How to Pay North Carolina State Tax on Social Security

Social Security may be taxed by the federal government but untaxed in North Carolina.

The federal government may tax up to 85 percent of your Social Security benefits when you file your federal income taxes. However, many states, including North Carolina, exempt this income from your state taxes. To ensure that you do not pay unnecessary state taxes on your Social Security benefits, check your federal return to determine how much of your Social Security benefits were included in your taxable income before filing your state tax return.

Things You'll Need

• Federal tax return
• Form D-400

Instructions

1. Check your federal income tax return to determine how much of your Social Security benefits were included as taxable income. This information is on line 20b if you used Form 1040 or line 14b if you used Form 1040A.

2. Report the taxable amount of your Social Security benefits on line 45 of North Carolina income tax Form D-400. This amount will be one of your available deductions on your North Carolina tax return.

3. Add the deductions that you have claimed on lines 43 through lines 52 of North Carolina Form D-400 and report the total on line 53. You will subtract this amount from your taxable income, which will reduce your North Carolina tax bill.

Tips & Warnings

• You cannot deduct Social Security benefits on your North Carolina return if they are not included in your federal taxable income.

References

• North Carolina Department of Revenue: Social Security and Railroad Retirement Benefits
• Social Security Administration: Taxes and Your Social Security Benefits
• IRS: Topic 352--Which Tax Form to Use?

Resources

• North Carolina: Form D-400