Filing a state tax return in Tennessee and/or North Carolina

[musick4000]

When I did my taxes, the software indicated that I/we did not need to file a TN tax return.  My wife earned $63 during 2016.  However, you keep showing my status as having a TN return that is incomplete - why?  Also, we owned a rental property in NC during 2016, same as in previous years.  Were we supposed to file a NC tax return?

[DanielV01]

You are correct about the Tennessee return.  Tennessee doesn not have a state income tax per se and most do not need to file a Tennessee return.  When you go to the state section, you can delete it (or choose not to file it).

For North Carolina, it depends.  Here is the NC filing requirement for nonresident returns, according to the North Carolina Tax Instruction Booklet (on page 4 middle column).

"Every nonresident who received income for the taxable year from North Carolina sources that was attributable to the ownership of any interest in real or tangible personal property in North Carolina or derived from a business, trade, profession, or occupation carried on in North Carolina, or is derived from gambling activities in North Carolina and whose total income from all sources both inside and outside of North Carolina  equals or exceeds the amount for his filing status shown in the Filing Requirements Chart."  (Italics and bold added)

Your rental (assuming it produced income and not a loss) is North Carolina income, and you will be required to file a North Carolina return if your Federal Gross Income is 8,250 (single) or 16,500 (married).  

[musick4000]

Thank you.  Our rental house did not produce income.  We lost money on it, as it was not rented for several months and also needed some repairs.  May I safely assume that we do NOT need to file a NC return under these circumstances?

[DanielV01]

You may.  A loss is not income, so there is nothing to report to NC if this is your only source of income there.