TurboTax Premier didn't calculate that I owed the State of NC on the $80K Capital Gain from the sale of my home. But my Realtor said that I would be taxed by NC?

[cstringer521]

All the Capital Gain info. was entered for the Fed. income tax return. TurboTax said that amount didn't have to be reported. There was no option to re enter those figures for the State, as it simply pulled the Federal info to complete the State of NC return. TurboTax Premier is supposed to come with live support but there was no option found while I was filling out my return to ask this question. Is Turbo Tax Premier correct in not determining that I owe the State on the sale of my primary home, which I lived in for 4 years? My Realtor said I would owe the State.  

[cstringer521]

I found this information at the below website, which seems to contradict the response I was provided. "Although residents of North Carolina pay both income and capital gains taxes at the state level, a single rate created by law in 2013 simplifies the process of calculating taxes. As of 2017, there's only one tax bracket -- the rate levied is a flat 5.499 percent -- and the rate applies to wages and all other income, including capital gains.
In North Carolina, there's no general exemption set -- all of the gain is included in income and subject to tax."(pocketsense.com/capital-tax-laws-north-Carolina)

[BMcCalpin · Accepted solution]

I don't see that you would owe the state for the sale.

North Carolina starts with federal adjusted gross income, and then makes adjustments for differences between state and federal law. I don't see any adjustment for the sale of home as treated on the federal return, nor can I find any reason why North Carolina would not honor the federal exclusion on gain from sale of home.

I do see this: "The amount by which your basis of property for State purposes exceeds your basis of property for federal purposes must be deducted from your adjusted gross income in the year that you dispose of the property." This is a subtraction from federal income (if the federal basis exceeds the state basis, then it becomes an addition).

But it is not likely that your state basis is different from your federal basis.

[cstringer521]

Although residents of North Carolina pay both income and capital gains taxes at the state level, a single rate created by law in 2013 simplifies the process of calculating taxes. As of 2017, there's only one tax bracket -- the rate levied is a flat 5.499 percent -- and the rate applies to wages and all other income, including capital gains.
In North Carolina, there's no general exemption set -- all of the gain is included in income and subject to tax.(pocketsense.com/capital-tax-laws-north-carolina)

[BMcCalpin]

I do not read that article the same way. Note this sentence: "Like many states, North Carolina does not require an itemization of capital gains transactions on its personal income tax return. Instead, residents simply declare the adjusted gross income calculated on the federal return, which includes capital gains as well as deductible losses, and enter that number to calculate their North Carolina taxes."

But the excluded gain from the sale of your qualified home does not appear on your federal return (certainly not on Schedule D), there is nothing to carry to the capital gain line on the North Carolina return.

The article appears to be talking about any other capital gain that IS reported on Schedule D.