That can happen if you made one or more quarterly estimated tax payments during the year, but didn't make exactly 4 quarterly payments of equal value.
For example:
...... if you would have owed 3,000 to NC (ignoring Quarterly estimates) but then only made the 4th quarter payment of a billion $....there would still be an interest payment applied. Even with a huge refund.
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So to "possibly" eliminate the interest, you would have to go thru the Annualized Income questions in the State tax section to create the form D-422A. But even then, the interest might not be eliminated....ir really depends on exactly when during the year your income was received...and exactly when your payments (or withholding) was made.
Example 2: You perhaps made a huge gain in Jan of 2020, but didn't make an estimated payment to cover it until Dec of 2020. The annualized income won't eliminate the penalty/interest, because you should have paid for the eventual NC taxes on it during the first Qtr of 2020.....that's what the D-422A determines
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
