Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what's the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they're all constructed differently. What follows is a breakdown of Form D-400, the North Carolina Individual Income Tax Return. If you don't live in North Carolina, not to worry, we'll be tackling the other 34 states soon enough.
The main D-400 form is brief, which is a very good thing. Hey, your time is valuable, right? But if you've earned any credits, the tax credit section is a bear. It's so outrageous that it's called the D-400TC and consists of two pages and about 40 lines. For most, a lot of that stuff won't apply, so you can skip it. But if some of it does apply, expect to spend an hour on this section alone.
Other state forms have proven there's an easier way to incorporate tax credits into the main part of the form. Ultimately, all the D-400TC does is cost state taxpayers time and money. Therefore, we're giving Form D-400 a 6 of 10 on our user-friendly meter for being incomplete. If you've got three minutes to burn, check out the form for North Dakota to see how it should be done.
Start with your name, address, and Social Security number at the top of the form. If this is an amended return or if something is going on with your residency status, fill in the appropriate ovals. Be sure to record your federal adjusted gross income before moving onto the entire portion of this form. Fortunately (or unfortunately), this basic information took up most of page 1.
After you fill in your filing status, don't miss the exemption box off to the right next to the barcode. Once you've covered that, record your federal taxable income on Line 6, any additions or subtractions on Lines 7 and 9, and your total North Carolina taxable income on Line 10. Just be aware, that you'll have to work through page 3 Lines 32 through 42 before you can fill in any additions or subtractions.
Carry forward the amount from Line 10 onto Line 11, and if you're a part-time resident, work through Line 12. On Line 13 enter your North Carolina taxable income, which turns out to be a repeat from Line 11 if you're a full-time resident. If the amount on Line 13 is less than $68,000, residents are allowed to use the tax table on Page 17 of the booklet to figure your tax. If you earn more, you'll have to use the tax rate schedule on Page 29 to see how much you owe.
This is your total North Carolina tax. If you have any tax credits coming, work through Form D-400TC and put the total on Line 15. Now subtract your credits (Line 15) from your tax (Line 14) and put the balance on Line 16. Line 17 is for a consumer use tax; that is a tax on stuff you bought outside the state and didn't already pay a tax on. Finish up, by adding Lines 16 and 17 on Line 18 to get your total North Carolina tax.
Enter your withholdings on Line 19, any other tax payments on Line 20, and an earned income tax credit on Line 21. Now add Lines 19 through 22 on Line 23. If Line 18 (the tax you owe) is more than Line 23 (payments and credits), enter the difference on Line 24. If interest/penalties apply, enter those amounts on Lines 24b and c. Now add all the amounts on Lines 24 a, b, and c and put that total amount on Line 25 next to the great big dollar sign.
If Line 18 is less than Line 23, enter that difference on Line 26. This number works out to be the amount you've overpaid. If you want to apply some of your refund to next year's tax bill, record it on Line 27. If you want to contribute to the endangered wildlife fund, enter that amount on Line 28. Now add Lines 27 and 28 on Line 29, before subtracting Line 26 from Line 29, to reveal the amount to be refunded to you. At this point you're reminded that you will get your refund faster if you electronically file.
If you're a full-time resident, go to the signature section on page 4 to sign, date, and jot down your telephone number. If you had a tax pro help you, they will do the same. If you're a part-time resident, work through the few lines above the signature section on page 4 before completing your return. And that's that, not too hard, provided you don't have deal with D-400TC.
Sadly, North Carolina is a state that requires you to send your return to different addresses based on its result.
If you're due a refund mail your return to:
N.C. Dept of Revenue
PO Box R
Raleigh, NC 27634-0001
If you owe, mail your return to:
N.C. Dept of Revenue
P.O. Box 25000
Raleigh, NC 27640-0640