turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

IanN
New Member

NC Taxes for Military

I am active duty and a resident of North Carolina who is stationed in CA. My spouse is a civilian working in CA who is a resident of CA and pays state taxes to CA. When filing my joint return for CA, it has me exclude my income from our joint CA state return because I'm paying taxes on my portion to NC (obviously). However, when I start to work on my NC taxes, it has me differentiate between my wife's income being Non-NC income, but then it proceeds to include her income in my total taxable income, which obviously mean's I would owe more. Am I missing something, or does North Carolina tax me on our total income even though CA state taxes were already paid on a portion of that income?  I've tried searching for answers to this for over a year and can't find anything. Any help would be great. 

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

3 Replies
KrisD15
Expert Alumni

NC Taxes for Military

Your spouse has the option of selecting North Carolina as his/her resident state for tax filing purposes. 

 

“The Military Spouses Residency Relief Act allows military spouses to declare the same state of lega...

 

If he/she declares North Carolina as their resident state for tax purposes, they would file a non-resident CA return to have the CA state tax withheld refunded.  Next you would file a joint NC return and claim all income. 

 

If they decide to stay a California Resident for tax purposes, you would need to file a Married Filing Separate North Carolina return and claim only your income. 

 

According to the State of North Carolina:

“North Carolina requires that you use the same filing status as you used on your federal return. An exception for married couples is if one spouse is a resident of North Carolina and the other is a nonresident (and had no NC taxable income), you may use the filing status for Married Filing Separately.”

 

“If you file married filing separate state returns but filed a married filing joint federal return, e-file the federal return and wait for the return to be accepted. Then, complete a federal return using the married filing separate status.  Do not file the second federal return. Attach copies of both the married filing joint federal return and the married filing separate federal return to the printed North Carolina return. You cannot e-file the North Carolina return.”

 

More information for military members filing a North Carolina Return

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
IanN
New Member

NC Taxes for Military

I've read over all that before, but my wife isn't utilizing the military act and has filed taxes in California, and paid taxes on her income to California. What I'm trying to determine why is North Carolina taxing a portion of our join income that was earned in CA, by a resident of CA, and taxed by CA. It appears that NC is just double dipping into that income and taxing it again.  In the past, I've filed married filing separately because of this whole issue, but I can never find a definite answer as to why they are doing this. 

NC Taxes for Military

I'm not sure exactly what you are seeing.

 

If her W-2 income is being properly tagged as Non-NC Income during the NC interview, then it is likely being excluded.

BUT

You should note, that when filing MFJ-NC (where one spouse is tagged as not an NC resident) the NC tax return does use all of both your incomes ....Just at First...calculates a Taxable income based on both your incomes, but then ratios the taxable income down based on what lower fractional amount of the total was just yours.

_____

Here's the big thing that can be an error on your part:  In the NC interview, on the page after the W-2 allocation page, there is a column that shows all the Federal income, and then a column where you enter NC income while Non-Resident.  Since your spouse is maintaining herself as a CA resident...That second column is for $$ for your NC non-resident spouse...and she had zero NC income as a NC nonresident....i.e. she didn't have any income subject to NC taxes...so in that column you should be entering all zeros for her...and zeroes must be entered & not left blank.

______

To see that, it works out right, after you've fully filled in everything, you'd need to see the actual form D-400, where line 12b will be your non-reduced total taxable income for both of you, the line 13 is a decimal fraction of the total that belongs to you, Line 14 is just the taxable income assigned to you, and line 15 is the lower tax associated with just you.

________

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question