North Carolina Standard Deduction or North Carolina Itemized Deductions
The starting point for determining North Carolina taxable income is federal adjusted gross income.
You may deduct from federal adjusted gross income either the N.C. standard deduction or N.C. itemized deductions. It is important to note that the N.C. standard deduction is greater than the federal standad deduction for most taxpayers. However, there is no longer an additional standard deduction available for taxpayers age 65 or older, or blind. If you are (1) married filing a separate return for North Carolina income tax purposes and your spouse itemizes deductions, (2) a nonresident alien, or (3) filing a short-year return because of a change in your accounting period, you are not entitled to the standard deduction. . Note 1: A Nonresident alien who is a student or business apprentice and a resident of India is entitled to a standard deduction. Note 2: A short-year return does not relate to a taxpayer who files a return as a part-year resident. The N.C. itemized deductions are not identical to federal itemized deductions and are subject to certain limitations.
N.C. Standard Deduction
If your filing status is:
Your standard deduction is:
|Married Filing Jointly/Qualifying Widow(er)||
|Married Filing Separately|
|If spouse does not claim itemized deductions||
|If spouse claims itemized deductions||
|Head of Household||
To claim the N.C. standard deduction, enter the standard deduction amount on Form D-400, line 11. Important: Do not complete Form D-400 Schedule S, Part C - N.C. Itemized Deductions, if you claim the N.C. standard deduction shown in the chart above.
N.C. Itemized Deductions
No itemized deductions included on federal Form 1040 (Schedule A) are allowed as N.C. itemized deductions except qualified mortgage interest, real estate property taxes, charitable contributions, and medical and dental expenses.
- The sum of qualified mortgage interest and real estate property taxes claimed, respectively, under sections 163(h) and 164 of the Code may not exceed $20,000. For spouses filing as married filing separately or married filing jointly, the total mortgage interest and real estate taxes claimed by both spouses combined may not exceed $20,000. For spouses filing as married filing separately with a joint obligation for mortgage interest and real estate taxes, the deduction for these items is allowable to the spouse who actually paid them. If the amount of the mortgage interest and real estate taxes paid by both spouses exceeds twenty thousand dollars ($20,000), these deductions must be prorated based on the percentage paid by each spouse. For joint obligations paid from joint accounts, the proration is based on the income reported by each spouse for that taxable year.
- Charitable contributions allowed as a deduction under section 170 of the Code are allowed without limitation.
- New for tax year 2015: Medical and dental expenses allowed as a deduction under section 213 of the Code are deductible. (From Line 4 of Schedule A, Federal Form 1040.)
The N.C. itemized deductions are not subject to the overall limitation on itemized deductions under section 68 of the Code.
To claim N.C. itemized deductions, you need to complete Form D-400 Schedule S, Part C – N.C. Itemized Deductions. The total N.C. itemized deductions entered on Form D-400 Schedule S, line 20, also needs to be entered on Form D-400, line 11.
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