Federal tax law brought quite a few changes this year as the accompanying article explains. Your state return won't require as much heavy lifting - and many of its changes are tied to the federal return.
The biggest surprise will be on Line 15 of your state form. You'll be asked to figure out the surtax you owe. The surtax will - depending on your income - be either 2 percent or 3 percent of the amount on line 14.
You'll owe a 2 percent surtax if you make: $60,000 up to $150,000 and your filing status is single; $80,000 up to $200,000 with head of household status; $100,000 up to $250,000 with married filing jointly status; $50,000 up to $125,000 with married filing separately status. Below those minimums you don't pay a surtax. Above those maximums you pay 3 percent.
Here's how Thomas Beam, spokesman for the state's revenue department, explained it in an e-mail: If your filing status is "married filing jointly" and your N.C. taxable income shown on Line 13 of Form D-400 is between $150,000 you compute your "regular" state income tax on Line 14 and then multiply that amount by 2 percent. Add the result to your "regular" tax on Line 14 to give you your total tax liability. Then you subtract credits, withholding, payments, etc., to find whether you are due a refund or whether you have to pay additional tax.
One change that parallels the federal tax law is with the Earned Income Tax Credit. The EITC is a refundable credit. If you owe state income taxes, the EITC can reduce what you owe. If you're getting a refund, the EITC is in addition to that. Your income last year could be as much as $43,279 if you have three or more kids, or $48,279 if married filing jointly. (The income adjusts down with fewer children.) The state has increased its earned income credit to 5 percent of the federal credit. And if you qualify for the federal credit, you qualify for the state's.
Another example where the state follows the federal change is in aid to Haiti. Congress passed a law this month making it possible to deduct money donated after Jan. 11 and before March 1 to qualified charities working to bring aid to Haiti. You can deduct it on your state return as well.
One way state and federal returns differ is in direct deposit. The IRS will deposit your refund directly into your bank or savings account if you file a paper return or an electronic return. The state will do so only if you file electronically.
If you owe, you can make the payment via bank draft, Visa or MasterCard on the agency's Web site www.dornc.com. Click on electronic services and then D-400V Individual Payment Voucher. There's no fee if you pay by bank draft, but if you use credit or debit, there will be a $2 fee for each $100 you owe. So owe a penny to $100 and pay $2. Owe $100.01 to $200 and pay $4 and so on.
One last reminder: File on time, even if you can't afford to pay. If you're late, you will automatically be penalized 5 percent of what you owe each month that you're late up to a maximum of 25 percent. If you can't afford to pay, call 877-252-3052 to arrange a payment plan.
If all the changes have left you befuddled, get help - and if you can, get it free.
If your income is low or moderate, you may qualify for free tax prep through the Volunteer Income Tax Assistance program sponsored by the Internal Revenue Service. Go to tinyurl.com/65wpd.
Low and moderate income taxpayers can also get help from the AARP at various sites in the region starting Monday through April 15. To find a site near you, call toll-free 888-227-7669.
