Who Must Pay State Income Tax in North Carolina?
In North Carolina, taxpayers must use Form D-400 to file their state income tax returns. The gross minimum income filing thresholds in North Carolina are different from the federal filing thresholds. Under North Carolina law, the North Carolina Department of Revenue does not adjust its annual threshold guidelines to account for annual inflation as required by the federal government's tax rules for the IRS.
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Filing Requirements
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North Carolina requires residents and nonresidents who earn income within the state to file their annual tax returns if their incomes exceed the state's annual tax filing requirement thresholds. For the 2010 tax year, residents and nonresidents who are single and age 65 or older must file returns if their federal gross income exceeds $6,250. Those under age 65 and single must file if their annual incomes exceed $5,500. Those married filing joint returns and younger than 65 years old must file if their annual incomes exceed $11,000. Those both over age 65 must file if their combined incomes exceed $12,200. However, when one married spouse is younger than age 65 while the other is age 65 or older, they must file returns if their combined incomes exceed $11,600. Taxpayers who are married but file separate returns must file if they each earn over $2,500.
Tax Table
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North Carolinians who earn less than $68,000 for the 2010 tax year must use the North Carolina tax table to calculate their tax liabilities. The state's tax table determines tax liabilities according to the taxpayer's annual taxable income. For instance, a single taxpayer who earns between $31,000 and $31,050 annually is liable for $2,044 in taxes. Taxpayers who file jointly and earn the same total income are liable for $1,959 in taxes for that year. Taxpayers who file separately must pay $2,066 in taxes for the same income bracket.
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Tax Rate
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The North Carolina Department of Revenue uses a tax rate schedule to determine tax liabilities for taxpayers who have at least $68,000 of taxable income, annually. The tax rate method requires taxpayers to pay a flat income tax based on their filing status and taxable income. For instance, in 2010 and 2011, taxpayers who are single and earn over $60,000 will pay $4,072.50 plus 7.75 percent in taxes for the portion of income exceeding $60,000. Married filing jointly taxpayers pay $6,787.50 plus 7.75 percent in taxes for income exceeding $100,000. Those filing separately should use the tax rate schedule if they each have at least $50,000 of taxable income and will each pay $3,393.75 plus 7.75 percent in taxes for income exceeding $50,000.
Taxpayer Bill of Rights
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The North Carolina General Assembly passed the Taxpayers' Bill of Rights Act providing state constitutional rights to taxpayers who pay North Carolina income taxes. The act provides privacy rights, rights to fair and courteous treatment from the tax department and rights to request waivers of penalty fees for tax delinquencies. The North Carolina Department of Revenue's Penalty Waiver Policy allows them to waive penalties in certain cases. However, under North Carolina law, the Department of Revenue may not waive accrued interest fees and requires taxpayers to pay accrued interest on delinquent tax payments.
Considerations
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Since tax laws can frequently change, you should not use this information as a substitute for legal or tax advice. Seek advice through a certified accountant or tax attorney licensed to practice law in your jurisdiction.
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References
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