A. Declaration of Estimated Income Tax (G.S. 105-163.38 through
- Preliminary Statement
A declaration of estimated tax must be filed by a corporation
for each taxable year in which it can reasonably be expected to
have an income tax liability to North Carolina of at least $500.
To insure proper credit, the corporation should use the pre-addressed
coded Form CD-429 furnished by the Department of Revenue.
The term "estimated tax" means the amount of income
tax the corporation expects to owe for the taxable year after
any tax credits.
The term "taxable year," for the purpose of filing declarations
of estimated tax, means the calendar or fiscal year in which
company expects to earn the income upon which the estimated tax
- When Due
Declaration returns and payments of tax are due to be filed on
or before the 15th day of the 4th, 6th, 9th and 12th months of
the taxable year.
- Penalty for Failure to Pay and/or File Estimated Tax
Failure to pay the required amount of estimated income tax will
subject the corporation to the underpayment penalty provided in
Article 4B of additional tax charges at the rate pursuant to G.S.
- "No Penalty" Tests
No additional tax charges (penalties) for underpayment will be
assessed if the estimated tax paid on or before the estimated
tax due date is at least as large as the payment that would be
due if the estimated tax fell into one of the following categories:
(Note: Large corporations as defined in IRS Code Section 6655
are excluded from the exceptions in a. or b.)
- It amounts to as much as the tax paid on the return of the
preceding taxable year of 12 months.
- It amounts to as much as the tax would be by applying the
current year's income tax rate to the corporation's taxable
income in the previous year. (Note: This provision has
effect for 2001 because the tax rates are the same as in
- It amounts to 90% of the tax shown on the current annual
income tax return.
- It amounts to 90% of the tax that would be due on the basis
of current income up to a specified cut-off date, annualized
for the year.
- Short Taxable Years
No estimated tax is required if the short period is less than
four months, or the requirements to make an estimated payment
are not met before the first day of the last month in the short
- Overpayment of Tax
Upon the request of the taxpayer, any overpayment of tax resulting
from an overstatement of estimated tax may be refunded or
to the subsequent year's estimated income tax liability only
after the corporation's annual income tax return has been filed.
amount of tax credited as estimated tax is considered payment
of tax made on the subsequent return.
- Electronic Funds Transfer (EFT) Requirement (G.S. 105-163.40;
A corporation subject to State estimated tax is required to make
the payments of its estimated tax liability by electronic funds
transfer (EFT) if either of the following conditions exist:
- The corporation is required under the Internal Revenue Code
to pay its federal estimated corporate income tax by electronic
- The corporation has paid estimated corporate income tax
installments of $240,000 or more in a twelve-month period.
This $20,000 monthly average threshold applies separately
to the corporate tax liability and is not a combination of
tax liabilities from other taxing schedules.