North Carolina Form D-400 - Individual Income Tax Return Instructions

Before You Begin  

The forms in this booklet are designed for electronic scanning that permits faster processing with fewer errors. To avoid unnecessary delays caused by manual processing, please follow the guidelines below:

Important: You must enter your social security number(s) in the appropriate boxes on the forms. Otherwise, we may be unable to process your return.

  • Be sure to enter your complete address on your return, including your apartment number, if applicable.
  • Make sure you have received all of your W-2s, 1099s, and other tax documents that you need to prepare your return.
  • Do not submit photocopies of the return. Submit original forms only. Do not use any prior year forms.
  • Use black or blue ink only. Do not use red ink or pencil.
  • Write your numbers in the boxes.
  • Do not use dollar signs ($), commas, decimal points, or other punctuation marks.
  • Do not use brackets to indicate negative numbers. Negative numbers are indicated by filling in the circle next to the number.
  • Do not enter zeros or draw lines in boxes where no data is required.
  • Round off to the nearest whole dollar. Drop amounts under 50 cents and increase amounts from 50 cents to 99 cents to the next whole dollar.
  • Use capital letters.
  • Print letters and numbers.
  • Fill in applicable circles completely.

Instructions for Filing Form D-400  

The information contained in this booklet is to be used as a guide in the preparation of a North Carolina individual income tax return and is not intended to cover all provisions of the law.

Filing Requirements  

The minimum gross income filing requirements under North Carolina law are different from the filing requirements under the Internal Revenue Code because North Carolina law does not adjust the standard deduction and personal exemption for inflation as required by the Internal Revenue Code.

Who is required to file a North Carolina individual income tax return?  

  • Every resident of North Carolina whose income for the taxable year exceeds the amount for his filing status shown in Chart A or B.
  • Every part-year resident who received income while a resident of North Carolina or who received income while a nonresident attributable to the ownership of any interest in real or tangible personal property in North Carolina or derived from a business, trade, profession or occupation carried on in North Carolina, or is derived from gambling activities in North Carolina and whose total income for the taxable year exceeds the amount for his filing status shown in Chart A or B.
  • Every nonresident who received income for the taxable year from North Carolina sources that was attributable to the ownership of any interest in real or tangible personal property in North Carolina or derived from a business, trade, profession, or occupation carried on in North Carolina, or is derived from gambling activities in North Carolina and whose total income from all sources both inside and outside of North Carolina equals or exceeds the amount for his filing status shown in Chart A or B.
  • If you are eligible to claim the State Earned Income Tax Credit or if you had North Carolina income tax withheld during the year but your income is below the amount required for filing, as shown in Chart A or B, you must still file a return to receive a refund.

If you were not required to file a federal income tax return but your gross income from all sources both inside and outside of North Carolina equals or exceeds the amount for your filing status shown in Chart A or B, you must complete a federal return and attach it to your North Carolina income tax return to show how your negative federal taxable income was determined.

You and your spouse must file a joint North Carolina return if you file a joint federal income tax return, and both of you were residents of North Carolina or both of you had North Carolina taxable income.

If you file a joint federal return and your spouse is a nonresident of North Carolina and had no North Carolina taxable income, you may file a joint State return. Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return. However, you still have the option of filing your State return as married filing separately. If you choose to file a separate North Carolina return, you must complete either a federal return as married filing separately reporting only your income, deductions, and exemptions, or a schedule showing the computation of your separate federal taxable income and attach it to your North Carolina return. You must also include a copy of your joint federal return unless your federal return reflects a North Carolina address.

When filing a joint return, include the name and social security number of each spouse on the return. Both spouses are jointly and severally liable for the tax due on a joint return unless one spouse has been relieved of any liability for federal income tax purposes as a result of the “innocent spouse” rules provided under Internal Revenue Code Section 6015.

Chart A - For Most Taxpayers (See Chart B for children and other dependents)  

  Filing Status  A Return is Required if Federal Gross Income Exceeds  
(1) Single $ 5,500
  Single (age 65 or over) $ 6,250
(2) Married - Filing Joint Return $11,000
  Married - Filing Joint Return (one age 65 or over) $11,600
  Married - Filing Joint Return (both age 65 or over) $12,200
(3) Married - Filing Separate Return $ 2,500
(4) Head of Household $ 6,900
  Head of Household (age 65 or over) $ 7,650
(5) Qualifying Widow(er) with dependent child. $ 8,500
  Qualifying Widow(er) (age 65 or over). $ 9,100

Filing Requirements for Children and Other Dependents  

If another person (such as your parent) can claim you as a dependent on their federal income tax return, use Chart B on Page 5 to see if you must file a North Carolina income tax return.

Chart B – For Children and Other Dependents  

Single dependents. Were you either age 65 or older or blind?

No. You must file a return if any of the following apply to you.

  • Unearned income was over $500
  • Earned income was over $3,000
  • Gross income was more than the larger of
    • $500, or
    • Earned income (up to $2,750) plus $250
     

Yes. You must file a return if any of the following apply to you.

  • Unearned income was over $1,250 ($2,000 if 65 or older and blind)
  • Earned income was over $3,750 ($4,500 if 65 or older and blind)
  • Gross income was more than
  • The larger of-

    • $500, or
    • Earned income (up to $2,750) plus $250

    Plus This amount: $750 ($1,500 if 65 or older and blind)

Married dependents. Were you either age 65 or older or blind?

No. You must file a return if any of the following apply to you.

  • Gross income was at least $10 and your spouse files a separate return and itemizes deductions.
  • Unearned income was over $500
  • Earned income was over $3,000
  • Gross income was more than the larger of
    • $500, or
    • Earned income (up to $2,750) plus $250
     

Yes. You must file a return if any of the following apply.

  • Unearned income was over $1,100 ($1,700 if 65 or older and blind)
  • Earned income was over $3,600 ($4,200 if 65 or older and blind)
  • Gross income was at least $10 and your spouse files a separate return and itemizes deductions
  • Gross income was more than

    The larger of-

    • $500, or
    • Earned income (up to $2,750) plus $250

    Plus This amount: $750 ($1,200 if 65 or older and blind)

     

The Income Tax Return  

All individuals (including part-year residents and nonresidents) must file their income tax return on Form D-400. If applicable, be sure to read the section entitled Information for Part- Year Residents and Nonresidents.

When to File  

If you file your return on a calendar year basis, it is due on or before April 15 of the following year. A fiscal year return is due on the 15th day of the 4th month following the end of the taxable year. When the due date falls on a Saturday, Sunday, or holiday, the return is due on or before the next business day. A fiscal year return should be filed on a tax form for the year in which the fiscal year begins (For example: A 2011 tax form should be used for a fiscal year beginning in 2011).

Nonresident Aliens: Nonresident aliens are required to file returns at the same time they are required to file their federal returns.

Extensions  

If you cannot file your return by the due date, you may apply for an automatic 6-month extension of time to file the return. To receive the extension, you must file Form D-410, Application for Extension for Filing Individual Income Tax Return, by the original due date of the return. You can file Form D-410 online at www.dornc.com. Click on Electronic Services. You should apply for an extension even if you believe you will be due a refund but cannot file by the due date.

You are not required to send a payment of the tax you estimate as due to receive the extension; however, it will benefit you to pay as much as you can with the extension request. An extension of time for filing the return does not extend the time for paying the tax. If you do not pay the amount due by the original due date, you will owe a 10 percent late-payment penalty and interest. The late-payment penalty will not be due plus $250 if you pay at least 90 percent of your tax liability through withholding, estimated tax payments, or with Form D-410 by the original due date.

A late-filing penalty may be assessed if your return is filed after the due date (including extensions). The penalty is percent per month ($5.00 minimum; 25 percent maximum) on the remaining tax due.

If you do not file the application for extension by the original due date of the return, you are subject to both a late-filing penalty and a late-payment penalty.

Out of the Country: If you were a U.S. citizen or resident and were out of the country on the regular due date of your return (April 15), you are granted an automatic 4-month extension for filing your North Carolina return if you fill in the “Out of the Country” circle on Page 1 of your return. ”Out of the Country” means you live outside the United States and Puerto Rico and your main place of work is outside the United States and Puerto Rico, or you are in military service outside the United States and Puerto Rico. The time for payment of the tax is also extended; however, interest is due on any unpaid tax from the original due date of the return until the tax is paid. If you are unable to file the return within the automatic 4-month extension period, an additional 2-month extension may be obtained by following the provisions in the first paragraph of this section; however, Form D-410 must be filed by the automatic 4-month extended date of August 15.

General Refund Information  

If you owe another State or local agency, the amount you owe may be deducted from your refund. If you have an outstanding federal income tax liability, the Internal Revenue Service may claim your North Carolina refund.

Need to Call Us About Your Refund? 

You can check the status of your refund at www.dornc.com. The automated refund inquiry line 1-877-252-4052 (toll-free) will also give you the status of your current refund. You can also obtain amended return refund information. Service is available 24 hours a day seven days a week. You will need the first social security number and the amount of refund shown on your return when you call.

How to Pay Your Tax  

If you owe additional tax, you can pay online by bank draft or credit or debit card using Visa or MasterCard. To pay online, go to the Department’s website at www.dornc.com and click on Electronic Services.

You can also pay by check or money order. Do not send cash. The Department will not accept a check, money order, or cashier’s check unless it is drawn on a U.S. (domestic) bank and the funds are payable in U.S. dollars. Make your check or money order payable to the N.C. Department of Revenue for the full amount due. Write “2011 D-400” and your name, address, and social security number on your payment. If you are filing a joint return, write both social security numbers on your payment in the order that they appear on the return. If you do not pay your tax online, you may go to our website and generate a personalized Form D-400V. Enclose the voucher with your return and payment, and mail to the address listed on page 4 of Form D-400. If you use tax software to prepare your return, be sure to include with your return and payment the Form D-400V generated by the software package.

Estimated Income Tax  

You are required to pay estimated income tax if the tax shown due on your return, reduced by your North Carolina tax withheld and allowable tax credits, is $1,000 or more regardless of the amount of income you have that is not subject to withholding. Each payment of estimated tax must be accompanied by Form NC-40, North Carolina Individual Estimated Income Tax. If you are filing estimated tax for the first time, contact any of our offices so that appropriate forms can be mailed to you. You can also pay your estimated tax online at www.dornc.com. Click on Electronic Services.

You should prepare your estimated tax carefully, both to avoid having to pay a large amount of tax when you file your return, and to avoid owing interest for underpayment of estimated income tax. Payment of estimated tax does not relieve you of your responsibility for filing a return if one is due.

Statute of Limitations  

Generally, to receive a refund, your return must be filed within three years from the date the original return was due or within two years after the tax was paid, whichever date is later. However, special rules extending the time for filing refund claims beyond the normal three-year statute of limitations apply to overpayments attributable to (1) worthless debts or securities, (2) capital loss carrybacks, or ( ) net operating loss carrybacks. For overpayments resulting from worthless debts or securities, the period of time for demanding an overpayment is seven years; for overpayments resulting from capital loss or net operating loss carrybacks, the period of time is three years from the due date of the return for the year in which the loss was incurred rather than three years from the due date of the return for the year to which the loss is carried back.

Amended Returns  

To amend returns for tax years 2008 and prior, use Form D-400X, Amended North Carolina Individual Income Tax Return. To amend returns for tax years 2009 and after, you must complete a corrected Form D-400, Individual Income Tax Return with the amended indicator filled in for the tax year you are amending. You must also complete Form D-400X-WS, Worksheet for Amending Individual Income Tax Return, and attach it to the front of the corrected D-400, Individual Income Tax Return. Do not send a copy of the original return. Amended returns on which you owe additional tax are required to be filed and the tax paid within three years after the date on which the original return was filed or within three years from the date required by law for filing the return, whichever is later.

If changes are made to your federal return by the Internal Revenue Service, you must report the changes to the State by filing an amended return within six months from the date you receive the report from the Internal Revenue Service. If you do not amend your State return to reflect the federal changes and the Department of Revenue receives the report from the Internal Revenue Service, an assessment may be made by the Department within three years from the date of receipt of the report, and you forfeit your right to any refund which might have been due by reason of the changes.

Penalties and Interest  

Failure to file penalty. Returns filed after the due date are subject to a penalty of percent of the tax for each month, or part of a month, the return is late (minimum $5.00; maximum 25 percent of the additional tax). If you file your return late, figure the amount of the penalty and add it to the tax due.

Failure to pay penalty. Returns filed after April 15 without a valid extension are subject to a late-payment penalty of 10 percent of the unpaid tax. If you have an extension of time for filing your return, the 10 percent penalty will apply on the remaining balance due if the tax paid by the original due date of the return is less than 90 percent of the total amount of tax due. If the 90 percent rule is met, any remaining balance due, including interest, must be paid with the return before the expiration of any extension period to avoid the late-payment penalty. The minimum penalty is $5.00. If your payment is late, figure the amount of the penalty and add it to the tax due.

The late-payment penalty will not be assessed if the amount shown due on an amended return is paid with the return. Proposed assessments of additional tax due are subject to the 10 percent late-payment penalty if payment of the tax is not received within 45 days of the assessment.

Other penalties. There are other penalties for negligence, filing a frivolous return, and fraud. Criminal penalties also apply for fraud with intent to evade or defeat the tax and for willful failure to file a return, supply information, or pay the tax.

Collection Assistance Fee. Any tax, penalty, and interest not paid within 90 days after the debt becomes collectible is subject to a 20 percent collection assistance fee.

Interest. Interest is due on tax not paid by April 15, even though you may have an extension of time for filing your return. You may obtain the current interest rate from any of the Department’s offices. If you pay your tax late, figure the amount of interest due and include it with the tax and any applicable penalty.

Interest on the underpayment of estimated tax. Compute interest on any underpayment of estimated income tax on Form D-422, Underpayment of Estimated Tax by Individuals. Interest is not due if each payment equals 25 percent of the lesser of 90 percent (66 2/3 percent for farmers and fishermen) of the tax due on your current year’s return or 100 percent of the tax due on your previous year’s return. If interest is applicable, add the interest to the tax due, and include the full payment with your return. If a refund is due, subtract the amount of the interest from the refund. If additional tax is due because of the new surtax, there is no interest on the underpayment of estimated tax on that portion of the tax.

N.C. Public Campaign Fund  

You may designate $3.00 of the taxes you pay to this Fund. (Married couples filing a joint return may each make a spousal designation if their income tax liability is $6.00 or more.) The N.C. Public Campaign Fund provides an alternative source of campaign money to qualified candidates who accept strict campaign spending and fund-raising limits. The Fund also helps finance a Voter Guide with educational materials about voter registration, the role of the appellate courts, and the candidates seeking election as appellate judges in North Carolina. Three dollars from the taxes you pay will go to the Fund if you mark an agreement. Regardless of what choice you make, your tax will not increase, nor will any refund be reduced.

N.C. Political Parties Financing Fund  

You may designate $3.00 of the taxes you pay for use by the Democratic, Republican, or Libertarian Party. (Married couples filing a joint return may make a spousal designation only if their income tax liability is $6.00 or more.) If you do not wish to specify a party but wish to designate $3.00, fill in the “Unspecified” circle and the amount you designate will be distributed on a prorata basis according to party voter registration. A political party is defined under election laws of this State as either: Any group of voters which, received at least 2 percent of the entire vote cast in the State for Governor or for president; or any group of voters which filed with the State Board of Elections petitions to form a new party equal to 2 percent of the total number of voters who voted in the most recent general election for Governor.

United States Armed Forces Pay  

If you are serving in the United States Armed Forces and your legal residence is North Carolina, you are liable for North Carolina income tax and North Carolina income tax should be withheld from your pay regardless of where you may be stationed. If you are a legal resident of another state stationed in North Carolina on military orders, you are not liable for North Carolina income tax on your military pay, but income from other employment, a business, or tangible property in North Carolina is subject to North Carolina income tax.

Military Spouses  

The Military Spouses Residency Relief Act of 2009 prohibits North Carolina from taxing the income earned for services performed in North Carolinabyaspouseofaservicememberstationed in North Carolina if (1) the servicemember is present in North Carolina solely in compliance with military orders; (2) the spouse is in North Carolina solely to be with the servicemember; and ( ) the spouse is domiciled in the same state as the servicemember. If all three of the conditions are met, an employer is not required to withhold North Carolina tax from wages paid to such military spouses. A spouse who does not meet these requirements should see “Information for Part-Year Residents and Nonresidents” below regarding the filing of their return. The Act does not apply to military spouses who are domiciled in North Carolina. Withholding from wages paid to military spouses domiciled in North Carolina is still required.

Death of the Taxpayer  

If you are the spouse or personal representative of an individual who died prior to filing a return, you may be required to file a return on the decedent’s behalf. If so, enter the date of death in the applicable box on Page 1 of Form D-400 to indicate the return is being filed for a deceased individual.

An Income Tax Return for Estates and Trusts, Form D-407, must be filed for an estate for the period from the date of death to the end of the taxable year if the estate had taxable income from North Carolina sources or income which was for the benefit of a North Carolina resident, and the estate is required to file a federal return for estates and trusts.

If you are filing a return for an unmarried individual who died during the year, enter the date of death in the applicable box and enter the name of the deceased and the address of the executor, administrator, or court-appointed representative. The executor, administrator, or court-appointed representative should fill in the circle above the deceased taxpayer information on Page 1 and sign the return. When filing a separate return for a decedent who was married at the time of death, enter the date of death, the name of the deceased, and the address of the surviving spouse. The surviving spouse should sign the return. In either case, be sure to enter the date of death in the space provided.

If you are a court-appointed representative, attach to the return a copy of the certificate that shows your appointment. A refund due on a return filed for a deceased taxpayer by a person other than a surviving spouse, executor, administrator or a court-appointed representative will be mailed to the Clerk of Superior Court of the county in which the taxpayer resided.

Information for Part-Year Residents and Nonresidents  

If you move your legal residence into or out of North Carolina during the tax year, you are a resident of two different states during two different periods of the tax year.

You are a nonresident if you maintain your legal residence in another state or country even though you may temporarily reside in North Carolina. If you reside in North Carolina for more than 183 days of a tax year, you are presumed to be a resident for income tax purposes in the absence of factual proof of residence in another state. However, your absence from North Carolina for more than 183 days raises no presumption that you are not a resident.

If you file a joint federal return and your spouse is a nonresident of North Carolina and had no North Carolina taxable income, you may file a joint State return. However, you still have the option of filing your State return as married filing separately. If you choose to file a separate North Carolina return, you must complete either a federal return as married filing separately reporting only your income, deductions, and exemptions or a schedule showing the computation of your separate federal taxable income and attach it to your North Carolina return. You must also include a copy of your joint federal return unless your federal return reflects a North Carolina address. Note: Itemized nonbusiness deductions of a husband and wife may be claimed by a spouse only if that spouse was obligated to pay the items and actually paid the amount during the year. In the case of a joint obligation (such as mortgage interest and real estate taxes), the deduction is allowable to the spouse who actually paid the item.

Part-year residents and nonresidents receiving income from North Carolina sources must determine the portion of their federal taxable income that is subject to North Carolina income tax by completing Lines 54 through 56 on Page 4 of Form D-400. See the instructions for Lines 54 through 56 on Page 14.

A part-year resident receiving partnership income from a partnership doing business in North Carolina and in one or more other states must prorate his share of the partnership’s income attributable and not attributable to North Carolina between his periods of residence and nonresidence in accordance with the number of days in each period. Include on Line 54 your share of partnership income determined for the period of residence and your share of the partnership income attributable to North Carolina during the period of nonresidence.

If you have income from sources within another state or country while you are a resident of North Carolina and the other state or country taxes you on such income, you may be eligible to claim a tax credit on your North Carolina return. See “Credit for Tax Paid to Another State or Country” on Page 15 for additional information.

Line Instructions for Filing Form D-400  

The references to line numbers on federal income tax forms were correct at the time of printing. If they have changed and you are unable to determine the proper line to use, please contact the Department of Revenue.

Lines 1 through 5 Filing Status  

Check the same filing status you checked on your federal return. Important: If either you or your spouse is a nonresident and had no North Carolina taxable income for the tax year, see page 4.

Line 6 - Federal Taxable Income  

Enter your federal taxable income from your federal return. If federal taxable income is less than zero, you were required to enter zero on your federal return. On your North Carolina return, enter the negative amount and fill in the circle to indicate that the amount is negative.

(Note: If you are completing a web fill-in form on the Department’s website, enter a minus sign to indicate a negative number.)

Line 13 - North Carolina Taxable Income  

  • If you were a resident of North Carolina for the entire year, enter the amount from Line 11 on Line 13.
  • If you were a part-year resident or a nonresident you must complete Lines 54 through 56 and enter on Line 12 the decimal amount from Line 56. Multiply the amount on Line 11 by the decimal amount on Line 12 and enter the result on Line 13.

Part-year residents and nonresidents should read the instructions listed above for additional information and complete the worksheet for Lines 54 and 55 on Page 15.

Line 14 -North Carolina Income Tax  

To calculate your tax, use one of the following methods:

North Carolina Tax Table. Use the Tax Table beginning on Page 21 to determine your tax if your taxable income on Line 13 is less than $68,000. Be sure to use the correct column in the Tax Table. After you have found the correct tax, enter that amount on Line 14.

Tax Rate Schedule. Use the Tax Rate Schedule on Page 29 to calculate your tax if your taxable income is $68,000 or more. Enter the amount on Line 14.

Line 15 - Tax Credits  

See Page 15 for information about tax credits. Complete Form D-400TC, Individual Tax Credits, if you are entitled to one or more of the credits.

Line 17 – Consumer Use Tax  

North Carolina use tax is due by individuals and businesses on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside this State for storage, use, or consumption in North Carolina. Use tax is due on taxable services sourced to North Carolina. Individuals and businesses must pay use tax when retailers do not collect tax on taxable transactions.

Out-of-state retailers that are not “engaged in business” in this State 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.

Items subject to sales and use tax include but are not limited to the following:

  • 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,
  • Ringtones,
  • Movies delivered or accessed electronically,
  • Sales or recharges of prepaid telephone calling cards and phones.

The use tax is calculated at the same rate as the sales tax. For January 1, 2011 through June 30, 2011, the rate was 8.25% in Mecklenburg County, 8% in Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 7.75% in all other counties. For July 1, 2011 through September 30, 2011, the rate was 7.25% in Mecklenburg County, 7% in Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry and Wilkes Counties, and 6.75% in all other counties. For October 1, 2011 through December 31, 2011, the rate was 7.25% in Mecklenburg County, 7% in Alexander, Cabarrus, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, 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. You may not claim a credit for sales tax or value-added tax paid to another country.

You should report use tax on purchases of food subject to the reduced rate of tax on Form E-554 and use tax on purchases of boats and aircraft on Form E- 555.

Use Tax Worksheet - Taxpayers Who Have Records of All Out-of-State Purchases  

1. Enter the total amount of out-of-state purchases, including delivery charges, for 1/1/11 through 6/30/11
_______
2. Multiply Line 1 by 8.25% (.0825) if Mecklenburg County resident, 8% (.08) if Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, or Wilkes County resident; 7.75% (.0775) if resident of any other county, and enter the amount
_______
3. Enter the total amount of out-of-state purchases, including delivery charges, for 7/1/11 through 9/30/11
_______
4. Multiply Line 3 by 7.25% (.0725) if Mecklenburg County resident, 7% (.07) if Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, or Wilkes County resident; 6.75% (.0675) if resident of any other county, and enter the amount
_______
5. Enter the total amount of out-of-state purchases, including delivery charges, for 10/1/11 through 12/31/11.
_______
6. Multiply Line 5 by 7.25% (.0725) if Mecklenburg County resident, 7% (.07) if Alexander, Cabarrus, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry or Wilkes County resident; 6.75% (.0675) if resident of any other county, and enter the amount
_______
7. Enter the tax legally due and paid to another state on the purchases. This amount may not exceed the total of Lines 2, 4 and 6
_______
8. Add Lines 2, 4 and 6, then subtract Line 7 and enter the result, rounded to the nearest whole dollar, here and on Form D-400, Line 17
_______

Use Tax Worksheet 2 - Taxpayers Who Do Not Have Records of All Out-of-State Purchases  

1. For purchases of items that cost less than $1,000 See the Use Tax Table on the previous page to estimate the use tax due based on your North Carolina taxable income shown on Form D-400, Line 13 and enter the amount
_______
2. For purchases of items that cost $1,000 or more
_______
2a -Enter the total amount of purchases, including delivery charges, of $1,000 or more for 1/1/11 through 6/30/11
_______
2b -Multiply Line 2a by 8.25% (.0825) if Mecklenburg County resident, 8% (.08) if Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, or Wilkes County resident; 7.75% (.0775) if resident of any other county, and enter the amount
_______
2c -Enter the total amount of purchases, including delivery charges, of $1,000 or more for 7/1/11 through 9/30/11
_______
2d -Multiply Line 2c by 7.25% (.0725) if Mecklenburg County resident, 7% (.07) if Alexander, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Robeson, Rowan, Sampson, Surry, or Wilkes County resident; 6.75% (.0675) if resident of any other county, and enter the amount
_______
2e -Enter the total amount of purchases, including delivery charges, of $1000 or more for 10/1/11 through 12/31/11
_______
2f - Multiply Line 2e by 7.25% (.0725) if Mecklenburg County resident, 7% (.07) if Alexander, Cabarrus, Catawba, Cumberland, Duplin, Haywood, Hertford, Lee, Martin, New Hanover, Onslow, Pitt, Randolph, Roberson, Rowan, Sampson, Surry or Wilkes County resident; 6.75% (.0675) if resident of any other county, and enter the amount
_______
3. Add Lines 1, 2b, 2d, and 2f and enter the total amount of use tax due
_______
4. Enter the tax legally due and paid to another state on the purchases. This amount may not exceed the amount on Line
_______
5. Subtract Line 4 from Line 3 and enter the result, rounded to the nearest whole dollar, here and on Form D-400, Line 17.
_______

Lines 19a and 19b - N.C. Income Tax Withheld  

Enter your North Carolina tax withheld on Line 19a. If you are married and you file a joint return, enter your North Carolina withholding on Line 19a and your spouse’s withholding on Line 19b. Do not include any income tax withheld by a state other than North Carolina or any other tax amounts that were withheld.

Be sure to attach your original or a copy of the original State wage and tax statements (Form W2), 1099 statements, or other statements verifying North Carolina tax withheld to your return. It is not necessary to attach 1099 statements on which no North Carolina income tax withheld is reported unless you are claiming a Bailey retirement deduction (See Line Instructions for Line 45). Wage and tax statements or 1099 statements generated by tax software programs cannot be used to verify North Carolina tax withholding.

Line 20 - Other Tax Payments  

a - 2011 Estimated Tax - Enter any estimated income tax payments for 2011 (including any portion of your 2010 refund that was applied to your 2011 estimated income tax). See Page for additional information about estimated income tax.

b -Paid with Extension - If you filed an automatic extension of time, enter the amount of North Carolina income tax paid with the extension.

c -Partnership - If you are a nonresident partner, enter your share of the tax paid to North Carolina by the manager of the partnership on your distributive share of the partnership income. Include with your return a copy of Form NC K-1 for Form D-403 provided by the partnership to verify the amount claimed.

d -S Corporation - If you are a nonresident shareholder of an S corporation, enter your share of the income tax paid to North Carolina by an S corporation on your distributive share of the S corporation income. Include with your return a copy of Form NC K-1 for Form CD401S provided by the S corporation to verify the amount claimed.

Line 21 - N.C. Earned Income Tax Credit  

See Page 16 for information about the State Earned Income Tax Credit. Complete Part of Form D-400TC to determine the allowable credit.

Line 22 - Tax Credit for Small Businesses That Pay N.C. Unemployment Insurance  

See Page 18 for information about the Tax Credit for Small Businesses That Pay Unemployment Insurance. Complete Part 6 of Form D-400TC to determine the allowable credit and enter the amount on Line 22 of Form D-400.

Lines 24a through 24d - Tax, Penalties, and Interest  

a - If Line 18 is more than Line 23, you owe additional tax. Subtract Line 23 from Line 18 and enter the result on Line 24a.

b -Penalties -See “Penalties” on Page 6 to determine if any other penalties apply to you.

c -Interest -See “Interest” on Page 6 to determine if you owe interest.

d -Interest on the Underpayment of Estimated Income Tax and Exceptions-You may owe interest if you underpaid your estimated tax for any payment period. You will not owe interest if you had no tax liability in the prior year or if this year’s tax liability, less any amount withheld and allowable tax credits, is less than $1,000. Complete Form D422 to see if you owe interest. Enter the interest on Line 24d. The interest will increase your tax liability or reduce your overpayment. You do not have to attach Form D-422 or Form D-422A to your return; however, maintain the form for your records.

Exception to Underpayment of Estimated Tax:  

  • Enter an “F” in the box if you are a farmer or fisherman. You will not owe interest if you are a farmer or fisherman and pay the tax due by March 1, 2012. You are a farmer or fisherman if you received at least two-thirds of your gross income for the year from farming and fishing.
  • Enter an “A” in the box if you completed Form D-422A, Annualized Income Installment Worksheet, in determining the amount to enter on Line 24d.

Line 25 - Pay This Amount  

Add Lines 24a, 24b, 24c and 24d and enter the total on Line 25. This is the total tax, penalties, and interest due. Mail your return and payment to the North Carolina Department of Revenue, P. O. Box 25000, Raleigh, North Carolina 276400640. Make your check or money order payable to the NC Department of Revenue. Important: The Department will not accept a check, money order, or cashier’s check unless it is drawn on a U.S. (domestic) bank and the funds are payable in U.S. dollars.

You may also pay electronically or generate a personalized payment voucher Form D-400V by visiting www.dornc.com. In addition, you may pay by cash at any of the Departments’ offices. However, do not send cash by mail.

Line 26 - Overpayment  

If Line 23 is more than Line 18, you have overpaid your tax. Subtract Line 18 (and any amount shown on Line 24d) from Line 23 and enter the amount of the overpayment on Line 26.

Line 27 -Estimated Income Tax  

If you have overpaid the tax, you may elect to have your refund applied to your estimated tax for the following year by entering the amount to be applied on Line 27. The election cannot be changed after you file your return. The last allowable date for making a 2012 estimated tax payment is January 15, 2013; therefore, to apply a portion of your refund to 2012 estimated tax, you must file your 2011 return by January 15, 2013.

Line 28 - N. C. Nongame and Endangered Wildlife Fund  

If you are due a refund, you can help keep North Carolina wild by contributing all or any portion of your refund to the N.C. Nongame and Endangered Wildlife Fund. Your tax deductible contributions are essential to monitoring and managing our wildlife populations, including sea turtles, bats, flying squirrels, frogs, fish, mussels, salamanders, turtles and hundreds of bird species from terns and pelicans to woodpeckers, falcons, and warblers. Conserving these species and their habitats is important to our state, our economy, and our quality of life. If wildlife conservation is important to you, please give what you can and help conserve North Carolina’s wildlife and natural places for future generations to enjoy.

If you wish to contribute to the Fund, enter the amount of your contribution on Line 28. Your election to contribute to the Fund cannot be changed after you file your return. If you are not due a refund, you may still contribute to this Fund by donating online or mailing your donation directly to the North Carolina Wildlife Resources Commission, 1722 Mail Service Center, Raleigh, North Carolina 27699-1722. Checks should be made payable to the Nongame & Endangered Wildlife Fund. For more information about the Fund, check out www.ncwildlife.org/give.

Line 30 -Amount to be Refunded  

If you are due a refund, mail your return to the North Carolina Department of Revenue, P.O. Box R, Raleigh, North Carolina 27634-0001. Refunds of less than $1.00 are made only upon written request.

Adjustments to Federal Taxable Income  

You must make certain adjustments to your federal taxable income (Line 6) in arriving at your North Carolina taxable income (Line 13). The law may require other adjustments that are not included in these instructions. Follow the Line Instructions beginning on Page 11 to determine the adjustments that apply to you.

Additions to Federal Taxable Income (Lines 31 - 41)  

Federal law requires that the federal standard deduction and personal exemption be increased each year if necessary for inflation. North Carolina law, however, does not have a similar provision.

If you claimed the standard deduction on your federal return, you must add to your federal taxable income the difference in the standard deduction for federal and State income tax purposes in figuring your North Carolina taxable income.

If you itemized deductions on your federal return, you must add to your federal taxable income the amount of any state and local taxes claimed as deductions on your federal return to the extent your itemized deductions exceed the standard deduction without the federal inflation adjustment.

You must also increase your federal taxable income by the difference in the personal exemption for federal and State income tax purposes.

Line 32  

Most people can find their standard deduction amounts on Line 32 of Form D-400. However, if you are 65 or older or blind, OR you can be claimed as a dependent on another individual’s return, you must use the chart or worksheet on this page, whichever applies, to determine the amount to enter on Line 32. IMPORTANT: If you are (1) married filing a separate return for federal income tax purposes and your spouse itemizes deductions, or (2) a nonresident alien, or (3) filing a short-year return because of a change in your accounting period, you are not entitled to the standard deduction; therefore, enter 0 on Line 32. Note: A short- year return does not relate to a taxpayer who files a return as a part-year resident.

Line 33  

Subtract Line 32 from Line 31 and enter the result (not less than zero).

Standard Deduction Worksheet for Dependents 

1. Add $250 to your earned income.* Enter the total
_______
2. Minimum amount
$500
3. Enter the larger of Line 1 or Line 2
_______

4. Enter on Line 4 the amount shown for your filing status

  • Single, enter $3 ,000
  • Married filing jointly/Qualifying widow(er), enter $6,000
  • Married filing separately, enter $3,000
  • Head of household, enter $4,400
 
_______
5. Enter the smaller of Lines 3 or 4. (If under 65 and not blind, stop here and enter this amount on Line of Form D-400.
_______

6. a. Check if:

You were 65 or Older Blind  

Your spouse was 65 or Older Blind  

b. Enter the number of boxes you have checked  

Note: If married filing separately, include the number of boxes checked for your spouse in the total number checked only if your spouse had no gross income and was not claimed as a dependent by another taxpayer.

c. Multiply $750 ($600 if married filing jointly or separately, or qualifying widow(er)) by the number of boxes you entered on Line 6b above and enter the result

_______
7. Add Lines 5 and 6c. Enter the total here and on Line 34 of Form D-400
_______

* Earned income includes salaries, wages, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must report in income.

Line 34 - State Tax Adjustment  

Enter the amount of the state and local taxes you deducted on Line 5 of Federal Schedule A, and any foreign income taxes included on Line 8 of Federal Schedule A. If no state, local, or foreign taxes were deducted, enter zero.

Line 36 -Personal Exemption Adjustment Worksheet  

If your federal adjusted gross income (Form 1040, Line 37; Form 1040A, Line 21; or Form 1040EZ, Line 4) is less than the following amount shown for your filing status (Married filing jointly/Qualifying widow(er) -$100,000; Head of Household -$80,000; Single -$60,000; Married filing separately -$50,000), complete Worksheet A. Otherwise, skip Worksheet A and complete Worksheet B.

A  

1. 1040 or 1040A filers  

  • Multiply the number of exemptions claimed on Line 6d of 1040 or 1040A by $1,200 and enter the result.

1040EZ SINGLE filers  

  • Enter $1,200 if you cannot be claimed as a dependent by someone else
  • Enter zero if you can be claimed as a dependent by someone else

1040EZ MARRIED FILING JOINTLY filers  

  • Enter $2,400 if neither spouse can be claimed as a dependent by someone else
  • Enter $1,200 if one spouse can be claimed as a dependent by someone else
  • Enter zero if both spouses can be claimed as dependents by someone else

STOP HERE and enter this amount on Form D-400, Line 36.

_________

B  

2. 1040 or 1040A filers  

  • Multiply the number of exemptions claimed on Line 6d of 1040 or 1040A by $1,700 and enter the result.

1040EZ SINGLE filers  

  • Enter $1,700 if you cannot be claimed as a dependent by someone else
  • Enter zero if you can be claimed as a dependent by someone else

1040EZ MARRIED FILING JOINTLY filers  

  • Enter $3,400 if neither spouse can be claimed as a dependent by someone else
  • Enter $1,700 if one spouse can be claimed as a dependent by someone else
  • Enter zero if both spouses can be claimed as dependents by someone else

STOP HERE and enter this amount on Form D-400, Line 36.

_________

Line 37 - Interest Income  

Enter the amount of interest received from notes, bonds, and other obligations of states and political subdivisions other than North Carolina if not included in federal taxable income. This includes exempt interest dividends received from regulated investment companies (mutual funds) to the extent such dividends do not represent interest from obligations of North Carolina or its political subdivisions.

Line 38 - Adjustment for Bonus Depreciation  

The federal Small Business Jobs Act of 2010 extended the 50 percent bonus depreciation through 2011. Subsequent to this Act, the federal Tax Relief Act of 2010 extended the bonus depreciation from 50 percent to 100 percent for qualified property acquired and placed in service after September 8, 2010 and before January 1, 2012. North Carolina did not adopt the bonus depreciation provisions under IRC sections 168(k) and 168(n) of these Acts. Therefore, if you deducted the bonus depreciation under IRC sections 168(k) or 168(n) on your 2011 federal return, you must add to federal taxable income 85% of the amount deducted. This adjustment does not result in a difference in basis of the affected assets for State and federal income tax purposes.

Note: Any amount of the bonus depreciation added to federal taxable income on your 2011 State return may be deducted in five equal installments over your first five taxable years beginning with the tax return for taxable year 2012.

Line 39 - Adjustment for Section 179 Expense Deduction  

The federal Small Business Jobs Act of 2010 increased the dollar limitation for expensing section 179 property to $500,000, and the investment limitation to $2,000,000. North Carolina did not conform to these increased amounts. If you deducted section 179 expense on your federal return, an addition is required equal to 85% of the difference between the amount claimed on your federal return for section 179 expenses and the amount that would have been allowed under the Internal Revenue Code as of May 1, 2010. This adjustment does not result in a difference in basis of the affected assets for State and federal income tax purposes.

Note: Any amount of section 179 expense deduction added to federal taxable income on your 2011 State return may be deducted in five equal installments over your first five taxable years beginning with the tax return for taxable year 2012.

Line 40 - Other Additions to Federal Taxable Income  

  • North Carolina does not allow the domestic production activities deduction. Therefore, if you claimed the deduction on Line of federal Form 1040, the amount claimed must be added to federal taxable income on Line 40, Form D-400.
  • 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 federal taxable income.
  • If you carry over a net operating loss from another year to the 2011 return, an addition is required for the amount of net operating loss carried to the 2011 year that is not absorbed and will be carried forward to subsequent years.

Example: You incur a net operating loss of $75,000 in 2010. You carry the net operating loss to the 2011 federal return and deduct the entire loss in arriving at federal taxable income. Only $50,000 of the loss is absorbed and $25,000 is carried forward to subsequent years. To determine North Carolina taxable income, you must make an addition to federal taxable income of $25,000.

  • If you are a shareholder in an S Corporation that paid built-in gains tax for federal income tax purposes, you must add to federal 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 federal 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 federal taxable income in figuring your North Carolina taxable income.

Example : Susan, age 10, received $2,000 in interest income in 2011. She had no other income. Her parents include $100 ($2,000-$1,900) of her income in their federal taxable income. In figuring their State taxable income, Susan’s parents must add $1,400 to federal taxable income in figuring their North Carolina taxable income.

Susan's unearned income ........... $2,000

Amount included in parents'
federal income .................................. 100

Amount not included in
parents' federal income................ $1,900

Susan's standard deduction.............. 500

Addition to federal taxable
income on parents' return ............ $1,400

Deductions From Federal Taxable Income (Lines 42 -53)  

Line 42 - State Income Tax Refund  

Enter the amount of any state or local income tax refund included on Line 10 of your federal return, Form 1040.

Line 43 - Interest From United States Obligations  

Enter the amount of interest received from notes, bonds, and other obligations of the United States (such as U.S. savings bonds, treasury notes and bills, etc.) or United States possessions.

Line 44 - Taxable Portion of Social Security and Railroad Retirement Benefits  

Social security and railroad retirement benefits are not subject to State income tax. Enter any Title 2 social security benefits received under the Social Security Act and any Tier 1 or Tier 2 railroad retirement benefits received under the Railroad Retirement Act that were included in federal taxable income. Railroad Retirement Act benefits include railroad unemployment insurance benefits and railroad sickness benefits.

Line 45 - Retirement Benefits Received by Vested Government Retirees (Bailey Settlement)  

As a result of the North Carolina Supreme Court’s decision in Bailey v. State of North Carolina, North Carolina may not tax certain retirement benefits received by retirees (or by beneficiaries of retirees) of the State of North Carolina and its local governments or by United States government retirees (including military). The exclusion applies to retirement benefits received from certain defined benefit plans, such as the North Carolina Teachers’ and State Employees’ Retirement System, the North Carolina Local Governmental Employees’ Retirement System, the North Carolina Consolidated Judicial Retirement System, the Federal Employees’ Retirement System, or the United States Civil Service Retirement System, if the retiree had five or more years of creditable service as of August 12, 1989. The exclusion also applies to retirement benefits received from the State’s §401(k) and §457 plans if the retiree had contributed or contracted to contribute to the plan prior to August 12, 1989. The exclusion does not apply to local government §457 plans or to §403(b) annuity plans. Benefits from other State, local, and federal retirement plans may or may not be excluded depending on rulings in the Bailey case. The exclusion does not apply to retirement benefits paid to former teachers and state employees of other states and their political subdivisions.

A retiree entitled to exclude retirement benefits from North Carolina income tax should claim a deduction on Line 45 for the amount of excludable retirement benefits included in federal taxable income. Even if all your retirement is excludable under Bailey, you must still file a North Carolina return if you meet the minimum gross filing requirements on Page 4. Important: If you qualify for this deduction, you do not qualify for the deduction for retirement benefits of up to $4,000 for the same federal, state, and local government retirement benefits. A copy of Form 1099-R or W-2 received from the payer must be attached to the return to support the deduction.

Line 46 - Other Retirement Benefits  

You may deduct a portion of other retirement benefits included in federal taxable income. Retirement benefits are amounts paid by an employer to a former employee or to a beneficiary of a former employee under a written retirement plan established by the employer to provide payments to an employee or beneficiary after the employee ends employment with the employer where the right to receive the payments is based upon the employment relationship. For self- employed individuals, retirement benefits are amounts paid to an individual (or beneficiary) under a written retirement plan established by the individual to provide payments after self- employment ends.

Retirement benefits also include amounts received from an individual retirement account or from an individual retirement annuity (IRA) and long-term disability benefits received under the Disability Income Plan of North Carolina. Retirement benefits do not include short-term disability benefits from the Disability Income Plan of North Carolina or distributions paid to an employee from an employer’s retirement plan because of a change in the structure of a corporate employer.

Federal, State, and Local Government Retirement Benefits. (Important: The following instructions apply to you if you received retirement benefits as a former employee of the State of North Carolina or any of its local governments or as a former employee of the federal government and you did not have five years of service with the government as of August 12, 1989, or if you received retirement benefits as a former employee of any other state or from a local government §457 plan. Otherwise, see the Line 45 instructions on this page.) If you received retirement benefits from one or more federal, state, or local government retirement plans, you may deduct the amount included in federal taxable income or $4,000, whichever is less. Married individuals filing a joint return where both received such retirement benefits may each deduct up to $4,000 for a potential deduction of $8,000.

Private Retirement Benefits. If you received retirement benefits from one or more private retirement plans other than federal, state, or local government retirement plans, you may deduct the amount included in federal taxable income or $2,000, whichever is less. Married individuals filing a joint return where both received such retirement benefits may each deduct up to $2,000 for a potential deduction of $4,000.

The total retirement benefits deduction may not exceed $4,000 per taxpayer. For married couples filing a joint return where both spouses received retirement benefits, the deduction applies separately to each, so that the maximum deduction on a joint return is $8,000.

If you included retirement benefits in federal taxable income, complete the Retirement Benefits Worksheet and enter the result on Form D-400, Line 46.

Retirement Benefits Worksheet  

 
You 
Your Spouse 
1. Enter the federal, state, or local government You Your Spouse retirement benefits included in federal taxable income not to exceed $4,000 for each taxpayer who received government retirement benefits
______
______
2. Enter the private retirement benefits included in federal taxable income not to exceed $2,000 for each taxpayer who received retirement benefits
______
______
3. Add Lines 1 and 2 and enter the total here not to exceed $4,000 for each taxpayer
______
______
4. Add the amounts on Line and enter the total here and on Form D-400, Line 46
______

Important: If you claim a deduction on Line 45 for retirement benefits received as a result of the Bailey settlement, you cannot claim the deduction of up to $4,000 for the same federal, state, or local government retirement benefits.

Line 47 - Severance Wages  

You may deduct up to $35,000 of any severance wages you received as a result of your permanent involuntary termination from employment through no fault of your own. The severance wages deducted as a result of the same termination may not exceed $35,000 for all taxable years in which the wages were received. “Stay on pay” does not qualify for the deduction.

Severance wages do not include payments that represent compensation for past or future services. Compensation for past or future services includes payment for accumulated sick leave, vacation time, other unused benefits, bonuses based on job performance, or payments in consideration of any agreement not to compete.

Line 48 - Adjustment for Bonus Depreciation Added Back in 2008, 2009 and 2010  

North Carolina did not adopt the 50 percent bonus depreciation provisions in IRC section 168(k) for tax year 2008 or in IRC sections 168(k) or 168(n) for tax years 2009 and 2010. Similarly, North Carolina did not adopt the provisions of the Small Business Jobs Act of 2010 which extended the 50 percent bonus depreciation through 2011 and the Tax Relief Act of 2010 which doubled and extended bonus depreciation from 50 percent to 100 percent for qualified property acquired and placed in service after September 8, 2010 and before January 1, 2012. Any amount added to federal taxable income on the 2008, 2009, and 2010 State returns may be deducted in five equal installments beginning with the 2009, 2010, and 2011 State returns, respectively. Therefore, enter 20 percent of the bonus depreciation added back on the 2008, 2009, and 2010 State returns.

Line 49 - Adjustment for Section 179 Expense Added Back in 2010  

North Carolina did not conform to the increased expense deduction or increased investment limit for section 179 property but rather maintained the expense deduction and investment limit allowed under the Internal Revenue Code as of May 1, 2010. Any amount added to federal taxable income on your 2010 return may be deducted in five equal installments beginning with the 2011 State return. Therefore, enter 20 percent of the section 179 expense deduction added back on your 2010 State return.

Line 50 - Contributions to NC College Savings Program  

You may deduct up to $2,500 ($5,000 on a joint return) for contributions made during the taxable year to an account in the Parental Savings Trust Fund of the State Education Assistance Authority (North Carolina’s National College Savings Program - NC 529 Plan), regardless of your income level.

Line 51 - Adjustment for Absorbed Non-ESB NOL Added Back in 2003, 2004, 2005, and 2006  

North Carolina did not adopt the federal five- year net operating loss (NOL) carry back provision authorized by the Worker, Homeownership, and Business Assistance Act of 2009. The portion of an individual’s 2008 and 2009 NOL that is not attributable to an Eligible Small Business is provided relief in future tax years. An addition to federal taxable income was required for the amount of any 2008 and 2009 NOL claimed under WHBAA beyond the standard two year period. If you made the required addition under North Carolina law, you may deduct one-third of the 2008 NOL absorbed on the 2003, 2004, and 2005 federal returns or the 2009 NOL absorbed on the 2004, 2005, and 2006 federal returns on tax years 2011, 2012, 2013. For additional information see our website www.dornc.com.

Line 52 - Other Deductions From Federal Taxable Income 

  • You may deduct $250 if you were an unpaid volunteer firefighter or an unpaid volunteer rescue squad worker who attended at least 36 hours of fire department drills and meetings or 36 hours of rescue squad training and meetings during 2011. An individual 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.
  • If you claim the American Opportunity and Lifetime Learning tax credit on your federal return in lieu of the deduction for higher education expenses allowed under Section 222 of the Internal Revenue Code, you may claim a deduction of up to $4,000 for the Code Section 222 qualifying expenses.
  • If you itemized your deductions and claimed the mortgage interest tax credit on your federal return because you participated in the mortgage credit certificate (MCC) program, you may deduct the amount shown on Line of Federal Form 8396.

Lines 54 and 55 - Part-Year Resident/ Nonresident Worksheet  

If you were a part-year resident of North Carolina during the taxable year 2011 OR if you were a nonresident and you received income from North Carolina sources, you must complete the worksheet on Page 15 to determine the portion of federal taxable income that is subject to North Carolina income tax. After you complete the worksheet, enter the amount from Column B, Line 33 on Form D-400, Line 54. Enter the amount from Column A, Line 33 on Form D-400, Line 55.

In Column B, enter only the portion of the North Carolina additions and deductions shown in Column A that are applicable to North Carolina. For example, if you received interest income from United States obligations of $1,200 evenly during the year and you became a North Carolina resident on July 1, you should enter $1,200 on Line 23 of Column A and $600 on Line 23 of Column B.

Income 
Column A
Income as Shown on Federal Return
Column B
Inc ome Subject to North Carolina Tax
1. Wages
______
______
2. Taxable interest
______
______
3. Taxable dividends
______
______
4. State and local income tax refunds
______
______
5. Alimony received.
______
______
6. Schedule C or C-EZ business income or (loss)
______
______
7. Schedule D capital gain or (loss)
______
______
8. Other gains or (losses)..
______
______
9. Taxable amount of IRA distributions
______
______
10. Taxable amount of pensions and annuities
______
______
11. Schedule E - Rents, royalties, partnerships, S-Corps estates, trusts, etc
______
______
12. Schedule F - Farm income or (loss).
______
______
13. Unemployment compensation
______
______
14. Taxable amount of Social Security or Railroad Retirement.
______
______
15. Other income
______
______
16. Add lines 1 through 15.
______
______

 

North Carolina Additions To Federal Taxable Income  

17. Interest income from obligations of states other than NC

______
______
18. Adjustment for bonus depreciation (Enter in Col. A the amount from Line 40, Form D-400)
______
______
19. Adjustment for 179 Expense Deduction (Enter in Col. A the amount from Line 41, Form D-400)..
______
______
20. Other additions to federal taxable income that relate to gross income
______
______
21. Add Lines 16, 17, 18, 19 and 20..
______
______

 

North Carolina Deductions From Federal Taxable Income  

22. State and local income tax refund (from Line 4 above)

______
______
23. Interest from obligations of the United States or United States' possessions
______
______
24. Taxable portion of Social Security or Railroad Retirement benefits
______
______
25. Bailey retirement benefits (Enter in Col. A the amount from Line 47, Form D-400)
______
______
26. Other retirement benefits (Enter in Col. A the amount from Line 48, Form D-400)
______
______
27. Severance wages (Enter in Col. A the amount from Line 49, Form D-400)
______
______
28. Adjustment for bonus depreciation (Enter in Col. A the total of the amount on Line 48d, Form D-400)
______
______
29. Adjustment for 179 expense deduction (Enter in Col. A the amount from Line 49, Form D-400)
______
______
30. Adjustment for absorbed Non-ESB NOL added back in 2003, 2004, 2005 and 2006 (Enter in Col. A the amount from Line 51, Form D-400)
______
______
31. Other deductions from federal taxable income that relate to gross income
______
______
32. Add lines 22 through 31.
______
______
33. Line 21 minus line 32
______
______
  • Enter the amount from Column B, Line 33 on Form D-400, Page 4, Line 54.
  • Enter the amount from Column A, Line 33 on Form D-400, Page 4, Line 55. (Enter this amount onForm D400, Line 55) (Enter this amount on Form D400, Line 54)