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- 1. 2008 North Carolina Form D-401 Individual Income Tax Instructions for Form D-400 LINA ARO C TH NOR E NU VE E FR DEPARTMENT O Almost 2 out of every 3 NC Taxpayers E-Filed Last Year! EASY · FASTER REFUNDS · SAFE De ca clar ación Electróni ( EN ESPAÑOL) Major Law Changes for 2008 A refundable Earned Income Tax Credit (EITC) is available to certain taxpayers. The State credit is 3.5% of the allowable federal credit. (See Page 13) An addition is required on the 2008 income tax return for taxpayers who claim bonus depreciation for property placed in service on or after January 1, 2008. (See Page 10) The upper income tax rate was reduced from 8% to 7.75%. (See Page 25) www.dornc.com N.C. Department of Revenue, Raleigh, NC 27640-0001
- 2. Table of Contents Page Page Page Page Line Instructions Instructions for Filing Form D-400 Deductions from Federal Taxable Filing Status.................................................7 Filing Requirements...................................4 Income ...................................................11 Federal Taxable Income............................7 When to File ...............................................5 Part-Year Residents/Nonresidents ............1 North Carolina Taxable Income ...............7 Extensions...................................................5 General Information for Claiming North Carolina Income Tax ....................... 7 General Refund Information.....................5 Tax Credits ................................................13 Consumer Use Tax....................................7 Need to Call Us About Your Refund?......5 North Carolina Tax Table .............................17 North Carolina Income Tax Withheld ......8 How to Pay Your Tax .................................5 Tax Rate Schedule.......................................5 Other Tax Payments.................................. 8 Estimated Income Tax...............................5 Important Reminders...................................6 Tax, Penalties, and Interest.......................8 Statute of Limitations.................................5 What You Should Send Us.........................6 Pay This Amount........................................8 Amended Returns .....................................5 Assemble Your NC Return For Mailing.....6 Estimated Income Tax...............................8 Penalties and Interest ................................5 Department of Revenue Service Centers 7 NC Nongame and Endangered N.C. Public Campaign Fund......................6 Maintaining Records....................................7 Wildlife Fund............................................8 N.C. Political Parties Financing Fund......6 Important Notice Regarding Substitute Additions to Federal Taxable Income......9 United States Armed Forces Pay ............6 Returns ......................................................7 State Tax Adjustment Worksheet...........10 Death of the Taxpayer ............................... 6 Important Toll-free Telephone Numbers....8 Personal Exemption Adjustment Information for Part-Year Residents Frequently Asked Questions ......................8 Worksheet .............................................10 and Nonresidents.......................................6 Mailing Addresses ........................................8 Frequently Asked Call us 24 hours a day, 7 days a week to get recorded information on many frequently asked income tax questions. (See page 28) Questions In 2007, almost 2.5 million NC Our NCDOR website offers income tax returns were filed e-file options and a list of electronically. This is a 14% approved e-file vendors. increase in 2007! Free You May Be Eligible Friendly and Confidential to E-File for Free! Customer Service To find out if you qualify for FREE or LOW COST e-filing For assistance in e-filing your we encourage you to review the approved software returns, utilize the “Help” vendors listed on our website. features that are provided by each software product. http://www.dornc.com/electronic/individual/efile_individuals.html Faster Refunds by Safe and Confidential Direct Deposit Why wait 8-12 weeks for No one sees your tax a refund? By e-filing and information except you. electing to Direct Deposit with e-file, you will receive your refund in just 2 to 3 weeks. Avoid Long Lines at More Accurate than the Post Office Paper Returns Why wait in long lines at the Computerized calculations are post office? If you e-file, you get automatic and virtually error immediate verification we received proof with e-filing. your tax return. Make it easy on yourself... File your return electronically
- 3. Page We encourage North Carolina income tax filers to file returns electronically and pay taxes using our easy to use, North Carolina E-File Services. Safe and Secure E-Filing Options for Individuals: Freeout File... You may be eligible to e-file forthe approved Free FREE!!! To find if you qualify for Free File, please review File vendors listed on our website. Eligibility requirements for the Free File program change annually. Please access the following link each year to determine if you qualify. How Do I E-File? http://www.dornc.com/electronic/individual/efile_individuals.html Low Cost Use Your Computer Visit our website at www.dornc.com to If you do not qualify for free electronic filing, you may be eligible to electronically file your Federal and State returns at a low cost. The software access E-File services available at no cost prices are listed from lowest to highest on our website www.dornc.com. to eligible taxpayers or use a commercial tax preparation software for a modest fee. A Bajo Costo para los Contribuyentes Hispanoparlantes A link to approved software products sites Al usar el programa computarizado de impuestos en Español, usted puede is located on our website. ser elegible para declarar electrónicamente sus impuestos federal y estatal a un bajo precio. Para más enformación visite www.dornc.com. Ask Your Tax Preparer to VITA/TCE File Your Federal and State Volunteer Income Tax Assistance/Tax Counseling for the Elderly (VITA/TCE) Returns Electronically programs offer free Federal and State tax preparation and electronic filing for taxpayers with low or moderate income, disabilities, non-English speaking, or the elderly. Call the IRS at 1-800-829-1040 for a location. “Where’s my Refund?” and Other Electronic Services www.dornc.com Click Electronic Services and select Individuals. Where’s My Refund? D-410 Application for Extension for Filing Individual Income Tax Return Track the status of your current individual income tax refund, amended returns and prior year returns filed late. File your individual income tax extension and pay the tax electronically. D-400V Individual Income Payment Voucher D-400V Amended Individual Income Payment Voucher Pay your current year individual income tax. Pay the tax on your individual income tax amended return. Bills and Notices E-Alerts Make a payment on a bill or notice that you received from the Department of Revenue. Join our Tax Updates Mailing List. Mailings through this list will include bulletins, directives, and other important notices about NC-40 Individual Estimated Income Tax law changes and related tax matters. Pay your individual estimated income tax payments online. 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. 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 like this: Do not use dollar signs ($), commas, decimal points, or other punctuation marks or symbols like this: 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 like this: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 0123456789 Fill in applicable circles completely. Example: Yes No
- 4. Instructions for Filing Form D-400 Page 4 The information contained in this booklet is to Carolina and whose total income for the taxable income was determined. be used as a guide in the preparation of a North year equals or exceeds the amount for his filing You and your spouse must file a joint North Carolina Carolina individual income tax return and is not status shown in Chart A or B below. return if you file a joint federal income tax return, and intended to cover all provisions of the law. • Every nonresident who received income for both of you were residents of North Carolina or both the taxable year from North Carolina sources of you had North Carolina taxable income. Filing Requirements that was attributable to the ownership of any If you file a joint federal return and your spouse The minimum gross income filing requirements interest in real or tangible personal property in is a nonresident of North Carolina and had no under North Carolina law are different from the North Carolina or derived from a business, trade, North Carolina taxable income, you may file a filing requirements under the Internal Revenue profession, or occupation carried on in North joint State return. However, you still have the Code because North Carolina law does not adjust Carolina, or is derived from gambling activities option of filing your State return as married filing the standard deduction and personal exemption in North Carolina and whose total income from separately. If you choose to file a separate North for inflation as required by the Internal Revenue all sources both inside and outside of North Carolina return, you must complete either a federal Code. Carolina equals or exceeds the amount for his return as married filing separately reporting only filing status shown in Chart A or B below. Who is required to file a North Carolina your income, deductions, and exemptions, or individual income tax return? • If you are eligible to claim the State Earned a schedule showing the computation of your Income Tax Credit or if you had North Carolina separate federal taxable income and attach it to • Every resident of North Carolina whose income income tax withheld during the year but your your North Carolina return. You must also include for the taxable year equals or exceeds the income is below the amount required for filing, a copy of your joint federal return unless your amount for his filing status shown in Chart A or as shown in Chart A or B below, you must still federal return reflects a North Carolina address. B below. file a return to receive a refund. When filing a joint return, include the name • Every part-year resident who received income If you were not required to file a federal income and social security number of each spouse on while a resident of North Carolina or who tax return but your gross income from all sources the return. Both spouses are jointly and severally received income while a nonresident attributable both inside and outside of North Carolina equals or liable for the tax due on a joint return unless one to the ownership of any interest in real or exceeds the amount for your filing status shown in spouse has been relieved of any liability for federal tangible personal property in North Carolina Chart A or B, you must complete a federal return income tax purposes as a result of the “innocent or derived from a business, trade, profession and attach it to your North Carolina income tax spouse” rules provided under Internal Revenue or occupation carried on in North Carolina, return to show how your negative federal taxable Code Section 6015. or is derived from gambling activities in North Chart A — For Most Taxpayers (See Chart B for children and other dependents) A Return is Required if Filing Status 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) ...........................................................................................................................................$12,200 () Married - Filing Separate Return ..............................................................................................................................$ 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 below 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? 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. No. You must file a return if any of the following apply to you. • Unearned income was over $500 • Gross income was at least $10 and your spouse files a • Earned income was over $,000 separate return and itemizes deductions. • Gross income was more than the larger of- • Unearned income was over $500 • $500, or • Earned income was over $,000 • Earned income (up to $2,750) plus $250 • Gross income was more than the larger of- • $500, or 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 (up to $2,750) plus $250 • Earned income was over $,750 ($4,500 if 65 or older and blind) Yes. You must file a return if any of the following apply. • Gross income was more than- • Unearned income was over $1,100 ($1,700 if 65 or older and blind) • Earned income was over $,600 ($4,200 if 65 or older and blind) The larger of- Plus This amount: } • $500, or • Gross income was at least $10 and your spouse files a separate $750 ($1,500 if 65 • Earned income (up to $2,750) or older and blind) return and itemizes deductions • Gross income was more than- plus $250 The larger of- Plus This amount: } • $500, or Unearned income includes taxable interest, dividends, capital gains, pensions, $600 ($1,200 if 65 annuities, and social security benefits. Earned Income includes salaries, wages, • Earned income (up to $2,750) or older and blind) tips, professional fees, scholarships that must be included in income, and other plus $250 compensation received for personal services. Gross income is the total of your unearned and earned income.
- 5. Instructions for Filing Form D-400 Page 5 obtained by following the provisions in the first your North Carolina tax withheld and allowable The Income Tax Return paragraph of this section; however, Form D-410 tax credits, is $1,000 or more regardless of the must be filed by the automatic 4-month extended amount of income you have that is not subject All individuals (including part-year residents date of August 15. to withholding. Each payment of estimated tax and nonresidents) must file their income tax return must be accompanied by Form NC-40, North on Form D-400. If applicable, be sure to read General Refund Information Carolina Individual Estimated Income Tax. If you the section entitled Information for Part-Year paid estimated tax for 2008, forms for filing and Residents and Nonresidents. If you owe another State or local agency, the paying your estimated tax for 2009 will be included amount you owe may be deducted from your When to File in a pre-addressed forms packet mailed to you refund. If you have an outstanding federal income in February, 2009. If you fail to receive a forms tax liability, the Internal Revenue Service may If you file your return on a calendar year basis, packet or if you are filing estimated tax for the first claim your North Carolina refund. it is due on or before April 15 of the following year. time, contact any of our offices so that appropriate A fiscal year return is due on the 15th day of the forms can be mailed to you. You can also pay your Need to Call Us About Your 4th month following the end of the taxable year. estimated tax online at www.dornc.com. Click Refund? When the due date falls on a Saturday, Sunday, on Electronic Services. or holiday, the return is due on or before the next You should prepare your estimated tax carefully, The automated refund inquiry line will give business day. A fiscal year return should be filed both to avoid having to pay a large amount of you the status of your current refund. You can on a tax form for the year in which the fiscal year tax when you file your return, and to avoid owing also obtain amended return refund information. begins (For example: A 2008 tax form should be interest for underpayment of estimated income tax. Service is available 24 hours a day seven days used for a fiscal year beginning in 2008). Payment of estimated tax does not relieve you of a week. If you are informed that your check has Nonresident Aliens: Nonresident aliens are your responsibility for filing a return if one is due. not been written, please wait seven days before required to file returns at the same time they are calling back. You will need the first social security required to file their federal returns. Statute of Limitations number shown on your return when you call. Note: You can also check the status of your refund at Extensions Generally, to receive a refund, your return www.dornc.com. must be filed within three years from the date the If you cannot file your return by the due date, original return was due or within two years after Automated Refund Inquiry Line you may apply for an automatic 6-month extension the tax was paid, whichever date is later. However, 1-877-252-4052 (toll-free) of time to file the return. To receive the extension, special rules extending the time for filing refund you must file Form D-410, Application for * Before Calling claims beyond the normal three-year statute of Extension for Filing Individual Income Tax Month Return Filed Please Allow limitations apply to overpayments attributable to Return, by the original due date of the return. January and February 8 weeks (1) worthless debts or securities, (2) capital loss You can file Form D-410 online at www.dornc. March 10 weeks carrybacks, or () net operating loss carrybacks. com. Click on Electronic Services. You should April 12 weeks For overpayments resulting from worthless debts apply for an extension even if you believe you will or securities, the period of time for demanding an All Electronically Filed Returns 4 weeks be due a refund but cannot file by the due date. overpayment is seven years; for overpayments * Additional time is required if you owe a resulting from capital loss or net operating loss You are not required to send a payment of the State agency or the IRS, or if your return carrybacks, the period of time is three years from contains an error. tax you estimate as due to receive the extension; the due date of the return for the year in which the however, it will benefit you to pay as much as you loss was incurred rather than three years from the can with the extension request. An extension of How to Pay Your Tax due date of the return for the year to which the loss time for filing the return does not extend the is carried back. time for paying the tax. If you do not pay the If you owe additional tax, you can pay online amount due by the original due date, you will owe by bank draft or credit or debit card using Visa Amended Returns a 10 percent late-payment penalty and interest. or MasterCard. To pay online, go to the Depart- The late-payment penalty will not be due if you ment’s website at www.dornc.com and click on You may amend your return by filing Form pay at least 90 percent of your tax liability through Electronic Services. D-400X. Amended returns on which you owe withholding, estimated tax payments, or with Form additional tax are required to be filed and the tax You can also pay by check or money order. Do D-410 by the original due date. paid within three years after the date on which not send cash. The Department will not accept the original return was filed or within three years A late-filing penalty may be assessed if your a check, money order, or cashier’s check unless it from the date required by law for filing the return, return is filed after the due date (including is drawn on a U.S. (domestic) bank and the funds whichever is later. extensions). The penalty is 5 percent per month are payable in U.S. dollars. Make your check or ($5.00 minimum; 25 percent maximum) on the money order payable to the N.C. Department of If changes are made to your federal return by remaining tax due. Revenue for the full amount due. Write “2008 the Internal Revenue Service, you must report D-400” and your name, address, and social the changes to the State by filing an amended If you do not file the application for extension security number on your payment. If you are filing return within six months from the date you receive by the original due date of the return, you are a joint return, write both social security numbers the report from the Internal Revenue Service. If subject to both a late-filing penalty and a late- on your payment in the order that they appear you do not amend your State return to reflect the payment penalty. on the return. If you received a pre-addressed federal changes and the Department of Revenue Out of the Country: If you were a U.S. citizen income tax booklet, also complete Form D-400V receives the report from the Internal Revenue or resident and were out of the country on the included with the booklet and enclose it with your Service, an assessment may be made by the regular due date of your return (April 15), you are return and payment in the envelope provided. Do Department within three years from the date of granted an automatic 4-month extension for filing not use Form D-400V if any of the preprinted receipt of the report, and you forfeit your right to your North Carolina return if you fill in the “Out of information does not match what you entered any refund which might have been due by reason the Country” circle on Page 1 of your return. ”Out on your return. Go to our website to generate of the changes. of the Country” means you live outside the United a personalized D-400V with the correct States and Puerto Rico and your main place of Penalties and Interest information. If you use tax software to prepare work is outside the United States and Puerto Rico, your return, be sure to include with your return or you are in military service outside the United and payment the Form D-400V generated by the Failure to file penalty. Returns filed after the due States and Puerto Rico. The time for payment of software package. date are subject to a penalty of 5 percent of the tax the tax is also extended; however, interest is due for each month, or part of a month, the return is Estimated Income Tax on any unpaid tax from the original due date of the late (minimum $5.00; maximum 25 percent of the return until the tax is paid. If you are unable to file additional tax). If you file your return late, figure the You are required to pay estimated income tax amount of the penalty and add it to the tax due. the return within the automatic 4-month extension if the tax shown due on your return, reduced by period, an additional 2-month extension may be
- 6. Instructions for Filing Form D-400 Page 6 Failure to pay penalty. Returns filed after April include the full payment with your return. If a employment, a business, or tangible property in 15 without a valid extension are subject to a late- refund is due, subtract the amount of the interest North Carolina is subject to North Carolina income payment penalty of 10 percent of the unpaid tax. If from the refund. tax. If you are a military nonresident stationed in you have an extension of time for filing your return, North Carolina with no North Carolina income but N.C. Public Campaign Fund the 10 percent penalty will apply on the remaining your spouse earned income in North Carolina, balance due if the tax paid by the original due date please see “Information for Part-Year Residents You may designate $.00 of the taxes you pay to of the return is less than 90 percent of the total and Nonresidents” below. this Fund. (Married couples filing a joint return may amount of tax due. If the 90 percent rule is met, each make a spousal designation if their income Death of the Taxpayer any remaining balance due, including interest, tax liability is $6.00 or more.) The N.C. Public must be paid with the return before the expiration Campaign Fund provides an alternative source of any extension period to avoid the late-payment If you are the spouse or personal representative of campaign money to qualified candidates who penalty. The minimum penalty is $5.00. If your of an individual who died prior to filing a return, you accept strict campaign spending and fund-raising payment is late, figure the amount of the penalty may be required to file a return on the decedent’s limits. The Fund also helps finance a Voter Guide and add it to the tax due. behalf. If so, enter the date of death in the with educational materials about voter registration, The late-payment penalty will not be assessed applicable box on Page 1 of Form D-400 to indicate the role of the appellate courts, and the candidates if the amount shown due on an amended return the return is being filed for a deceased individual. seeking election as appellate judges in North is paid with the return. Proposed assessments of Carolina. Three dollars from the taxes you pay An Income Tax Return for Estates and Trusts, additional tax due are subject to the 10 percent will go to the Fund if you mark an agreement. Form D-407, must be filed for an estate for the late-payment penalty if payment of the tax is not Regardless of what choice you make, your tax will period from the date of death to the end of the received within 45 days of the assessment. not increase, nor will any refund be reduced. taxable year if the estate had taxable income from Other penalties. There are other penalties for N.C. Political Parties North Carolina sources or income which was for negligence, filing a frivolous return, and fraud. Financing Fund the benefit of a North Carolina resident, and the Criminal penalties also apply for fraud with intent estate is required to file a federal return for estates to evade or defeat the tax and for willful failure to You may designate $.00 of the taxes you and trusts. file a return, supply information, or pay the tax. pay for use by the Democratic, Republican, or If you are filing a return for an unmarried individual Collection Assistance Fee. Any tax, penalty, Libertarian Party. (Married couples filing a joint who died during the year, enter the date of death in the and interest not paid within 90 days after the debt return may make a spousal designation only if their becomes collectible is subject to a 20 percent applicable box and enter the name of the deceased income tax liability is $6.00 or more.) If you do not collection assistance fee. and the address of the executor or administrator. The wish to specify a party but wish to designate $.00, fill in the “Unspecified” circle and the amount you executor or administrator should fill in the circle under Interest. Interest is due on tax not paid by April designate will be distributed on a pro rata basis the deceased taxpayer information on Page 1 and 15, even though you may have an extension of according to party voter registration. No political sign the return. When filing a separate return for a time for filing your return. You may obtain the party with less than 1 percent of the total number current interest rate from any of the Department’s decedent who was married at the time of death, enter of registered voters in the State will receive any offices. If you pay your tax late, figure the amount the date of death, the name of the deceased, and of the designated funds. of interest due and include it with the tax and any the address of the surviving spouse. The surviving applicable penalty. United States Armed Forces Pay spouse should sign the return. In either case, be sure to enter the date of death in the space provided. Interest on the underpayment of estimated If you are serving in the United States Armed tax. Compute interest on any underpayment If you are a court-appointed representative, Forces and your legal residence is North Carolina, of estimated income tax on Form D-422, attach to the return a copy of the certificate that you are liable for North Carolina income tax and Underpayment of Estimated Tax by Individuals. shows your appointment. A refund due on a North Carolina income tax should be withheld Interest is not due if each payment equals 25 return filed for a deceased taxpayer by a person from your pay regardless of where you may be percent of the lesser of 90 percent (66 2/ percent other than a surviving spouse or a court-appointed stationed. If you are a legal resident of another for farmers and fishermen) of the tax due on your representative will be mailed to the Clerk of state stationed in North Carolina on military orders, current year’s return or 100 percent of the tax Superior Court of the county in which the taxpayer you are not liable for North Carolina income due on your previous year’s return. If interest is applicable, add the interest to the tax due, and tax on your military pay, but income from other resided. Information for Part-Year Residents and Nonresidents If you move your legal residence into or out a federal return as married filing separately A part-year resident receiving partnership of North Carolina during the tax year, you are reporting only your income, deductions, income from a partnership doing business in a resident of two different states during two and exemptions or a schedule showing the North Carolina and in one or more other states different periods of the tax year. computation of your separate federal taxable must prorate his share of the partnership’s income and attach it to your North Carolina You are a nonresident if you maintain your income attributable and not attributable to North return. You must also include a copy of your joint legal residence in another state or country even Carolina between his periods of residence and federal return unless your federal return reflects though you may temporarily reside in North nonresidence in accordance with the number a North Carolina address. Note: Itemized Carolina. If you reside in North Carolina for more of days in each period. Include on Line 51 your nonbusiness deductions of a husband and wife than 18 days of a tax year, you are presumed share of partnership income determined for may be claimed by a spouse only if that spouse to be a resident for income tax purposes in was obligated to pay the items and actually paid the period of residence and your share of the the absence of factual proof of residence in the amount during the year. In the case of a joint partnership income attributable to North Carolina another state. However, your absence from obligation (such as mortgage interest and real North Carolina for more than 18 days raises no during the period of nonresidence. estate taxes), the deduction is allowable to the presumption that you are not a resident. If you have income from sources within another spouse who actually paid the item. If you file a joint federal return and your state or country while you are a resident of North Part-year residents and nonresidents receiving spouse is a nonresident of North Carolina and Carolina and the other state or country taxes you income from North Carolina sources must determine had no North Carolina taxable income, you may on such income, you may be eligible to claim a the portion of their federal taxable income that is file a joint State return. However, you still have tax credit on your North Carolina return. See subject to North Carolina income tax by completing the option of filing your State return as married “Credit for Tax Paid to Another State or Country” Lines 51 through 5 on Page 4 of Form D-400. See filing separately. If you choose to file a separate North Carolina return, you must complete either the instructions for Lines 51 through 5 on Page 12. on Page 1 for additional information.
- 7. Line Instructions for Filing Form D-400 Page 7 The references to line numbers on federal An individual in North Carolina owes use tax on an out-of-state purchase when the item purchased income tax forms were correct at the time of is subject to the North Carolina sales tax and the retailer making the sale does not collect sales tax on printing. If they have changed and you are the sale. Items that are subject to sales tax include computers and other electronic equipment, canned unable to determine the proper line to use, software, books, audio and video tapes, compact discs, records, clothing, appliances, furniture and please contact the Department of Revenue. other home furnishings, sporting goods, and jewelry. Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the internet, and retailers located outside North Carolina. Lines 1 through 5 - Filing Status When an out-of-state retailer does not collect sales tax, the responsibility of paying the tax falls on the purchaser. Check the same filing status you checked on The use tax is calculated at the same rate as the sales tax, which for 2008, was 7.25% in Mecklenburg your federal return. Important: If either you or County, 7% in Alexander, Catawba, Martin, Pitt, Sampson, and Surry Counties, and 6.75% in all other your spouse is a nonresident and had no North counties. If you paid another state’s sales or use tax on out-of-state purchases, that amount may be Carolina taxable income for the tax year, see credited against the North Carolina use tax due. You may not claim a credit for sales tax or value-added page 4. tax paid to another country. To calculate your North Carolina use tax, complete one of the Use Tax Worksheets below. Complete Line 6 - Federal Taxable Income Worksheet 1 if you kept records of all of your out-of-state purchases. Complete Worksheet 2 if you did not keep records of all of your out-of-state purchases. Worksheet 2 has two parts; the first part Enter your federal taxable income from your is a calculation of the amount due on items that cost less than $1,000 each and the second part is a federal return. If federal taxable income is less calculation of the amount due on items that cost $1,000 or more each. The first calculation is based on than zero, you were required to enter zero on your a Use Tax Table that reflects the estimated amount of use tax due by taxpayers with varying amounts federal return. On your North Carolina return, enter of North Carolina taxable income. The estimated amount is .0675% (.000675) of North Carolina taxable the negative amount and fill in the circle to indicate income. If you believe the estimate from the table is too high for your out-of-state purchases, you may that the amount is negative. (Note: If you are estimate what you think you owe. completing a web fill-in form on the Department’s website, enter a minus sign to indicate a negative You should report use tax on purchases of food subject to the reduced rate of tax on Form E-554 number.) and use tax on purchases of boats and aircraft on Form E-555. Line 13 - North Carolina Use Tax Worksheet 1 Taxable Income Taxpayers Who Have Records of All Out-of-State Purchases If you were a resident of North Carolina for the entire year, enter the amount from Line 11 on Line 1. 1. Enter the total amount of out-of-state purchases If you were a part-year resident or a including shipping and handling for 1/1/08 through 12/1/08 ............ 1. _____________ nonresident you must complete Lines 51 through 53 and enter on Line 12 the decimal 2. Multiply Line 1 by 7.25% (.0725) if Mecklenburg County amount from Line 5. Multiply the amount on resident, 7% (.07) if Alexander, Catawba, Martin, Pitt, Sampson, Line 11 by the decimal amount on Line 12 and or Surry County resident; 6.75% (.0675) if resident of any other enter the result on Line 1. county, and enter the amount ............................................................ 2. _____________ Part-year residents and nonresidents should 3. Enter the tax paid to another state on the purchases. This read the instructions on Page 6 for additional amount may not exceed the amount on Line 2 ................................. 3. _____________ information and complete the worksheet for Lines 51 and 52 on Page 12. 4. Subtract Line from Line 2 and enter the result, rounded to the nearest whole dollar, here and on Form D-400, Line 17 ................... 4. _____________ Line 14 - North Carolina Income Tax Use Tax Worksheet 2 To calculate your tax, use one of the following methods: Taxpayers Who Do Not Have Records of All Out-of-State Purchases North Carolina Tax Table. Use the Tax Table beginning on Page 17 to determine your tax if your taxable income on Line 1 is less than $68,000. 1. For purchases of items that cost less than $1,000 Be sure to use the correct column in the Tax Table. See the Use Tax Table on the following page to estimate the use After you have found the correct tax, enter that tax due based on your North Carolina taxable income shown on amount on Line 14. Form D-400, Line 1 and enter the amount ...................................... 1. _____________ Tax Rate Schedule. Use the Tax Rate Schedule on Page 25 to calculate your tax if 2. For purchases of items that cost $1,000 or more your taxable income is $68,000 or more. Enter 2a - Enter the total amount of purchases, including the amount on Line 14. shipping and handling, of $1,000 or more for 1/1/08 through 12/1/08 ................................................. 2a. _____________ Line 15 - Tax Credits 2b - Multiply Line 2a by 7.25% (.0725) if Mecklenburg County See Page 1 for information about tax credits. resident, 7% (.07) if Alexander, Catawba, Martin, Pitt, Complete Form D-400TC, Individual Tax Sampson, or Surry County resident; 6.75% (.0675) if Credits, if you are entitled to one or more of the resident of any other county, and enter the amount ............... 2b. _____________ credits. Add Lines 1 and 2b and enter the total amount of use tax ................ 3. _____________ 3. Line 17 – Consumer Use Tax 4. Enter the tax paid to another state on the purchases. Like all states that have a sales tax, North This amount may not exceed the amount on Line ......................... 4. _____________ Carolina has a use tax on out-of-state purchases. The use tax applies to purchases made outside 5. Subtract Line 4 from Line and enter the result, rounded to the the State for use inside the State. Individuals in nearest whole dollar, here and on Form D-400, Line 17 ................... 5. _____________ North Carolina are responsible for paying use tax on their out-of-state purchases.
- 8. Line Instructions Page 8 Department of Revenue, P. O. Box 25000, Use Tax Table Raleigh, North Carolina 27640-0640. Make NC Taxable Income NC Taxable Income your check or money order payable to the NC Use Tax Use Tax (D-400, Line 13) (D-400, Line 13) Department of Revenue. Important: The At Least But Less Than Amount At Least But Less Than Amount Department will not accept a check, money order, or cashier’s check unless it is drawn $ 0 2,200 $1 $ 2,000 24,400 $16 on a U.S. (domestic) bank and the funds are 2,200 ,700 2 24,400 25,900 17 payable in U.S. dollars. ,700 5,200 25,900 27,400 18 If you received a pre-addressed income tax 5,200 6,700 4 27,400 28,900 19 booklet, be sure to use the payment voucher 6,700 8,100 5 28,900 0,400 20 (Form D-400V) included in this booklet. However, 8,100 9,600 6 0,400 1,900 21 do not use Form D-400V if any of the information 9,600 11,100 7 1,900 ,00 22 does not match what you entered on your return. 11,100 12,600 8 ,00 4,800 2 Go to our website to generate a personalized 12,600 14,100 9 4,800 6,00 24 D-400V with the correct information. 14,100 15,600 10 6,00 7,800 25 15,600 17,000 11 7,800 9,00 26 You may also pay electronically. Visit our website 17,000 18,500 12 9,00 40,700 27 at www.dornc.com for more information. In addition, 18,500 20,000 1 40,700 42,200 28 you may pay by cash at any of the Department’s 20,000 21,500 14 42,200 4,700 29 offices. However, do not send cash by mail. 21,500 2,000 15 4,700 45,200 0 45,200 and over Multiply NC Line 25 Taxable Income by .0675% (.000675) If Line 22 is more than Line 18, you have overpaid your tax. Subtract Line 18 (and any amount shown on Line 2c) from Line 22 and enter Lines 19a and 19b - Line 21 - the amount of the overpayment on Line 25. N.C. Income Tax Withheld N.C. Earned Income Tax Credit Line 26 - Estimated Income Tax Enter your North Carolina tax withheld on Line See Page 1 for information about the State 19a. If you are married and you file a joint return, Earned Income Tax Credit. Complete Part 5 of Form If you have overpaid the tax, you may elect enter your North Carolina withholding on Line 19a D-400TC to determine the allowable credit. to have your refund applied to your estimated and your spouse’s withholding on Line 19b. Do tax for the following year by entering the amount not include any income tax withheld by a state Lines 23a through 23c - to be applied on Line 26. The election cannot other than North Carolina or any other tax amounts Tax, Penalties, and Interest be changed after you file your return. The last that were withheld. allowable date for making a 2009 estimated tax a - If Line 18 is more than Line 22, you owe Be sure to attach your original or a copy of the payment is January 15, 2010; therefore, to apply additional tax. Subtract Line 22 from Line 18 and original State wage and tax statements (Form W- a portion of your refund to 2009 estimated tax, you enter the result on Line 2a. 2), 1099 statements, or other statements verifying must file your 2008 return by January 15, 2010. North Carolina tax withheld to your return. It is not b - Penalties and Interest - See “Penalties and necessary to attach 1099 statements on which no Interest” beginning on Page 5 to determine if Line 27- N. C. Nongame and North Carolina income tax withheld is reported any other penalties apply to you or if you owe Endangered Wildlife Fund unless you are claiming a Bailey retirement interest. deduction (See Line Instructions for Line 44). If you are due a refund, you may elect to c - Interest on the Underpayment of Estimated Wage and tax statements or 1099 statements contribute all or any portion of the refund to Income Tax and Exceptions- You may owe generated by tax software programs cannot be the North Carolina Nongame and Endangered interest if you underpaid your estimated tax for used to verify North Carolina tax withholding. Wildlife Fund. Your tax deductible contributions any payment period. You will not owe interest are essential to match private and federal grants if you had no tax liability in the prior year or if Line 20 - Other Tax Payments to pay for conservation projects from sea turtles this year’s tax liability, less any amount withheld to songbirds, from native fish to bats. Conserving and allowable tax credits, is less than $1,000. a - 2008 Estimated Tax - Enter any estimated these species and their habitat is made possible Complete Form D-422 to see if you owe interest. income tax payments for 2008 (including any by your contributions. Enter the interest on Line 2c. The interest portion of your 2007 refund that was applied to will increase your tax liability or reduce your If you wish to contribute to your 2008 estimated income tax). See Page 5 for overpayment. You do not have to attach Form the Fund, enter the amount of additional information about estimated income D-422 or Form D-422A to your return; however, your contribution on Line 27. tax. maintain the form for your records. Your election to contribute to b - Paid with Extension - If you filed an automatic the Fund cannot be changed Exception to Underpayment of Estimated Tax: extension of time, enter the amount of North after you file your return. If you Enter an “F” in the box if you are a farmer or Carolina income tax paid with the extension. are not due a refund, you may still contribute to fisherman. You will not owe interest if you are this Fund by mailing your donation directly to the c - Partnership - If you are a nonresident a farmer or fisherman and pay the tax due by North Carolina Wildlife Resources Commission, partner, enter your share of the tax paid to North March 1, 2009. You are a farmer or fisherman 1722 Mail Service Center, Raleigh, North Carolina Carolina by the manager of the partnership on if you received at least two-thirds of your gross 27699-1722. Checks should be made payable to your distributive share of the partnership income. income for the year from farming and fishing. the Nongame Endangered Wildlife Fund. For Include with your return a copy of Form NC K-1 for Enter an “A” in the box if you completed more information about the Fund, check out Form D-40 provided by the partnership to verify Form D-422A, Annualized Income Installment www.ncwildlife.org/give.htm. the amount claimed. Worksheet, in determining the amount to enter Line 29 - Amount to be d - S Corporation - If you are a nonresident on Line 2c. Refunded shareholder of an S corporation, enter your Line 24 - Pay This Amount share of the income tax paid to North Carolina by an S corporation on your distributive share If you are due a refund, mail your return to Add Lines 2a, 2b, and 2c and enter the North Carolina Department of Revenue, of the S corporation income. Include with your the total on Line 24. This is the total tax, P.O. Box R, Raleigh, North Carolina 27634- return a copy of Form NC K-1 for Form CD- penalties, and interest due. Mail your 0001. Refunds of less than $1.00 are made 401S provided by the S corporation to verify return and payment to the North Carolina only upon written request. the amount claimed.
- 9. Line Instructions Page 9 Adjustments to Federal Taxable Standard Deduction Worksheet for Dependents Income Use this worksheet only if someone can claim you, You must make certain adjustments to your or your spouse if filing jointly, as a dependent. federal taxable income (Line 6) in arriving at your North Carolina taxable income (Line 1). The law may require other adjustments that are not 1. Add $250 to your earned income.* Enter the total .................. 1. _______________ included in these instructions. Follow the Line Instructions below to determine the adjustments $500 2. Minimum amount ...................................................................... 2. _______________ that apply to you. 3. Enter the larger of Line 1 or Line 2 ........................................... 3. _______________ Additions to Federal Taxable 4. Enter on Line 4 the amount shown for your filing status Income (Lines 30 - 40) • Single, enter $,000 • Married filing jointly/Qualifying widow(er), enter $6,000 Federal law requires that the federal • Married filing separately, enter $3,000 standard deduction and personal exemption be • Head of household, enter $4,400 ...................................... 4. _______________ increased each year if necessary for inflation. 5. Enter the smaller of Lines or 4. (If under 65 and not blind, North Carolina law, however, does not have a stop here and enter this amount on Line 1 of Form D-400 .... 5. _______________ similar provision. If you claimed the standard deduction on 6. a. Check if: You were 65 or Older Blind your federal return, you must add to your Your spouse was 65 or Older Blind federal taxable income the difference in the standard deduction for federal and State b. Enter the number of boxes you have checked income tax purposes in figuring your North Note: If married filing separately, include the number of boxes checked for your Carolina taxable income. spouse in the total number checked only if your spouse had no gross income and was not claimed as a dependent by another taxpayer. If you itemized deductions on your federal c. Multiply $750 ($600 if married filing jointly or separately, or return, you must add to your federal taxable qualifying widow(er)) by the number of boxes you income the amount of any state and local taxes claimed as deductions on your federal return entered on Line 6b above and enter the result ............... 6c. _______________ to the extent your itemized deductions exceed 7. Add Lines 5 and 6c. Enter the total here and on Line 1 of the standard deduction without the federal Form D-400............................................................................... 7. _______________ inflation adjustment. You must also increase your federal taxable * Earned income includes salaries, wages, tips, professional fees, and other income by the difference in the personal exemption compensation received for personal services you performed. It also includes any amount received as a scholarship that you must report in income. for federal and State income tax purposes. Line 31 Most people can find their standard deduction Standard Deduction Chart for People amounts on Line 1 of Form D-400. However, if you are 65 or older or blind, OR you can be Age 65 or Older or Blind claimed as a dependent on another individual’s Do not use this chart if someone can claim you, or your spouse return, you must use the chart or worksheet on this page, whichever applies, to determine the if filing jointly, as a dependent. Instead use the worksheet above. amount to enter on Line 1. IMPORTANT: If you are (1) married filing a separate return for Check if: You were 65 or Older Blind federal income tax purposes and your spouse itemizes deductions, or (2) a nonresident alien, Your spouse was 65 or Older Blind or (3) filing a short-year return because of a change in your accounting period, you are not Enter the number of boxes checked above entitled to the standard deduction; therefore, enter 0 on Line 31. Note: A short-year return Note: If married filing separately, include the number of boxes checked does not relate to a taxpayer who files a return as for your spouse in the total number only if your spouse had no gross a part-year resident. income and was not claimed as a dependent by another taxpayer. Effective for tax year 2008, federal law provides If your filing status is: And the total number of Your standard an additional standard deduction for real property boxes you have checked is: deduction is: taxes paid by homeowners who claim the basic standard deduction. The additional deduction Single 1 $,750 is the lesser of (1) the amount allowable as a 2 $4,500 deduction for real property taxes if you could have Married filing jointly 1 $6,600 itemized your deductions or (2) $500 ($1,000 in or 2 $7,200 the case of a joint return). North Carolina has Qualifying widow(er) $7,800 not adopted this provision of federal law. 4 $8,400 Therefore, the North Carolina standard deduction cannot be increased by the additional federal Married filing separately 1 $3,600 standard deduction for real property taxes. 2 $4,200 $4,800 Line 32 4 $5,400 Head of household 1 $5,150 Subtract Line 1 from Line 0 and enter the 2 $5,900 result (not less than zero).