I am a part-year NC resident from 01/01/2020 to 07/31/2020. The PY NC Source Income is $18550. Allocations from other Federal Income are 1) Interest is $664 and 2) other is -$5000 (this is from a tax treaty). So the AGI for NC should be 18550+664-5000=$14214. NC income tax rate for 2020 is 5.25%. The standard deduction of NC for Single is $10750. Then the total tax should be (14214-10750)x5.25%=$182, however, the calculated tax from TurboTax is $691.
Can anyone help me on understanding this?
NC doesn't calculate it that way for part-year residents.
They take your whole-year income, from everywhere and everything, then subtract your Std Ded (or Itemized Ded) from that grand total, to get an NC taxable income-before adjusting any of it for being a part-year resident.
Then they multiply that amount by a decimal (the proportion of your income that is truly NC-taxable) .
SO if 60% of your total yearly income was actually NC income, then they'd multiply the total taxable income calculated, by 0.6 to get the final taxable income from which the NC tax will be calculated..
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On the D-400
Lines 6-to-12b calculate your total income (potentially subject to NC tax).
Line 13 is the decimal multiplier
line 14 is your actual NC-taxable income
line 15 is the tax calculated for that (usually from a tax table...so it won't be exactly 5.25%)
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Now I don't know where your -5000 comes in but I suspect it is part of one of the lines above line 12b
NC doesn't calculate it that way for part-year residents.
They take your whole-year income, from everywhere and everything, then subtract your Std Ded (or Itemized Ded) from that grand total, to get an NC taxable income-before adjusting any of it for being a part-year resident.
Then they multiply that amount by a decimal (the proportion of your income that is truly NC-taxable) .
SO if 60% of your total yearly income was actually NC income, then they'd multiply the total taxable income calculated, by 0.6 to get the final taxable income from which the NC tax will be calculated..
________________________
On the D-400
Lines 6-to-12b calculate your total income (potentially subject to NC tax).
Line 13 is the decimal multiplier
line 14 is your actual NC-taxable income
line 15 is the tax calculated for that (usually from a tax table...so it won't be exactly 5.25%)
_______________________________
Now I don't know where your -5000 comes in but I suspect it is part of one of the lines above line 12b
Thank you so much for helping me understand this. I live chatted (changed from premier to premier live) with 2 product experts and 2 tax experts and none of them were able to provide anything close to what you provided. Most ridiculously is that one of them just left the chat for no reason, shame on them!!!
Anyway, I redo the math and the result is indeed $691:
Total income: 149598+1139+49-5000 = 145786
NC income: 18550+664-5000 = 14214
Percentage: 14214/145786 = 0.0975
NC tax: (145786 - 10750)x0.0975x5.25%=691
Thank you again and TurboTax should hire you as their lead tax expert and refund me with the difference between premier and premier live!