Category: North Carolina
North Carolina Additions to Federal Adjusted Gross Income
Domestic Production Activities Deduction - North Carolina does not allow a deduction for the domestic production activities. Enter the amount claimed on your federal Form 1040 Line 35 to add this back to your North Carolina Income.
Net Operating Losses - If you included a Net Operating Loss to your current Federal tax return and still have an amount to carryforward to next year, enter the carryforward amount.
EXAMPLE: You incur a net operating loss (NOL) $75000 in 2012. You carry the net operating loss to the 2013 federal return and deduct the entire loss in arriving arriving at the federal adjusted gross income. Only $50,000 of the loss is absorbed and $25,000 is carried forward to subsequent years. To determine North Carolina taxable income, you must make an addition to federal adjusted gross income of $25,000.
Federal Form 8814, Child's Interest/Dividend Earnings - If you qualified and elected to report your child's unearned income on your federal return, you must enter the difference of the excluded amount (up to $1900) minus the child's standard deduction ($500) to calculate your North Carolina taxable income
EXAMPLE: Susan, age 10, received $2000 in interest income in 2013. She had no other income. Her parents include $100 ($2000-1900) of her income in their federal adjusted gross income. In figuring their North Carolina taxable income, Susan's parents must enter $1400 ($1900-500).
Exclusion of Lump-Sum Distribution from a Retirement Plan - If you elected to exclude a lump-sum distribution from a retirement plan for you regular federal income tax computation AND computed the tax separately, enter the amount of the excluded lump sum.
Built-in Gains Tax for S-Corporations - If you are a shareholder in an S-Corporation that paid built-in gains tax for federal income tax purposes, enter your share of the built-in gains tax that the S-Corporation paid.
Distributions from North Carolina's National College Savings Program - If you withdrew an amount (for purposes other than qualified higher education expenses) that you contributed to North Carolina's National College Savings Program AND deducted that amount in a prior year, you must enter the amount withdrawn to accurately calculate your North Carolina taxable income.