NC Assessment

[Patrick1010]

We live in Charlotte and my wife works across the border in SC.  NC gives us a credit for income taxes paid in SC.  The state return for NC properly shows the credit but for some reason I just received a notice/assessment from NC saying I owe the amount that was credited, for ‘18, ‘19 and ‘20.  Is this a simple issue where I’ll just need to provide NC with proof that SC withheld taxes?

[AnnetteB6]

Take a look at your returns for NC to be sure that the credit for taxes paid to SC matches the amount of taxes paid on the corresponding SC non-resident returns.  

The credit is based on actual taxes paid to the other state, not the amount of state taxes withheld by the other state.  

If the amounts from the NC and SC returns match, then you may be able to provide a copy of the SC non-resident returns to NC as proof of taxes paid.  

[Patrick1010]

Thanks!  On the NC return the “net taxes paid to another state” is actually a bit higher than the “credit for income tax paid to another state”.  That’s a good thing, right?  I’ll call NCDOR tomorrow to see what I need to send in.

[AnnetteB6]

That difference between the two amounts would likely indicate that you would have paid less NC tax if the income had been earned in NC instead of SC.  Hopefully, it is just a matter of providing copies of the SC returns.  

You are on the right track with calling NC DOR to get clarification on what to provide.  My apologies for not mentioning that originally.

@Patrick1010