Because the starting point for determining North Carolina taxable income is federal taxable income, you must complete your federal return before you begin your North Carolina return. Do not enter your total income on line 6 of your Form D-400.

Your federal taxable income is the amount on line 43 of your federal form 1040, line 27 of 1040A or line 6 of 1040EZ. If your federal taxable income is less than zero, you were required to enter zero on your federal return; however, the starting point for your North Carolina return must be the negative amount. For example, a single taxpayer with total federal income of $8,250 with total deductions and exemptions of $8,750 will have a negative $500 federal taxable income. Although the taxable income will be zero on the federal return, the starting point for your North Carolina return will be negative $500. Do not enter zero on your State return when your federal taxable income is a negative amount or you will pay too much State tax.

If you have a negative federal taxable income, fill in the circle to the left of the line 6 amount on the Form D-400.

Remember, first complete your federal return to determine the starting point for your North Carolina return.

Last modified on: 01/02/08 03:27:42 PM.