NC Non-Resident Form

[LB641]

We are nonresidents of NC.

We sold the NC rental, and entered our NC portion of capital gains.

We then get a question that appears to ask about SS income, that is not NC.

We previously entered "0" as NC taxable for this income that is on my federal taxes.

But the question seems to be about income adjustments (please see attached screen shot of the question.

Should the entry be a "0", or is NC trying to give me credit on income that is not NC generated or taxable?

Not sure why this specific question come up.  See attached.

The NC form section in the NC forms says NC deductions from GROSS INCOME. Can I take this deduction from my NC nonresident capital gains income? Or since my SS income is not from NC, would I then enter a 0? Not sure if NC is offering me a SS deduction to my NC capital gains income, even though the SS income is nonresident. See two screen shots attached.

[ColeenD3]

No, if it is not taxable to NC, it is not deductible to NC. They are not going to give you credit for a deduction that has nothing to do with their state. Enter zero income for the social security benefits.

[LB641]

@ColeenD3 

Thanks....   It puzzled us because we found this entry in two places. We had already entered the NC amounts and put a zero in the areas that were Non NC. But then the entry showed up again (by itself) under NC deductions from Gross Income. Since it showed up again, by itself, we wondered if there was some credit or something different about this specific entry and amount. Any thoughts on why it alone showed up again?

Please see attached screen shot of the two areas.

@ColeenD3 

[ColeenD3]

It is informational only. It is not NC income. The only income that applies to NC is the capital gain. Below is how NC treats it. However, since it was never NC income to begin with, you aren't actually deducting it either.

If your social security or railroad retirement benefits were taxed on your federal return, you may take a deduction for those benefits on your North Carolina individual income tax return. You may take this deduction because this income has already been included as part of your federal adjusted gross income and North Carolina does not tax this income. This deduction will increase your refund or decrease the amount you must pay.

NC SS

[LB641]

@ColeenD3 

Thank you again for the kind reply.  Just want to be sure I am clear, and either I enter the SS value noted, or enter a 0.

We are Non-Residents. We sold the vacation rental, and have capital gains, which we entered.

It is informational only. It is not NC income. The only income that applies to NC is the capital gain.

Agreed. And my SS number noted is earned in my home state, not NC. So is 0 the correct entry. Or -

Below (image) is how NC treats it. However, since it was never NC income to begin with, you aren't actually deducting it either.

Agreed, and not being NC earned as a non-resident, my entry is 0?

 If your social security or railroad retirement benefits were taxed on your federal return, you may take a deduction for those benefits on your North Carolina individual income tax return.

My SS was taxed on my federal form. That is normal for all, correct?

You may take this deduction, because this income has already been included as part of your federal adjusted gross income and North Carolina does not tax this income. This deduction will increase your refund or decrease the amount you must pay.

Not sure what this is saying. Sorry - The SS income is included and taxed on my federal form. And as such included in my gross income. But my gross income is not taxed in NC, as I am a non resident. Correct? The only income I noted (see attached) are the line items that were earned in NC. That being said, are you saying I could take the deduction, as a non resident? Or is my entry a "0".  As you can see in the attached, the only income and numbers I included, were the capital gains from the sale of the vacation home in NC, the rental income, and the assets depreciation recapture, from the sale of the assets.  It's the NC deduction from gross income (my SS) that has us wondering why it has been noted.  In all the years we have been doing our NC non-resident taxes, we have never seen this one line. Appreciate you sticking with me and helping. I guess the question is, as a non resident, should I be taking this deduction, or is it a "0". And understanding why 🙂  Thanks   see attached   @ColeenD3 

[LB641]

@ColeenD3 

It is informational only. It is not NC income. The only income that applies to NC is the capital gain.

This is what we thought. Our NC capital gains, our NC rental income, and our NC asset depreciation recapture. Those are the only figures we entered. (see attached)

Below is how NC treats it. However since it was never NC income to begin with, you aren't actually deducting it either.

This is what we understood, but unlike previous years, this new line showed up (top image) seemingly offering us a NC deduction from gross income, and the figure being my SS value. Not sure why this option was offered this year, and thus do we enter a "0", or take the deduction. As nonresidents, the SS was earned here in our home state. But it appears that NC is offering it as a deduction?

If your social security retirement benefits were taxed on your federal return, you may take a deduction for those benefits on your North Carolina individual income tax return.

Yes, the SS number shown is a taxed figure (bottom image), on our Federal tax form. Not sure what that has to do with NC, or why it shows up as a option? Do we take it, and why, or not take it, as non resident, and enter "0".

You may take this deduction, because this income has already been included as part of your federal adjusted gross income and North Carolina does not tax this income. This deduction will increase your refund or decrease the amount you must pay.

This seems to contradict the third sentence, or we may be reading it wrong. We can take the deduction, as a nonresident, when this SS number was earned in our home state? The only income we included on the NC form is our NC capital gains, our NC rental income, and our NC asset depreciation recapture. How can I take that deduction? Trying to learn and fully understand, as this has not shown up in our previous tax years.

Thank you so much for sticking with us and for your help 🙂   (please see attached.

@ColeenD3