	90% of the North Dakota net
income tax liability on the
fiduciary’s taxable income
		 for the 2024 tax year.
Note: Substitute 66 2/3%
if a qualified farmer. See
instructions for 2024
Form 38‑ES.

4
	

b.	100% of the North Dakota
net income tax liability on
fiduciary’s taxable income for
the 2023 tax year (as shown
on the 2023 Form 38, page 1,
line 4). Note: If the estate or
trust was not in existence for
the entire 2023 tax year, this
part does not apply; the 90%
threshold in part a must be
applied.

In general, one-fourth (25%) of the
total estimated tax required to be paid
for the 2024 tax year must be paid by
April 15, June 15, and September 15,
2024, and January 15, 2025. For
more information, including payment
options, obtain the 2024 Form 38‑ES.

Withholding from
nonresident beneficiary

If a trust is required to file Form 38,
the trust must withhold North Dakota
income tax at the rate of 2.50% from
the year-end distributive share of
North Dakota income of a nonresident
beneficiary.
Nonresident beneficiary. For this
purpose, a nonresident beneficiary is
defined as:
	 •	 an individual domiciled outside
North Dakota,
	 •	 a trust legally organized outside
North Dakota, or
	 •	 a partnership, S corporation, or
other passthrough entity with a
commercial domicile outside North
Dakota.
A nonresident beneficiary includes
the grantor of a grantor trust if the
grantor meets the definition of a
nonresident beneficiary.
Exemption from withholding. This
withholding requirement does not
apply to a nonresident beneficiary if:
	 •	 the beneficiary’s distributive share
of North Dakota income is less
than $1,000,
	 •	 the beneficiary elects to include
the distributive share of North
Dakota income in a composite
filing (see “Composite filing” on
this page), or
	 •	 the beneficiary is a passthrough
entity that elects exemption from
the withholding requirement.
Obtain Form PWE for more
information.

Withholding procedure. This
withholding requirement applies to the
year-end distributive share of North
Dakota income, which is determined
at the end of the trust’s tax year and
reported on Form 38, Schedule BI,
Column 5. The requirement does not
apply to actual distributions made
during the tax year. The withholding
amount is calculated and reported
on Schedule BI, Column 6. If certain
conditions are met, an amount less
than the amount calculated at the
2.50% tax rate may be withheld.
For the qualifying conditions, see
Form PWA. A payment for the total
amount of withholding reported on
Schedule BI, Column 6, must be
submitted with Form 38 when it is
filed.

Composite filing

A composite filing method is available
to a trust with one or more eligible
nonresident beneficiaries. Under this
method, a trust calculates the North
Dakota income tax on the year-end
distributive share of North Dakota
income of an eligible nonresident
beneficiary and pays the tax with
Form 38. The tax is calculated at
the highest individual income tax
rate (which is 2.50% for the 2023
tax year), and no adjustments,
deductions, or tax credits are allowed
in calculating the tax. A composite
filing satisfies the North Dakota
income tax filing and payment
obligations of the eligible nonresident
beneficiaries included in it, which
means they do not have to separately
file their own North Dakota income tax
returns. The composite filing method
is optional and does not require prior
approval from the Office of State Tax
Commissioner, and a choice to use it
may be made on a year-to-year basis.
Eligible nonresident beneficiary.
A nonresident beneficiary (as defined
under “Withholding from nonresident
beneficiary” on page 3) is eligible to
be included in a composite filing if
both of the following apply:
	 •	 The beneficiary’s only source of
income within North Dakota is one
or more passthrough entities. A
passthrough entity includes a trust,
partnership, S corporation, limited
liability company treated like a
partnership or S corporation, and
any other similar entity.

	 •	 The beneficiary elects to be
included in a composite filing. An
election is indicated by the trust’s
calculation and reporting of a tax
amount for the beneficiary on
Form 38, Schedule BI, Column 7.
If the distributive share is a loss,
the tax is zero.
The distributive share of North Dakota
income included in a composite return
is subject to tax even if it is under
$1,000.
Composite filing method
procedure. The tax under
the composite filing method is
calculated and reported on Form 38,
Schedule BI, Column 7. A payment
for the total tax amount reported
on Schedule BI, Column 7, must be
submitted with Form 38 when it is
filed.

Correcting a previously filed
return
If a fiduciary needs to correct an
error on Form 38 after it is filed,
the fiduciary must file an amended
return. There is no special form for
this purpose. See “How to prepare an
amended 2023 return” below.
Note: If required to electronically
file the original return, the amended
return must also be electronically
filed.
If a fiduciary paid too much tax
because of an error on the 2023
Form 38, the fiduciary generally
has three years from the due date
(excluding extensions) of the return or
the date the return was actually filed,
whichever is later, in which to file an
amended return to claim a refund of
the overpayment. See N.D.C.C.
§ 57-38-40 for other time periods that
may apply.
How to prepare an amended 2023
return
	 1.	 Obtain a blank 2023 Form 38.
	 2.	 Enter the name of the estate or
trust, and the fiduciary’s name,
current address, FEIN, etc., in the
top portion of page 1 of Form 38.
	 3.	 Fill in the “Amended return” circle
at the top of page 1 of Form 38.
	 4.	 Complete the Tax Computation
Schedule and Schedule BI using
the corrected information.
However, unless there is an

5
increase in the amount reported
on Schedule BI, Column 5,
of the amended return, enter
on Schedule BI, Column 6,
the same amount reported
on the previously filed return.
Also complete Schedule CR, if
applicable. Then complete lines 1
through 7 on page 1 of Form 38.
	 5.	 Leave line 8 on page 1 of
Form 38 blank unless claiming an
additional amount not previously
claimed.
	 6.	 On line 9 of page 1 of Form 38,
enter the total taxes due from the
previously filed 2023 Form 38,
page 1, line 7. If the total taxes
due have not been fully paid, only
enter the amount paid.
	 7.	 Complete lines 10 through 16 of
page 1 of Form 38. If there is an
overpayment on line 11, enter
the full amount on line 13. On
an amended return, the amount
credited to the next year’s
estimated tax (line 12) may not
be increased or decreased.
	 8.	 Attach a statement explaining the
reason(s) for filing the amended
return. If it is because of changes
the fiduciary or the Internal
Revenue Service (IRS) made to
the 2023 Federal Form 1041,
attach a copy of the amended
federal return or IRS notice.
	 9.	 Complete and provide a corrected
North Dakota Schedule K-1 to the
beneficiaries, as required.

Reporting federal changes

If the Internal Revenue Service (IRS)
changes Federal Form 1041, or if a
fiduciary files an amended Federal
Form 1041, an amended North Dakota
Form 38 must be filed within ninety
days after the final determination of
the IRS changes or the filing of the
amended federal return. Enclose a
copy of the IRS audit report or the
amended federal return with the
amended North Dakota Form 38.

W-2/1099 reporting
requirement

Every fiduciary that is required to
file Federal Form 1099 or W-2 may
also have to file one with the Office
of State Tax Commissioner. For more
information, obtain the guideline
Income Tax Withholding and see
“Annual Filing Requirements—W-2 and
1099.”

Disclosure notification

Upon written request from the
chairman of a North Dakota legislative
standing committee or Legislative
Management, the law requires the
Office of State Tax Commissioner to
disclose the amount of any deduction
or credit claimed on a tax return. Any
other confidential information, such as
a taxpayer’s name or federal employer
identification number, may not be
disclosed.

Use of information

All of the information on Form 38 and
its attachments is confidential by law
and cannot be given to others except
as provided by state law. Information
about the beneficiaries is required
under state law so the Office of State
Tax Commissioner can determine the
beneficiary’s correct North Dakota
taxable income and verify if the
beneficiary has filed a return and paid
the tax.

General
instructions for
completing
Form 38
Complete Form 38 as
follows:
	 1.	 Complete Federal Form 1041 in
its entirety.
	 2.	 Complete Items A through H at
the top of page 1 of Form 38—see
page 5 of these instructions.
	 3.	 Complete the Tax Computation
Schedule on page 2 of Form 38—
see page 6 of these instructions.
	 4.	 Complete Schedule BI on page 3
of Form 38—see page 8 of these
instructions.
	 5.	 Complete lines 1 through 17 on
page 1 of Form 38—see page 10
of these instructions.
	 6.	 Complete Schedule K-1, if
required, for the beneficiaries—
see page 11 of these instructions.
Rounding of numbers. Numbers
may be entered on the return in
dollars and cents, or they may be
rounded to the nearest whole dollar.
If rounding, drop the cents if less than
$0.50 and round up to the next whole
dollar amount if $0.50 or higher. For
example, $25.36 becomes $25.00,
and $25.50 becomes $26.00.

Fiscal year filers. The tax year for
North Dakota income tax purposes
must be the same as the tax year
used for federal income tax purposes.
Use the 2023 Form 38 if the estate’s
or trust’s taxable year began in the
2023 calendar year. Note: Use the
2022 Form 38 if the taxable year
began in the 2022 calendar year.

Specific line
instructions for
page 1 of Form 38,
Items A-H
Complete Items A through H at
the top of page 1 of Form 38. Then
complete the Tax Computation
Schedule and Schedule BI before
completing lines 1 through 17 on
page 1 of Form 38.
Item A - Tax year
The same tax year used for federal
income tax purposes (as indicated on
the federal return) must be used for
North Dakota income tax purposes.
Fill in the applicable circle. If the
estate or trust has a fiscal year, enter
the beginning and ending dates of
the fiscal year. Use the 2023 Form 38
only if the estate’s or trust’s tax year
began in the 2023 calendar year.
Item B - Name and address
Enter the legal name of the estate
or trust, the name and title of the
fiduciary, and the fiduciary’s mailing
address on the applicable lines. If
filing an amended return, enter the
most current address.
Item C - Federal EIN
North Dakota uses the federal
employer identification number (FEIN
or federal EIN) for identification
purposes. Enter the federal employer
identification number from page 1 of
Federal Form 1041.
Important: Do not enter the
fiduciary’s own federal employer
identification number. A fiduciary
for an estate or trust must obtain
a separate federal employer
identification number for the estate or
trust.
Item D - Date created
Enter the date the estate or trust
was created from page 1 of Federal
Form 1041.

6
Item E - Number of beneficiaries
Enter the total number of beneficiaries
and the number of each type of
beneficiary.
Item F - Residency status
Fill in the applicable circle to indicate
the residency status of the estate or
trust. See “Resident estate or trust”
under “Who must file” on page 2 for
more information.
Item G - Entity type
If Federal Form 1041 was used, fill in
the circle next to the same entity type
checked on page 1 of Form 1041. Fill
in the circle next to “Other” (Item 10)
if the fiduciary filed:
	 •	 Form 1041-QFT (Write “Qualified
funeral trust” on the line.)
	 •	 Form 990-T for a tax-exempt trust
with unrelated business taxable
income (Write “Tax-exempt trust
with UBTI” on the line.)

Final return. Fill in this circle if this
is the last return to be filed in North
Dakota for this estate or trust.
Composite return. Fill in this circle
only if (1) the trust has one or more
nonresident beneficiaries eligible to
be included in a composite filing and
(2) all of them elected to include their
distributive shares of North Dakota
source income in a composite filing.
See “Composite filing” on page 4 for
more information.
Amended return. Fill in this circle
if this return is being filed to correct
a previously filed 2023 Form 38. See
“Correcting a previously filed return”
on page 4 for more information.
Extension. Fill in this circle if a
federal or state extension of time
to file the return was obtained. See
“Extension of time to file” on page 3
for more information.

Item H - Check off items
Fill in all applicable circles.
Initial return. Fill in this circle if this
is the first return filed in North Dakota
for this estate or trust.

Instructions for
completing
Tax Computation
Schedule
(Form 38, page 2)

Grantor trust. If all of a trust is a
grantor trust, do not complete the
Tax Computation Schedule. However,
if a trust is part grantor trust and
part other type of trust (e.g., simple
or complex), complete the Tax
Computation Schedule to the extent it
applies to the nongrantor part of the
trust.

Instructions for Part 1
Line 2
Additions
The following items must be entered
on this line if taxable to the fiduciary:
	 •	 Taxable portion of a lump‑sum
distribution from Federal
Form 4972, line 6 plus line 10. This
adjustment does not apply to a
fiduciary for a nonresident estate
or trust.

Worksheet for calculating net long-term capital gain exclusion
(for Form 38, Tax Computation Schedule, Part 1, line 4b)

	 1.	 Enter amount from 2023 Schedule D (Form 1041), line 18a, column (2).
		 If zero or less, stop here; no exclusion is allowed................................................................ 	 1	 ______________
	 2.	 Enter amount from 2023 Schedule D (Form 1041), line 19, column (2).
		 If zero or less, stop here; no exclusion is allowed................................................................ 	 2	 ______________
	 3.	 Enter the smaller of line 1 or line 2. This is the fiduciary’s federal net long-term capital gain..... 	 3	 ______________
	
	

•	 If a resident estate or trust, enter the amount from line 3 on line 5 and go to line 6.
•	 If a nonresident estate or trust, go to line 4.

	 4.	 Complete lines 4a through 4d using only the capital gains and losses reportable to North Dakota by the fiduciary:
	
a.	
		
	
b.	
		
		
	
c.	
		
	
d.	

North Dakota net short-term capital gain (loss) included on 2023
Schedule D (Form 1041), line 17, column (2).................................... 	4a	______________
North Dakota net long-term capital gain (loss) included on 2023
Schedule D (Form 1041), line 18a, column (2). If zero or less, stop
here; no exclusion is allowed.......................................................... 	4b	______________
Combine lines 4a and 4b. If zero or less, stop here; no exclusion
is allowed..................................................................................... 	 4c	______________
Enter the smaller of line 4b or line 4c. This is the North Dakota net long-term capital gain	 4d	 ______________

	 5.	 If resident estate or trust, enter amount from line 3. Otherwise, enter smaller of
		 line 3 or line 4d................................................................................................................5	 ______________
	 6.	 Portion of line 5, if any, included in an amount that will be entered on Form 38, Tax
		 Computation Schedule, Part 1, line 4d.................................................................................6	 ______________
	 7.	 Subtract line 6 from line 5..................................................................................................7	 ______________
	 8.	 Multiply line 7 by 40% (.40). Enter this amount on Form 38, Tax Computation Schedule,
		 Part 1, line 4b...................................................................................................................8	 ______________

7
	 •	 Loss adjustment reported to the
fiduciary by an S corporation that
elected taxation under N.D.C.C.
§ 57-38-01.35. For details,
obtain the Income Tax Guideline:
Adjustment For Income (Loss)
From An S Corporation electing
to be taxed as a C corporation.
Attach a copy of the statement
received from the entity.
	 •	 For an electing small business trust
(ESBT), the net amount of the
separate S corporation items of
income, gain, loss, etc., that would
have been included had they not
been removed for purposes of the
separate tax calculation on Federal
Form 1041. If the net amount is a
loss, enter as a negative number.
	 •	 Amount of contribution on which
the fiduciary claims a North Dakota
endowment fund tax credit under
N.D.C.C. § 57-38‑01.21, but only
to the extent the contribution
reduced the fiduciary’s federal
taxable income. If a fiduciary
receives the credit from a
passthrough entity, include on
this line the fiduciary’s share of
the related contribution from the
passthrough entity to the extent
it reduced the fiduciary’s federal
taxable income.
Line 4a
Interest from U.S. obligations
Enter the following on this line if
included in the amount on line 1:
	 •	 Interest income from U.S.
obligations.
	 •	 Interest income from other
securities that is specifically
exempted from state income tax
by federal statute.
	 •	 The portion of dividend income
from a mutual fund attributable
to the fund’s investment in U.S.
obligations or federally-exempted
securities.
Common sources of interest income
that may be entered on this line
include U.S. savings bonds, Treasury
bills and notes, and securities issued
by the Banks for Cooperatives,
Commodity Credit Corporation,
Federal Deposit Insurance
Corporation, Federal Farm Credit
System, Federal Home Loan Banks, 	
Federal Intermediate Credit Banks,

Federal Land Banks, Federal Savings
& Loan Insurance Corporations, and
Student Loan Marketing Association.
Do not enter on this line interest
income from securities of the Federal
Home Loan Mortgage Corporation
(Freddie Mac), Federal National
Mortgage Association (Fannie
Mae), and Government National
Mortgage Association (Ginnie Mae),
nor from a federal income tax
refund or repurchase agreement.
Attach a statement specifically
identifying the securities and the
interest income from them. For
a mutual fund, identify the fund,
the qualifying securities, and
the percentage of income from
qualifying securities.
Line 4b
Net long-term capital gain
exclusion
If the amount on line 1 includes a net
long-term capital gain, 40% of the
gain is excludable from North Dakota
taxable income. For a nonresident
estate or trust, the exclusion is
allowed only for a net long-term
capital gain based on the capital
gains and losses reportable to North
Dakota. A net long-term capital gain
included in an amount entered on line
4d (Other subtractions) is not eligible
for the exclusion. Complete the
worksheet on page 6 to calculate the
amount to enter on this line.
Line 4c
Qualified dividend exclusion
Resident estate or trust— A
fiduciary for a resident estate or trust
may enter on this line 40 percent of
the qualified dividends allocated to
the estate or trust and reported on
Form 1041, page 1, line 2b(2).
Nonresident estate or trust. A
fiduciary for a nonresident estate
or trust may enter on this line
40 percent of the portion of the
qualified dividends allocated to the
estate or trust and reported on
Form 1041, page 1, line 2b(2), that
are reportable to North Dakota.
Qualified dividends allocated to the
estate or trust that are reportable
to North Dakota must be included in
the fiduciary’s share of total income
reported on Form 38, Tax Computation
Schedule, Part 2, Column B, line 11.

Line 4d
Other subtractions
Enter the following items on this line
to the extent they are included in the
amount on line 1:
	 •	 Income earned or received by a
Native American while living and
working on any Indian reservation
in North Dakota.
	 •	 Taxable part of a retirement, sick
pay, or unemployment payment
from the U.S. Railroad Retirement
Board. Attach a copy of
Form RRB-1099 or RRB-1099-R
(or both, if applicable).
	 •	 Income adjustment reported to the
fiduciary by an S corporation that
elected taxation under N.D.C.C.
§ 57-38‑01.35. For details,
obtain the Income Tax Guideline:
Adjustment For Income (Loss)
From An S Corporation electing
to be taxed as a C corporation.
Attach statement received from
the entity.
	 •	 Income exempted under N.D.C.C.
Ch. 40‑63 (Renaissance Zone
Act). Attach Schedule RZ. Also
see “Property tax clearance”
below.
	 •	 Income exempted under N.D.C.C.
Ch. 40‑57.1 (new or expanding
business income exemption).
Attach supporting statement
showing calculation. Also
see “Property tax clearance”
below.
	 •	 Military pay you received as a
member of the U.S. Armed Forces
on active and reserve duty and
as a member of the national
guard. The deduction is allowed
to the extent the military pay is
included in federal taxable income.
Military pay, for the purpose of
this deduction, is all military pay,
including federal pay for training,
education, mobilization, and
bonuses and state pay when called
to state active duty. Attach
Form W-2.
Also enter on this line contributions
made during the tax year to a College
SAVE account administered by the
Bank of North Dakota. The maximum
deduction allowed is $5,000.

8
Property tax clearance. If a
renaissance zone income exemption or
a new or expanding business income
exemption is claimed on this line, the
fiduciary must attach the following to
Form 38:

S corporation, or limited liability
company doing business in North
Dakota, to the extent the interest
is apportioned or allocated to North
Dakota by that entity. Do not include
any interest from U.S. obligations.

	 •	 A statement in which the fiduciary
states whether or not the estate or
trust holds a 50% or more interest
in real property in North Dakota.
If it does, the fiduciary must also
provide in the statement the name
of each North Dakota county in
which the estate or trust holds
a 50% or more interest in real
property.

Line 2, Column B
Ordinary dividends
Enter the fiduciary’s share of dividend
income received from a partnership,
S corporation, or limited liability
company doing business in North
Dakota, to the extent the dividend
income is apportioned or allocated to
North Dakota by that entity.

	 •	 A copy of a property tax clearance
record obtained from each North
Dakota county in which the estate
or trust holds a 50% or more
interest in real property. This
may be obtained by completing
the form Property Tax Clearance
Record available on the Office of
State Tax Commissioner’s website.

Instructions for Part 2
All estates and trusts—Enter the
amounts from the 2023 Federal
Form 1041, page 1, lines 1 through 8,
on the corresponding lines in
Column A. Then complete lines 9
through 11 in Column A.
Nonresident estate or trust
only— Enter in Column B (North
Dakota) the portion of the amount in
Column A that is reportable to North
Dakota. See below for the instructions
to lines 1 through 8 of Column B.
Then complete lines 9 through 11 in
Column B. Complete lines 1 through
11 in Column C by entering the
difference between Column A and
Column B.
Instructions for Column B only—
North Dakota
If part or all of a North Dakota income
amount reportable in Column B was
entered in Part 1, line 4a and line 4d
because it is exempt from North
Dakota income tax, only enter the
taxable portion in Column B.
Line 1, Column B
Interest income
Enter the fiduciary’s share of
interest received from a partnership,

Line 3, Column B
Business income or (loss)
Enter the net income or loss from a
sole proprietorship doing business in
North Dakota as reported on Federal
Schedule C (Form 1040), to the extent
the net income or loss is apportionable
and allocable to North Dakota.
Line 4, Column B
Capital gain (loss)
Enter net capital gains and losses
from the sale or exchange of real
and tangible personal property
located in North Dakota. Also enter
the fiduciary’s share of net capital
gains and losses from a partnership,
S corporation, or limited liability
company doing business in North
Dakota, to the extent they are
apportioned or allocated to North
Dakota by that entity.
Line 5, Column B
Rents, royalties, partnerships,
other estates and trusts, etc.
Enter the net income or loss from
real and tangible personal property
located in North Dakota. This includes
net income or loss from leasing the
property, and royalties and other
income from interests in oil, coal,
or other mineral property located in
North Dakota.
Enter the fiduciary’s share of
income or loss from a partnership,
S corporation, or limited liability
company doing business in North
Dakota (that is not reported on the
other lines of Part 2), to the extent
the income is apportioned and
allocated to North Dakota by that
entity.

Enter the fiduciary’s share of North
Dakota source income and losses from
another estate or trust.
Line 6, Column B
Farm income or (loss)
Enter the net income or loss from
a farm or ranch operation doing
business in North Dakota as reported
on Federal Schedule F (Form 1040),
to the extent the net income or loss is
apportionable and allocable to North
Dakota.
Line 7, Column B
Ordinary gain or (loss)
Enter the ordinary gain or loss from
the sale or exchange of real and
tangible personal property located in
North Dakota.
Line 8, Column B
Other income
Enter the amount of any other income
having its source in North Dakota that
is not included on lines 1 through 7 of
Part 2.

Instructions
for completing
Schedule BI
(Form 38, page 3)

Schedule BI must be completed
to provide information about each
beneficiary. If the estate or trust has
more than four beneficiaries, complete
and attach additional Schedule BI
forms. If more than one Schedule BI
is needed, complete lines 1 through
4 on only one of them, and include
the combined amount for all of the
schedules on that one schedule.
Note: Only the North Dakota
prescribed Schedule BI will be
accepted. Taxpayer prepared
substitutes are not acceptable.
Grantor trust. For purposes of
completing Schedule BI, “beneficiary”
includes the owner(s) of a grantor
trust.

All Beneficiaries
(Columns 1 through 4)
Columns 1 and 2
Enter the name, mailing address, and
federal identification number of each
beneficiary.

9
Column 3
Identify the entity type of the
beneficiary by entering the applicable
code letter as follows:
	 Entity type	

Code letter

Box 14	 Other information (Only
include income and
deduction items includable
in the calculation of federal
adjusted gross income.)

	Individual...................... I
	 C corporation................. C
	 S corporation................. S
	 Partnership.................... P
	 Estate........................... E
	 Trust............................. T
	 Exempt organization.......O

Grantor trust owner. For a grantor
trust owner (who does not receive a
federal Schedule K-1), enter the sum
of the income and deduction items
reportable for federal income tax
purposes that are attributable to the
owner.

Note: A “C corporation” is a
corporation that files Federal
Form 1120; an “S corporation”
is a corporation that files Federal
Form 1120S; and the “Trust” entity
type only applies to a trust that
files Federal Form 1041 or, in lieu of
filing Federal Form 1041, elects an
alternative reporting method under
the federal income tax regulations.

Nonresident beneficiaries
only (Columns 5 through 7)

If the beneficiary is a limited liability
company (LLC) that is a disregarded
entity for federal income tax purposes
or a nominee on Federal Schedule K-1,
enter the code letter for the type of
entity of the entity’s owner. If the
LLC is treated like a C corporation,
partnership, or S corporation, enter
the code letter for that particular
entity type.
Column 4
Enter the sum of the following
items from the beneficiary’s Federal
Schedule K-1 (Form 1041), Part III:
Box 1	

Interest income

Box 2a	 Ordinary dividends
Box 3	

Net short-term capital gain

Box 4a	 Net long-term capital gain
Box 5	

Other portfolio and
nonbusiness income

Box 6	

Ordinary business income

Box 7	

Net rental real estate income

Box 8	

Other rental income

Box 9	

Directly apportioned
deductions

Box 11	 Final year deductions (Only
include deductions that are
allowed as a deduction from
gross income in calculating
adjusted gross income
for federal income tax
purposes.)

Columns 5 through 7 only apply to
a nonresident beneficiary. For this
purpose, a nonresident beneficiary is
defined as:
	 •	 an individual domiciled outside
North Dakota,
	 •	 a trust legally organized outside
North Dakota, or
	 •	 a partnership, S corporation, or
other passthrough entity with a
commercial domicile outside North
Dakota.
A nonresident beneficiary includes
the grantor of a grantor trust if the
grantor meets the definition of a
nonresident beneficiary.
Column 5
Nonresident beneficiary only
Complete Column 5 for each
nonresident beneficiary. Include
in this column the portion of each
item of income, loss, and deduction
included in the amount in Column 4
that is derived from sources in North
Dakota. For this purpose, this includes
the same kinds of items that would
be reportable to North Dakota had
they been directly received by the
nonresident beneficiary. These items
include:
	 •	 Compensation for services
performed in North Dakota.
	 •	 Net income (loss) from the rental
or lease of real and tangible
personal property located in North
Dakota.
	 •	 Net income (loss) attributable to
royalties and other income from
oil, coal, or other mineral interests
located in North Dakota.

	 •	 Gain or loss from the sale,
exchange, or other disposition of
real and tangible personal property
located in North Dakota.
	 •	 Net income (loss) from a sole
proprietorship doing business in
North Dakota.
	 •	 Net income (loss) from a
partnership, S corporation, or
other trade or business carried on
in North Dakota, to the extent it is
apportioned and allocated to North
Dakota.
	 •	Income from gambling activity
carried on in North Dakota.
	 •	Income, gain, or loss from sources
in North Dakota received from
another estate or trust.
For a nonresident beneficiary,
income from North Dakota sources
generally does not include interest,
dividends, pensions, annuities, or
income and gain from intangible
property. However, if any of these
income items were derived from a
partnership, S corporation, or limited
liability company doing business in
North Dakota, they must be included
in Column 5 to the extent they are
apportioned or allocated to North
Dakota by that entity.
Column 6
Nonresident beneficiary only
If a nonresident beneficiary’s
distributive share of North Dakota
income in Column 5 is $1,000
or more, multiply the amount in
Column 5 by 2.50% (.025) and enter
the result in Column 6. However, the
following exceptions apply:
	 •	 If the nonresident beneficiary
provides the fiduciary with a
completed Form PWA, enter the
amount from line 6 of Form PWA
in Column 6 and fill in the circle
under “Form PWA or Form PWE.”
	 •	 If the nonresident beneficiary
provides the fiduciary with a
completed Form PWE, leave
Column 6 blank and fill in the circle
under “Form PWA or Form PWE.”
	 •	 If the nonresident beneficiary
elected to be included in a
composite filing, leave Column 6
blank and see the instructions to
Column 7.
See “Withholding from nonresident
beneficiary” on page 3 for more
information.

10
Column 7
Nonresident beneficiary only
Note: Leave Column 7 blank if
Column 6 was completed for the
nonresident beneficiary.
Complete Column 7 for each
nonresident beneficiary electing to
be included in a composite filing.
Multiply the amount in Column 5 by
2.50% (.025) and enter the result in
Column 7. If the amount in Column 5
is zero or less, enter zero in Column 7.
See “Composite filing” on page 4 for
more information.

Instructions
for completing
Schedule CR
(Form 38, page 3)

A credit is allowed to a resident estate
or trust for income tax paid to another
state or local jurisdiction on income
that is also taxable by North Dakota.
A “state” means any of the other
49 U.S. states, the District of
Columbia, and a U.S. territory. A “local
jurisdiction” means a city, township,
county, etc., within a state.
Qualifying taxes—The credit
is allowed for income taxes paid
to another state and any local
jurisdictions in that state. This
includes an estate’s or trust’s share
of income tax paid on a composite
return filed by a partnership or other
passthrough entity in which the
estate or trust owns an interest. The
credit is not allowed for income tax
paid to a foreign country or its local
jurisdictions, nor is it allowed for any
tax that is not an income tax (e.g.,
property or sales taxes).
Other state’s return—The credit
is allowed only if the fiduciary files
an income tax return with the other
state or local jurisdiction. The credit
is not allowed for income tax withheld
or estimated income tax paid to the
other state. A copy of the income
tax return filed with the other
state and/or local jurisdiction
must be attached to Form 38.

Payment of income tax to more
than one other state—If the
fiduciary pays income tax to more
than one other state for the tax
year, a separate Schedule CR must
be completed for each state. If the
fiduciary also paid income tax to a
local jurisdiction in another state,
include the income tax paid to the
local jurisdiction on the Schedule CR
filed for the state in which the local
jurisdiction is located. Fill in the total
of the separately calculated credit
amounts on Form 38, page 1, line 2.
Line 2
Enter only those items of income,
gain, loss, and adjustments to income
(included in the fiduciary’s share of
total income on line 1) that have their
source in the other state. Generally
they have their source in the other
state if they are taxable or deductible
under the other state’s tax laws.
Disregard any adjustment to the
fiduciary’s total federal income allowed
or required by the other state’s tax
laws.
Line 6
Enter the amount of the income tax
less any income tax credits (except
withholding and estimated tax) shown
on the other state’s income tax return.
If the fiduciary also paid income tax to
a local jurisdiction in the other state,
include the income tax shown on the
local jurisdiction’s income tax return
(or, if applicable, the other state’s
return).

Specific line
instructions for
page 1 of Form 38,
lines 1-17
Complete the Tax Computation
Schedule and Schedule BI before
completing lines 1 through 17 on
page 1 of Form 38.
Line 2
Credit for income tax paid to
another state or local jurisdiction
A fiduciary for a resident estate or
trust may be eligible for a credit
if the fiduciary pays income tax to
another U.S. state, the District of
Columbia, a U.S. territory, or any of
their local jurisdictions, on income

that is also taxed to the fiduciary in
North Dakota. See the instructions to
Schedule CR on this page. Attach a
copy of the income tax return filed
with the other state and/or local
jurisdiction.
Line 3
Other credits
For other credits that may apply, see
Schedule 38-TC and its instructions.
Enter on this line the total credits
retained by the estate or trust from
Schedule 38-TC, line 22a. Do not
include on this line any credit(s)
allocated to the beneficiaries. Attach
Schedule 38-TC.
Line 8
Income tax withholding
Enter the North Dakota income
tax withholding shown on a 2023
Form W-2, Form 1099, or North
Dakota Schedule K-1. Also enter North
Dakota income tax withholding shown
on a 2022 North Dakota Schedule K-1
if the tax year of the partnership,
S corporation, estate, or trust shown
on the Schedule K-1 is a fiscal year
ending in your 2023 tax year. Be sure
the state identified on the Form W-2
or Form 1099 is North Dakota. Do
not enter on this line North Dakota
extraction or production taxes
withheld from mineral interest income,
such as an oil or gas royalty, because
they are not income taxes. Attach a
copy of the Form W-2, Form 1099,
or North Dakota Schedule K-1.
Line 9
Estimated tax payment
Enter North Dakota estimated income
tax paid on 2022 Forms 38-ES and
Form 38-EXT. Also enter the amount
of an overpayment from the 2022
Form 38 that was applied as an
estimated tax payment for the 2023
tax year.
Line 12
Application of overpayment to
2024
If there is an overpayment on line 11,
part or all of it may be applied as an
estimated payment toward the 2024
tax liability. Enter on this line the
amount to be applied. The amount
applied may not be changed after the
return is filed. If this is an amended
return, do not make an entry on this
line.

11
Line 14
Tax due
A tax due must be paid in full with
the return when it is filed. See the
instructions to line 16 for payment
options. A late payment of tax may
be subject to penalty and interest
charges—see “Penalty and interest” on
page 3.
Line 15
Penalty and interest
The Office of State Tax Commissioner
will notify the fiduciary of any penalty
and interest owed for late filing or late
payment, or interest owed on tax due
during an extension period. However,
if desired, the fiduciary may calculate
these amounts and enter them on
this line, and submit payment for
them with the return. See “Penalty
and interest” on page 3 for how to
calculate these amounts.
Line 16
Balance due
The balance due must be paid in full
with the return. The payment may
be made electronically in one of the
following ways.
	•	 Online—A payment may be made
online with an electronic check or a
debit or credit card. The electronic
check option is free. North Dakota
contracts with a national payment
service to provide the debit or
credit card option. There is a fee
for the debit or credit option, none
of which goes to the State of North
Dakota. To pay online, go to
		 www.tax.nd.gov/payment.
	•	 Electronic funds transfer—A
payment may be made by means
of an Automated Clearing House
(ACH) credit transaction that
the taxpayer initiates through
its banking institution. For more
information, go to our website at
www.tax.nd.gov.
If paying with a paper check or money
order, complete a 2023 Form 38‑PV
payment voucher and enclose it with
the payment. Make the check or
money order payable to “ND State
Tax Commissioner,” and write the last
four digits of the federal employer
identification number and “2023
Form 38” on the check or money
order. A check must be drawn on a
U.S. or Canadian bank, be in U.S.
dollars, and use a standard 9-digit

routing number. A check drawn on a
foreign bank (except one in Canada)
cannot be accepted.
Line 17
Interest on underpaid estimated
tax
If the fiduciary for an estate or trust
was required to pay estimated North
Dakota income tax for 2023, but the
fiduciary did not pay enough or paid
it late, interest is charged on the
underpayment or late payment. To
determine if interest is owed, obtain
and complete Schedule 38‑UT.

Instructions
for completing
Schedule K-1
North Dakota Schedule K-1 (Form 38)
must be used to provide beneficiaries
with information they will need to
complete a North Dakota income tax
return. The information to be included
in the schedule will depend on the
type of beneficiary.
For purposes of completing
Schedule K-1 (Form 38), a beneficiary
includes an owner of a grantor trust.
North Dakota Schedule K-1 (Form 38)
must be completed and given to:
	 •	 each beneficiary to whom the
fiduciary distributes a share of a
North Dakota adjustment or tax
credit (which is reportable in Part 3
of North Dakota Schedule K-1), or
	 •	 each nonresident individual,
estate, or trust beneficiary for
which the fiduciary is required to
report an amount on Schedule BI,
Column 5.
A North Dakota Schedule K-1
does not have to be provided to a
partnership, corporation, or North
Dakota resident individual, estate, or
trust beneficiary if there are no North
Dakota adjustments or tax credits
distributable to the beneficiary.
In addition to the North Dakota
Schedule K‑1, the fiduciary must
provide the beneficiary with a copy of
the Beneficiary’s Instructions to North
Dakota Schedule K-1 (Form 38).
A copy of all North Dakota
Schedule K-1 forms must be enclosed
with Form 38 along with any required
supplemental statements.

Amended schedule. If a fiduciary
files an amended Form 38, the
fiduciary must issue amended North
Dakota Schedule K-1 forms to its
beneficiaries. Fill in the “Amended”
circle at the top of the North Dakota
Schedule K-1.
Final schedule. Fill in the “Final”
circle at the top of the North Dakota
Schedule K-1 if it is the last one that
the fiduciary is required to issue to a
beneficiary.

Part 2
Beneficiary information
Item F
Enter the same code letter shown in
Column 3 of Schedule BI of Form 38
for the beneficiary.
Item G
If the beneficiary is an individual,
estate, or trust, fill in the applicable
circle to indicate the legal residency
status of the beneficiary for North
Dakota income tax purposes. If an
individual beneficiary changed his or
her legal residency to or from North
Dakota during the tax year, check
the part-year resident status. In the
case of an estate or trust beneficiary,
only the full-year resident or full-year
nonresident status will apply.
Item H
For a nonresident beneficiary, fill
in the applicable circle to indicate
whether the beneficiary elected to be
included in a composite filing by the

fiduciary.

Part 3
All beneficiaries—
North Dakota adjustments
and tax credits

Complete this part for a beneficiary
only if the income, deduction, or tax
credit is allocated to the beneficiary.
Line 1
Federally-exempt income from
non-North Dakota bonds and
securities
If the beneficiary is an individual,
estate, or trust, do not make an entry
on this line.

12
For all other beneficiaries, enter
the beneficiary’s share of interest
and dividend income from bonds
and securities that is exempt from
federal income tax. Do not include
income from bonds and securities of
North Dakota and any of its political
subdivisions.
Line 2
State and local income taxes
If the beneficiary is an individual,
estate, or trust, do not make an entry
on this line.
For all other beneficiaries, enter the
portion of any state or local income
taxes deducted in calculating ordinary
income (loss) that was allocated to
the beneficiary.
Line 3
Interest from U.S. obligations
Enter the portion of any interest
from U.S. obligations allocated to the
beneficiary. Include interest income
from other securities if the interest
is specifically exempted from state
income tax by federal statute. Also
include the portion of dividend income
from a mutual fund attributable to the
fund’s investment in the same kinds of
securities.
Line 4
Renaissance zone income
exemption
If the estate or trust qualified for
the renaissance zone business or
investment income exemption (see
instructions to the Tax Computation
Schedule, Part 1, line 4d), enter the
portion of the exemption amount
allocated to the beneficiary. This
applies only if the income qualifying
for the exemption is allocated to the
beneficiary.
Line 5
New or expanding business
income exemption
If the estate or trust qualified for the
new or expanding business income
exemption (see instructions to the
Tax Computation Schedule, Part 1,
line 4d), enter on this line the portion
of the exemption amount allocated to
the beneficiary. This applies only if the
income qualifying for the exemption is
allocated to the beneficiary.

Line 6
College SAVE deduction
Enter the portion of a College SAVE
deduction allocated to the beneficiary.
Lines 7 through 23
Tax credits
If the estate or trust qualified for a
North Dakota income tax credit (see
instructions to Form 38, page 1,
line 3), and part or all of the credit
was allocated to its beneficiaries,
enter the beneficiary’s share of the
credit on the applicable line.
Line 14a. Enter on this line the
beneficiary’s share of an endowment
fund tax credit from Schedule 38-TC,
line 12a.
Line 14b. Enter on this line the
beneficiary’s share of a contribution
amount from Schedule 38-TC,
line 12b.
Line 14c. Enter on this line the
beneficiary’s share of an endowment
fund tax credit (ND Schedule K-1)
from Schedule 38-TC, line 12c.
Line 14d. Enter on this line the
beneficiary’s share of a contribution
amount (ND Schedule K-1) from
Schedule 38-TC, line 12d.

Part 4
Nonresident individual,
estate, or trust beneficiary
only—North Dakota income
(loss)
Complete Part 4 for a nonresident
individual, estate, or trust beneficiary.
Enter on the corresponding line of
Part 4, lines 24 through 34, each
item of North Dakota income, gain,
loss, deduction, etc., included i