State income tax laws pose complications for workers who earn income in one state but live in another. Most states with income tax require their residents to file taxes on income earned elsewhere and require non resident tax filing on income earned in the state.
In North Carolina, the law requires you to file a tax return if you are making money from a job or property in North Carolina, no matter where you happen to live. However, the law exempts some income from taxes and allows you to calculate tax on the percentage of your income coming from North Carolina.
North Carolina Filing Requirements
North Carolina does not exempt nonresidents from state income tax. You must file a state return in North Carolina if you had income from North Carolina sources and your total federal gross income is $8,750 or more (for single taxpayers or married people filing singly), or $17,500 (for those filing married, joint returns). There are different filing requirements for those falling in the "head of household" category and dependents. If you're married and filing singly, and your spouse is itemizing deductions, you must file a state return if you had North Carolina income.
The income test applies to wages, salaries, tips, commissions and other compensation earned for work in North Carolina, even if you didn't live there, as well as non-wage income. The latter can be derived from property you own in North Carolina, such as rental housing or farmland, or from a business that you operate within the state. State law on minimum filing requirements applies to all income combined, no matter where you earn it.
If you need to file a state income tax return in North Carolina, you have until April 15 of the following year to file a D-400, the North Carolina Individual Income Tax Return. You must attach a copy of your federal return with this form. Page 16 of the instructions allows you to figure the percentage of your non-exempt income derived from North Carolina sources. Page 4 of the D-400 calculates taxable income in North Carolina if you are a part-time resident or a nonresident.
North Carolina Residency Requirements for Tax Purposes
North Carolina holds you to be a resident if you live within the state for 183 days or more during the tax year. If you are a resident and pay taxes to another state, you may claim that amount as a tax credit against your North Carolina tax liability. Likewise, if you are a resident of another state, you may claim North Carolina taxes paid as a credit against that other state's taxes. This avoids double taxation of your income.
- North Carolina Department of Revenue: Individual Income Filing Requirements
- North Carolina Department of Revenue: 2018 D-400 Individual Income Tax Return
- North Carolina Department of Revenue: Nonresidents and Part-Year Residents
- North Carolina Department of Revenue: Credit for Income Tax Paid To Another State or Country
- eFile: State Income Tax Return(s)
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.