What’s New for Tax Year 2016

Changes to Form D-400

For tax year 2016, a new section, Veteran Information has been added to page one of Form D-400. You and your spouse, if filing a joint return, can voluntarily indicate whether you or your spouse are veterans or not by filing in the "yes" circle. If married filing separately, do not complete the information you’re your spouse. (See Page 6 of Form D-401.)

Increase! N.C. standard deduction has increased for each filing status for tax years 2016 and 2017. (See Page 7 for exceptions.) If you claim the N.C. standard deduction, please fill in the N.C. standard deduction circle on Line 11 and enter the amount shown below for your filing status.

N.C. Standard Deduction Amounts for Most Taxpayers:

Filing Status
2016 Standard Deduction 2017 Standard Deduction
Single
$ 8,250
$ 8,750
Married Filing Jointly/Qualifying Widow(er)
$16,500
$17,500
Married Filing Separately
$ 8,250
$ 8,750
Head of Household
$13,200
$14,000

Changes to Form D-400 Schedule S:

Reminder: You must attach Form D-400 Schedule S (Pages 1 and 2) to Form D-400 if you complete Parts A, B, C, or D of Form D-400 Schedule S, otherwise, we will not be able to process your return.

  • Additions to Federal Adjusted Gross Income:
    • Line 3, Adjustment for bonus depreciation (See Page 11 of Form D-401.)
    • Line 4, Adjustment for section 179 expense depreciation (See Page 11 of Form D-401.)
    • Line 5 – Other Additions to Federal Adjusted Gross Income (See Page 11 of Form D-401.)
      • Qualified tuition and related expenses claimed under section 222 of the Code.
      • The exclusion from gross income for cancellation of qualified principal residence debt. Exception: If a taxpayer is insolvent, as defined in section 108(d)(3) of the Code, then the addition to federal adjusted gross income is limited to the amount of discharge of qualified principal residence indebtedness excluded from income that exceeds the amount of discharge of indebtedness that would have been excluded because the taxpayer was insolvent.
      • The exclusion from gross income for qualified charitable distribution from an IRA by a person who has attained age 70 ½.
      • The amount of net operating loss carried to the 2016 year that is not absorbed and will be carried forward to subsequent years.
      • An amount withdrawn from a NC 529 Plan that was deducted in a prior year and that was used for purposes other than qualified higher education expenses unless the withdrawal was due to the death or permanent disability of the designated beneficiary.
  • Deductions from Federal Adjusted Gross Income:
    • Line 13 – Other Deductions from Federal Adjusted Gross Income (See Page 12 of Form D-401.)
      • The amount by which the deduction for an ordinary and necessary business expenses was required to be reduced or was not allowed under the Code because you claimed a federal tax credit in lieu of a deduction.
      • The amount of cancellation of indebtedness (COD) included in federal adjusted gross income that was previously deferred under section 108(i)(1) of the Internal Revenue Code in tax years 2009 or 2010.

Changes to N.C. Itemized Deductions:

New! Line 22 – N.C. Itemized Deductions now includes a deduction for the repayment of claim of right income if you claimed this deduction as an itemized deduction on your federal return. (See Repayment of Claim of Right Worksheet on Page 13 of Form D-401.)

Note: Line 15 – Mortgage insurance premiums are not treated as qualified home mortgage interest. North Carolina did not conform to the extension of the federal provision to allow mortgage insurance premiums as qualified residence interest. (See Page 12 of Form D-401.)

Changes to Form D-400TC

New! Article 3L – Historic Preservation Tax Credits Investment Program: This new Article was enacted to replace the tax credits generally available under Article 3D and 3H of Chapter 105 which expired for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2015. To claim the tax credit on Line 12 or 13 of Form D-400TC, you must complete Form NC-Rehab.

New! Credits for Rehabilitating Historic Structures: Line 12 of Form D-400TC: An income-producing historic structure (Article 3L) (From Line 17 of Form NC-Rehab, Part 4.)

Line 13: A nonincome-producing historic structure (Article 3L) (From Line 20 of Form NC-Rehab, Part 4.)

New! Form NC-Rehab – You must complete Form NC-Rehab if you claim a tax credit on Lines 12 or 13 of Form D-400TC and attach Form NC-Rehab to the front of Form D-400.