VA resident with a rental in NC with net loss. TurboTax is telling me I need to complete a NC return, of course, for $39.99 more. I know the NC tax is zero.

[cwolaw]

I went to the NCDOR website, completed the D-400 Sched S, and associated worksheet for nonresidents.  Since the rental had a net loss, there is no income from rent to report in Column A or Column B of the worksheet, and the calculations result in a Zero NC Tax obligation.   Why on earth would I have to file a NC Return when I have no tax obligation to NC?  So, for $39.99, I could download the Turbo NC State return, only to determine I have a zero tax liability?  NC Rules say  "Every nonresident who received income for the taxable year from NC Sources that was attributable to the ownership of an interest in real or tangible personal property in NC or derived from a business trade, profession, or occupation carried on in NC......" would seem to indicate, that since I derived NO INCOME due to the net loss, I do not have to file a NC return.  Turbo Tax added a provision that includes verbiage similar to above, but also, "even if it results in a loss".  This appears to be Turbo Tax trying to sell me another State Tax Return, not a NC Requirement.  I can find no such provision in the NC Instructions.  Am I reading this right?

[DianeW]

No.  It's understandable why there can be confusion.  The issue is that in almost all tax law scenarios, both federal and state, the filing requirement for a return considers only the income.  The return is required to be completed to show there is a loss that is created because the expenses are more than the income.  This is true for rentals and businesses and other income such as sales proceeds for capital gains or losses.

In the end you have no income and therefore no tax liability.  The TurboTax verbiage adds the loss provision to provide the complete information about filing requirements.