NC state taxes

[sonya]

My daughter move to NC in 2023 to attend a college. She earded $4125.  TuboTax shows she owes $103 in state taxes. 

This seems like a high number based on so little income.

Am I missing something in TurboTax that would reduce or eliminate the state taxes owed?

[MarilynG1 · Accepted solution]

What is your daughter's Resident State?  She would report all her income there. 

She would not owe taxes to a Non-Resident state she worked in briefly while attending school.

If North Carolina taxes were withheld from her income there, she can file a Non-Resident State Return to get them refunded to her.

Prepare the Non-Resident State Return first, then the Resident State.

Here's more info on How to File a Non-Resident State Return.

@sonya 

[SteamTrain]

Not  enough information....she might owe NC some if she had significant other income during the year.

1)  IF she is under age 24 and your dependent, then she didn't move to NC, you should not indicate that she moved as her attending college (Assumed full time) there is considered temporary, and remains a resident of your own home state.

or....explain if you think #1 is not true.

2)  If #1 is true, then her NC tax return should be an NC non-resident tax return.   When done that way....ALL her income from everywhere during the year is included in her state income for the year ...but ONLY at First....when you/she eventually goes thru all the NC state non-resident income allocations, you only indicate her working income there as being NC income, and all other income types are not NC sourced income.  That might still end up with her having some taxes associated with NC if her non-NC income is significant.

Example: Student works the summer at home and earns 15,000, then works at school in NC and earns 5,000 there.  Ignoring anything else, that's 20,000 of Federal income (AGI). 

a)  NC Transfers that Federal AGI to the NC non-resident tax return..

b) ....then NC applies a 12,750 Std Deduction to that resulting in $7,250 of taxable income

c)..... the tax on that is calculated as 4.75% of 7,250....or  ~$344...but that's on all her income.

d)  .........but if you do the income allocation questions properly in the software, only 25% of her income was in NC, so the NC form calculations will take 25% of 344, or only $86 she owes to NC itself.  (that percentage...though showing as a decimal fraction multiplier, should show up on line 13 of the NC From D-400)

So really, it will depend on her total income for the year....and then whether you go thru the income allocations properly in the NC Q&A section...assigning only the NC wages as income subject to NC taxes.

[sonya]

I appreciate the help!