Subsistence Allowance Help

[maryrasmussen]

I am doing brother's taxes.  He is a South Carolina firefighter eligible for the subsistence allowance.  He lives in the state of North Carolina.  When I adjust his SC income down for the subsistence allowance it increases his taxes due in NC - why is this?

[Karca · Accepted solution]

Generally, if you are a resident of one state (North Carolina), you'll get credit for the income tax paid to a non-resident state that you earned income in (South Carolina).  If you are taking a deduction in South Carolina, this would reduce your South Carolina tax, therefore reducing the credit you can take in North Carolina for out of state taxes paid in South Carolina.