I have a client, both taxpayer and spouse are military stationed in NC with residency in WA. Spouse had a side business in NC, does she have to file an NC return?

[SteamTrain · Accepted solution]

Yes// The MSRRA exemption from NC taxes  for a civilian spouse, only applies to W-2 income when working for an employer in NC who issues a W-2 to her.  Self-employment income, is taxed.  She'll need to file a Non-resident NC tax return and include that business income as NC-Source income to be taxed by NC.