North Carolina State Tax Help
- North Carolina did not conform to the extension of the federal provision that allowed an exclusion from gross income for the discharge of qualified principal residence indebtedness under section 108 of the Code. If you made this election, an addition to federal adjusted gross income is required for the amount excluded from gross income on your federal return.
- North Carolina did not conform to the extension of the federal provision which allowed an exclusion from gross income for a qualified charitable distribution from an individual retirement plan by a person who has attained age 70 1/2 under section 408(d)(8) of the Code. Therefore, an addition to federal adjusted gross income is required for the amount excluded from gross income on your federal return.
- North Carolina doesn't allow the domestic production activities deduction, so if you claimed it on Line 35 of your federal Form 1040, you'll need to add the amount back here.
- If you elected to exclude a lump-sum distribution from a retirement plan from your regular federal income tax computation and computed the tax separately, the amount of the lump-sum distribution must be added to taxable income.
- If you carry over a net operating loss from another year to the 2014 return, an addition is required for the amount of net operating loss carried to the 2014 tax year that is not absorbed and will be carried forward to subsequent years.
- If you are a shareholder in an S Corporation that paid built-in gains tax for federal income tax purposes, you must add to taxable income your share of the built-in gains tax that the S Corporation paid.
- You must add to taxable income any amount that was contributed to North Carolina's National College Savings Program (NC 529 Plan) and deducted in a prior year that was later withdrawn and used for purposes other than the qualified higher education expenses of the designated beneficiary unless the withdrawal was due to the death or permanent disability of the designated beneficiary.
- If you qualified and elected to report your child's unearned income on your federal return, you included only the child's unearned income in excess of $1,900 in your taxable income. The difference in the child's standard deduction of $500 and the amount of his income not included in your federal taxable income must be added to your income in figuring your North Carolina taxable income.
Medical insurance premiums that you pay for general health care, hospitalization, or disability insurance do NOT qualify as premiums paid for a long-term care insurance contract.
No credit is allowed for payments that are deducted from, or not included in, your federal gross income for the taxable year. For example, payments that are not included in federal income are premiums paid through an employer-sponsored plan in which the payments are excluded from taxable wages (pre-taxed dollars). If you claimed a deduction for medical expenses on federal Schedule A, Line 4, or if you claimed a deduction for self-employed health insurance premiums on federal Form 1040, Line 29, you are not entitled to claim this credit. However, you may claim this credit for any premiums paid for long-term care insurance that are not deductible on your federal return because of the age limitations of the Internal Revenue Code.
You may not claim a deduction as both a volunteer firefighter and a volunteer rescue squad worker. In the case of a married couple filing a joint return, each spouse may qualify separately for the deduction, with the same requirements applicable for your spouse to take the deduction.
You must have already filed (or at least completed) your other state return to have this amount. It's simply the amount of tax you were required to pay to the other state as shown on that state's return on income that's also being taxed by North Carolina.
This exclusion also applies to retirement benefits received from the North Carolina's 401(k) and 457 plans if the retiree had contributed or contracted to contribute to the plan prior to August 12, 1989. This exclusion does not apply to retirement benefits paid to former teachers and state employees of other states and their political subdivisions.
If you're entitled to exclude your retirement benefits under the Bailey Settlement, enter the amount of your excludable retirement benefits that were included in your federal taxable income.
Distributions from most types of retirement plans may be rolled over into another retirement plan or into an IRA. Because rollover distributions lose their character upon rollover, all distributions from a qualifying Bailey retirement account in which the employee / retiree was vested as of August 12, 1989, are exempt from state income tax regardless of the source of the funds contained in the account. Conversely, qualifying tax-exempt Bailey benefits rolled over into another retirement plan lose their character and would not be exempt upon distribution from the other plan unless the plan is a qualifying Bailey retirement account in which the employee was vested as of August 12, 1989.
Rollovers to IRAs will always result in a loss of tax-exempt status since IRAs do not qualify under the Bailey settlement.
Out-of-state retailers that are not "engaged in business" in North Carolina are not required to collect North Carolina's tax. However, some out-of-state retailers voluntarily collect North Carolina tax as a convenience to their customers. Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the internet, and other retailers.
Essentially if you bought something online and paid sales tax for it, then you don't have to pay use tax. But if you bought something online and paid no sales tax, then you used it while in North Carolina, you need to pay use tax on the item at the sales tax rate.
- Computers and other electronic equipment
- Prewritten software including electronic downloads of software
- Books, books on tape, and digital books delivered or accessed electronically
- Audio compact discs, tapes, and records
- Digital music delivered or accessed electronically
- Magazines and newspapers including those delivered or accessed electronically
- Clothing, appliances, furniture, home furnishings, sporting goods, and jewelry
- Movies delivered or accessed electronically
- Sales or recharges of prepaid telephone calling cards and phones
The credit may not be claimed for contributions for which credits for certain real property donations, gleaned crops, or recycling oyster shells are claimed. This credit may not exceed the tax liability for the tax year, reduced by other tax credits.
For January 1, 2014 through March 31, 2014, the rate was 7.5% in Durham and Orange Counties, 7.25% in Mecklenburg County, 7% in Alexander, Buncombe, Cabarrus, Catawba, Cumberland, Duplin, Edgecombe, Greene, Halifax, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, and Wilkes Counties, and 6.75% in all other counties.
For April 1, 2014 through September 30, 2014, the rate was 7.5% in Durham and Orange Counties, 7.25% in Mecklenburg County, 7% in Alexander, Buncombe, Cabarrus, Catawba, Cumberland, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 6.75% in all other counties.
For October 1, 2014 through December 31, 2014, the rate was 7.5% in Durham and Orange Counties, 7.25% in Mecklenburg County, 7% in Alexander, Buncombe, Cabarrus, Catawba, Cumberland, Davidson, Duplin, Edgecombe, Greene, Halifax, Harnett, Haywood, Hertford, Lee, Martin, Montgomery, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 6.75% in all other counties.
If you paid another state's sales or use tax that was legally due on out-of-state purchases, that amount may be credited against the North Carolina use tax due. Credit is allowed for another state's sales tax paid against the 4.75% North Carolina sales tax due. Separate credit is allowed for another state's local tax paid against the North Carolina local and transit sales and use tax due. You may not claim a credit for sales tax or value-added tax paid to another country.
- Enter any estimated tax payments you made for 2014.
- Enter any amounts credited from your 2013 return.
- Enter any amount prepaid with extension requests.
Do NOT enter any amount of your 2014 North Carolina Income Tax withheld by your employer(s) as shown on any wage or tax statements.