Your resident state taxes all income but gives a credit for income taxed by another state. Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.
- First, prepare your non-resident NC return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
- Then prepare your resident state SC return and it will generate a credit for your income already being taxed in the non-resident state.
- The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state, if they have a higher tax rate.
It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.