Deduction for General Sales Taxes Claimed
in Lieu of State and Local Income Taxes
The American Jobs Creation Act of 2004 (HR 4520) allows taxpayers
to deduct state and local general sales taxes as an itemized deduction
on their 2004, 2005, 2006, and 2007 federal returns in lieu of state and local
income taxes. Since state and local income taxes are required to be
added back on the North Carolina return, general sales taxes are also
required to be added back. Therefore, a deduction for general sales
taxes will be treated on the North Carolina return in the same manner
as the deduction for state and local income taxes.
Effect on North Carolina Form D-400 and instructions:
Page 3, Line 32 – If either the general
sales taxes or the state and local income taxes are claimed on line
5 of Federal Schedule A, the amount on line 5 of Schedule A must
be entered on line 32 of Form D-400.
State Income Tax Adjustment Worksheet, page 10 of Instructions
for Form D-400 –
The amount to enter on line 1 of the worksheet is either the state
or local income taxes or the general sales taxes claimed on line
5 of Federal Schedule A.
Last modified on:
01/02/08 03:27:39 PM.
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