How do I answer this question for the NC State Return for NC ADDITIONS TO INCOME?

FTUSA_Community_12
FTUSA_Community_12 Member Posts: 8 Newcomer
edited March 12 in State Filing

Under the topic "NC additions to income" I don't know what are they asking? What are some examples of Expenses Allocable to Income Exempt or Excluded from Gross Income? Why would I include expenses that are exempt from NC income tax like it says below? Would this include 401K contributions?

Expenses Allocable to Income Exempt or Excluded From Gross Income

Enter the amount of expenses resulting from any income that was either excluded from federal gross income or exempt from NC income tax:

Only include expenses that are excluded from your federal adjusted gross income.

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  • FTUSA_Community_12
    FTUSA_Community_12 Member Posts: 8 Newcomer
    edited March 12

    I would like to stress this question:

    Why would I enter the amount of expenses which are exempt from NC income tax when these are suppose to be "NC additions to income" and would therefore result in exempt income being taxed?

    I believe the confusion comes directly from incorrect instructions for line 12 of NC Form D-400 Schedule S.

    NC DOR Line 12 instructions are confusing in it's entirety but especially the last sentence makes no sense:

    "On Line 12, enter the amount of expenses allocable to income not subject to North Carolina income tax."

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