Growing Without Rain

News and Views about Taxes

NC deductions and credits you may not know about

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North Carolina has some deductions and credits that you might miss on your D-400.

  • If you chose to take the American Opportunity Credit or Lifetime Learning Credit for higher education expenses on your Federal tax return instead of the tuition and fees deduction, you can still take the deduction for those expenses on your North Carolina return. Enter the amount of those expenses (up to $4000) on line 52 of your D-400.
  • If you have established a North Carolina Parental Savings Trust Fund – also known as a “529 plan” – you may deduct up to $2500 of contributions made to that plan ($5000 if you are filing a joint return) regardless of the amount of your adjusted gross income. If you did a rollover from another state plan to an NC plan, that’s also considered a deductable contribution. Report this amount on line 51 of your D-400.
  • If you were an unpaid volunteer firefighter or rescue squad worker who attended at least 36 hours of drills and meeting in 2009, you may deduct $250 from your North Carolina taxable income. This is also reported on line 52 of your D-400.
  • If you took taxable distributions from a 401(k) plan, IRA, or other pension plan, you are entitled to exclude a portion of that distribution from your North Carolina taxable income. If you received distributions from a Federal, State, or local government retirement plan – and the distributions do not qualify for the “Bailey exclusion” (which will be the subject of my next post) – then you may exclude up to $4000 of the taxable portion of those distributions from your NC taxable income. If you received distributions from a private retirement plan, you may exclude up to $2000 of the taxable portion of those distributions. If you are filing a joint return, and each spouse received distributions, each spouse may apply the exclusion to the distributions they received. These are reported on line 47 of the D-400.
  • If you lost your job in 2009, you may deduct up to $35,000 of any severance pay you received. This includes only the amount received as severance – it does not include payments for unused sick leave or vacation time or other accrued benefits. Report this amount on line 48 of your D-400.
  • If you did not itemize deductions on your Federal tax return, you may be able to claim the NC tax credit for charitable contributions. The amount of this credit is 7% of the amount of your contributions in excess of 2% of your Federal adjusted gross income – for example, if your Federal AGI is $25,000, you can claim a credit for 7% of the amount of your charitable contributions that exceed $500. This credit is limited to the amount of your tax liability and is reported on line 20(b) of Form D-400TC.
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    Written by nctaxpro

    February 15, 2010 at 9:44 am

    Posted in North Carolina, Taxes

    One Response

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    1. […] Posted in North Carolina, Taxes « NC deductions and credits you may not know about […]


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