Just after the start of the year, our tax attorneys in Chapel Hill encouraged some filers to hold their returns until after the General Assembly decided whether to pass pending state income tax laws. Delaying filing could have helped prevent those taxpayers from re-filing an amended return.
The North Carolina Department of Revenue also released announcements alerting taxpayers that the potential law changes could prompt taxpayers to re-file amended returns. Initially, a decision was anticipated by January 29, 2015, but the governor signed the changes into law on March 31, 2015. For taxpayers who waited, they should prepare their returns according to the new North Carolina income tax provisions. Individuals who filed prior to March 31, 2015 should learn more about the tax provision changes and check with a tax professional to learn if they need to re-file.
The pending changes resulted from the Tax Increase Prevention Act, which was signed into law by President Obama last year. North Carolina lawmakers were deciding which provisions of the Act they were going to implement on the state level. The outcome: North Carolina will not follow six provisions in TIPA.
The North Carolina Department of Revenue provides a chart of the six income tax differences here. One difference includes mortgage insurance premiums not recognized as qualified residence interest by the state. Others address qualified tuition deductions, qualified charitable distributions from retirement accounts, and more.
Taxpayers who do not file an amended return might have outstanding tax debt and owe penalties and late payment fees on the balance. According to the NCDOR:
Any person who has already filed a 2014 North Carolina income tax return and whose federal taxable income (C corporation) or federal adjusted gross income (individual) is impacted by the amendments to federal law included in TIPA or by the provisions of TIPA from which North Carolina has decoupled must file an amended North Carolina return.
Schedule a review of your 2014 tax returns with your tax attorney or tax preparer to ensure your North Carolina income tax requirements are fulfilled.