I use a professional accounting firm to calculate my taxes, so I am confident in the accuracy of the numbers.
I am self-employed and earned more money last year in addition to taking more out of my 401(k) and IRA. I am 71 years old and subject to minimum distributions, which added to my problem. Because of the higher income, I expected to pay more in taxes and, indeed, my federal tax went up 20 percent. This seemed reasonable to me, but I was shocked by the increase in the North Carolina state tax.
My tax went from $1,826 for tax year 2013 to $4,969 for tax year 2014. Further, I will now be paying an additional $500 per quarter to the state.
My accounting firm explained that I had lost exemptions that applied to retirement income, small business and medical expenses. My out-of-pocket medical expenses have varied between $8,000 and $15,000 over the past few years. My effective tax rate remained unchanged at 6 percent, but apparently the state needed to close my “loopholes” to pay for someone else’s tax cut.
Never miss a local story.
I don’t understand how the state of North Carolina can claim it is reducing taxes with results like these.