Interest Income from Obligations of Other States

North Carolina's individual income tax return may require an adjustment for interest received on notes and bonds. All taxpayers who received interest on notes and bonds from states other than North Carolina must add this interest income to the North Carolina return because this interest income has not been included on your federal return. Notes and bonds issued by Guam, Puerto Rico, and the U.S. Virgin Islands are not subject to this adjustment.

Mutual fund shareholders who receive exempt interest dividends on notes and bonds of other states must also make this adjustment. Unless you have a supporting statement from the mutual fund showing it is not taxable to North Carolina, you must add back all interest income which was exempt on your federal return.

Enter this amount on line 34 of your Form D-400. Include the amount on line 34 in the total additions on line 39, then enter the total on line 7, page 1 of Form D-400.

Recheck your North Carolina return. If you received this type of income, it must be entered on line 34 of the return.