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Level 2
posted Feb 20, 2025 7:52:23 AM

Bailey Exclusion - NC Retiree

My wife retired under CSRS and is eligible for the Bailey exclusion here in North Carolina. I'm preparing our NC taxes and I have a question. For the amount of retirement benefits do I use the Gross distribution OR Taxable amount?

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1 Best answer
Level 15
Feb 20, 2025 8:14:22 AM

@scsiguru 

 

You use the Federally-taxable amount  (the box 2a value, or the Federally-taxable amount calculated if box 2a is empty or marked "undetermined).

________________

Why?:

 

...........because the NC tax return starts with the Federal AGI......and NC only allows you to deduct what $$ amount was included in the Federal AGI in the first place.

2 Replies
Level 15
Feb 20, 2025 8:14:22 AM

@scsiguru 

 

You use the Federally-taxable amount  (the box 2a value, or the Federally-taxable amount calculated if box 2a is empty or marked "undetermined).

________________

Why?:

 

...........because the NC tax return starts with the Federal AGI......and NC only allows you to deduct what $$ amount was included in the Federal AGI in the first place.

Level 2
Feb 20, 2025 8:41:26 AM

Thank you!