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General Information for Claiming Tax Credits - Form D-400TC

Credit for Tax Paid to Another State or Country

When income is taxed by North Carolina for a period during which you were a legal resident of North Carolina and the same income is also

taxed by another state or country because it was earned in or derived from sources within that state or country, a tax credit may be claimed,

but not on the basis of a withholding statement alone. Attach a copy of the return filed with the other state or country and a copy of the check

or receipt if a balance of tax was paid with the return.

Complete the North Carolina return and include all income both within and outside the State. Compute the tax as though no credit is to be claimed. Complete

Part 1 of Form D-400TC to determine the allowable tax credit. The amount entered on Line 1, Part 1 of Form D–400TC is total income from all

sources received while a resident of North Carolina, adjusted by the applicable additions and/or deductions to federal taxable income that relate to

gross income that you listed on Form D–400, Page 3. The amount of net tax paid on Line 6 is any prepayment of tax (tax withheld, estimated tax payments,

amount paid with extension, etc.) plus any additional tax paid or less any refunds received. Attach a copy of the tax return filed with the other state and

proof of the payment.

Include on Line 2, Part 1 of Form D–400TC your share of any S Corporation income that is attributable to and taxed by another state, whether

or not the other state taxed the income at the individual or corporate level. Include the tax you paid another state on your share of S Corporation

income or your pro rata share of the corporate tax paid by the S Corporation to another state that taxes the corporation rather than the

shareholder on Line 6, Part 1, Form D–400TC. Attach a schedule to your return showing the total amount of tax paid to the other state by the

S Corporation, and how your pro rata share of the tax was determined.

If you claim credit for tax paid to more than one state or country, use the worksheet below to determine the tax credit allowable for

each state or country. Determine the total credits for all states by adding the amount on Line 7 of each worksheet and enter the total on Form

D-400TC, Line 7a. Be sure to use separate worksheets to determine the separate credits for each state or country.

Out-of-State Tax Credit Worksheet

1. Enter total income from all sources received while a resident of North Carolina, (combined for

joint filers) adjusted by the applicable additions shown on Lines 35 through 37 and applicable deductions

shown on Lines 39 through 44 of Form D-400. ...................................................................................................................

2. The portion of Line 1 that was taxed by the other state or country .....................................................................................

3. Divide Line 2 by Line 1 and enter the result as a decimal amount (Round to four decimal places) .......................................

4. Enter North Carolina income tax (From Form D-400, Line 14) ..............................................................................................

5. Multiply Line 3 by Line 4 ......................................................................................................................................................

6. Amount of net tax paid to the other state or country on the income shown on Line 2 (See instructions above

for definition of net tax paid) ...............................................................................................................................................

7. Enter the lesser of Line 5 or Line 6 .....................................................................................................................................

Credit for Child and Dependent Care Expenses

prior to the dependent’s 7th birthday will be

calculated using the applicable percentage in

Important: For tax year 2003, the maximum amount of qualified expenses for federal

column A, and the tax credit for employment

purposes was increased from $2,400 to $3,000 for one qualifying dependent and from

related expenses incurred after the dependent

$4,800 to $6,000 for two or more qualifying dependents. Under North Carolina law, the

becomes age seven will be calculated by using

maximum qualifying expenses on which the credit is based remains at $2,400 for one

the applicable percentage in column B.

dependent and $4,800 for two or more dependents. If you are entitled to claim an income

tax credit for child and dependent care expenses on your federal return, you may claim a tax

You must use the table below at the bottom

credit for such expenses on your North Carolina return. For dependents who were age seven or

left to determine the amounts to enter on Lines

older and not physically or mentally incapable of caring for themselves, the credit is from 7

10 and 12 of Form D-400TC.

percent to 9 percent of the federal employment–related expenses, depending on your filing status

and federal adjusted gross income. For dependents who were under the age of seven and

Credit for Children

dependents who were physically or mentally incapable of caring for themselves, the tax credit is

from 10 to 13 percent of the qualified federal employment–related expenses, depending on your

If you are entitled to claim a child tax credit

filing status and your federal adjusted gross income. The federal employment–related expense is

on your federal return, you may claim a child

shown on Line 3 of Federal Form 2441 or on Line 3 of Schedule 2, Part II, of Federal Form 1040A.

tax credit of $75 on your State return for each

However, do not enter more than $2,400 for one dependent or $4,800 for two or more

dependent child if your federal adjusted gross

dependents on Line 8, Part 2 of Form D-400TC.

income (Form 1040, Line 34; or Form 1040A,

A nonresident or part-year resident is allowed the tax credit in the proportion that federal

Line 21) is less than the following amount

taxable income (as adjusted) is taxable to North Carolina.

shown for your filing status: Married filing

jointly/qualifying widow(er) - $100,000;

For a dependent who reaches age seven during the taxable year and who is not physically or

Head of household - $80,000; Single -

mentally incapable of caring for himself, the tax credit for employment-related expenses incurred

$60,000; or Married filing separately -

$50,000.

Child and Dependent Care Credit Table

Federal Adjusted Gross Income

(Federal Form 1040, Line 34 or

New for 2003: The credit for children

Filing Status

Federal Form 1040A, Line 21)

Column A

Column B

can be claimed only for a child who was

Up to $20,000

.13

.09

under 17 years of age on the last day of

Head of Household

Over $20,000 up to $32,000

.115

.08

the year.

Over $32,000

.10

.07

Up to $25,000

.13

.09

A nonresident or part-year resident is

Surviving Spouse

Over $25,000 up to $40,000

.115

.08

allowed the tax credit in the proportion that

or Joint Return

Over $40,000

.10

.07

federal taxable income (as adjusted) is taxable

Up to $15,000

.13

.09

to North Carolina.

Single

Over $15,000 up to $24,000

.115

.08

Over $24,000

.10

.07

Complete Form D–400TC, Part 3 to determine

Up to $12,500

.13

.09

the allowable credit.

Married Filing Separately

Over $12,500 up to $20,000

.115

.08

Over $20,000

.10

.07

Form D-400tc - General Information For Claiming Tax Credits, Form D-429 - Worksheet For Determining The Credit For The Disabled Taxpayer

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