[Later edited based on some calculation steps I inverted accidentally]
One thing that confuses some folks is how NC (and many other states) do the non-resident tax calculations. The NC forms will first apply the deductions (Std/Itemized) to ALL your income, as-if you are actually an NC resident. Then after those appropriate deductions, the form will then ratio-down the taxable income for you, as a non-resident, based on what sub-portion was earned/received from NC sources. Thus, NC starts with your full Federal income, and then you need to tell the software (during the NC interview) what lower amount actually came from NC sources.
Very Crudely...As an NC nonresident, if you had 50,000 of gross income, and $500 NC-sourced income...NC first multiplies the gross NC-taxable income (after deductions) by 0.01 (i.e 500/50,000) to ratio-down your non-resident NC-taxable income, and the final tax is applied to that lower amount.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
