Live in Montana, Work Remotely for a Delaware Employer: Who Taxes You?
Answer
Delaware taxes you even though you never work there. Its convenience-of-the-employer rule sources your remote workdays back to the employer's state unless the job genuinely cannot be done in Delaware. You file a Delaware nonresident return and a Montana resident return, claiming the credit at home.
Last verified
The convenience rule asks a question that no other sourcing rule asks: not where you worked, but why you worked there. If the answer is your own preference, Delaware treats the day as a Delaware workday no matter where the desk actually was.
Delaware sources a nonresident employee's remote workdays to Delaware when the employee works outside the state for their own convenience rather than because the employer requires it. Days worked outside Delaware at the employer's necessity are excluded.
The rule is not an administrative preference. Delaware applies it under 30 Del. C. §1124; Delaware Division of Revenue Technical Information Memorandum 2011-1, and the burden of showing that remote work is an employer necessity rather than an employee convenience falls on you and your employer, not on Delaware Division of Revenue.
A Montana resident taxed by another state on the same income claims the credit for taxes paid to other states on Form 2 (credit for income tax paid to another state). The credit is capped at the Montana tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Delaware also has a layer below the state one, and it is the layer that survives every agreement: Wilmington levies a city earned income tax on wages earned inside the city, collected by the city rather than the Division of Revenue.
What you file
- 1Nonresident return · DelawareForm PIT-NON
File the Delaware nonresident return FIRST — you need the Delaware tax figure before you can complete Montana.
- 2Resident return · MontanaForm 2 (credit for income tax paid to another state)
File a Montana resident return reporting all income, then claim the credit for tax paid to Delaware. The credit is capped at what Montana would have charged on that same income, so if Delaware taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Montana | Delaware | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 1 (Form MW-4) | None |
| Convenience rule | No | Yes — general rule |
| Nonresident return | Form 2 with the nonresident/part-year schedule | Form PIT-NON |
| Credit for other-state tax | Form 2 (credit for income tax paid to another state) | Schedule I (Form PIT-RES) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | Montana Department of Revenue | Delaware Division of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Delaware and working in Montana gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Montana → DelawareBoth states — credit offsets the double tax
- 1099 contractor: Montana → DelawareHome state, plus the client state if you work there
- Moved mid-year: Montana → DelawareTwo part-year returns
Other Montana pairs
Questions people actually ask
I live in Montana and work remotely for a Delaware employer. Which state do I pay?
Delaware taxes you even though you never work there. Its convenience-of-the-employer rule sources your remote workdays back to the employer's state unless the job genuinely cannot be done in Delaware. You file a Delaware nonresident return and a Montana resident return, claiming the credit at home.
Which state should my employer be withholding for?
Both, potentially — and that is the problem. Delaware expects withholding because it claims the income, while Montana taxes you as a resident. Many employers withhold only for Delaware, which leaves a Montana balance due at filing unless you make estimated payments during the year.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Montana gives residents a credit for tax paid to Delaware on the same income, claimed on Form 2 (credit for income tax paid to another state). The credit is capped at the Montana tax on that income, so if Delaware taxes it more heavily the excess is not refunded by either state.
How current is this?
The Montana and Delaware rules on this page were last checked against Montana Department of Revenue and Delaware Division of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Montana Department of Revenue — individual income taxaccessed 2026-08-07
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07