Surface water and groundwater are intimately connected by a two‐way flux between the stream and underlying aquifers. The National Water Model (NWM) currently only considers a one‐way flux, where groundwater can enter a stream but cannot return to the aquifer. The Northern High Plains Aquifer, USA is used as a case study to investigate the consequences of omitting two‐way stream–aquifer fluxes on streamflow prediction capabilities of the NWM during hydrologic extremes. Instead of traditional field techniques to identify stream–aquifer fluxes, this study presents an integrated approach to classify likely stream regimes using three identification methods: United States Geological Survey (USGS) gage data, simulated stream–aquifer fluxes from an existing USGS Groundwater Availability Model, and the normalized difference vegetation index from remote sensing. For flood events, the modeled flood response for losing streams is characterized by statistically significant earlier peak discharges and an overestimate of the observed flood volume when compared to gaining streams. For drought events, our study found no statistical difference between losing and gaining streams, however, modeled streamflow from the NWM overestimated the observed USGS hydrograph. The systematic overestimate of streamflow by the NWM could be, in part, due to the lack of a losing stream mechanism which was on average 0.1% streamflow loss per streamwise km along the river.