part year residents in VA and NC but had earned income source in VA only

Forum|Forum|5 years ago
February 18, 2021
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We were part year residents in VA and NC but had earned income source in VA only. VA 760PY allowed for income allocation for the portion of the year we were residents. When moving to NC state return in TurboTax we entered the status of Non NC sourced income per prompts. We were never prompted to enter allocation information for NC and ended up with 0$ tax liability in NC. How is this possible? VA did not tax the total income, only the allocated portion. I find it hard to believe that NC does not want to tax the earned income from the VA source for the portion of the year we resided in NC. HELP???

DavidD66

You are correct, North Carolina does want to tax the income you earned while a NC resident, even if you earned it in another state. As you go through your NC state return, you should come to a screen where you allocate your income to North Carolina. See the screenshot below:

North Carolina Tax Allocation

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reheltonAuthor

This page does come up but only allows allocations for interest, dividends and capital gains (loss). I am wondering what to do with earned income from a job sourced in VA. The parallel page on the VA portion of turbo tax also had a section for wages, salaries, tips, etc.

On the page prior to the one you have referenced, I have indicated a status of "not NC source income" next to the wage section.

MAK70

For Part Year Residents, North Carolina tax return, you only get taxed on the North Carolina income- however, North Carolina allows the full standard deduction- it does not prorate it according to the time you were a resident of North Carolina. This means that if you filed Married-Joint, $21,500 of your NORTH CAROLINA only income is not taxed.

This is actually very generous and counter-intuitive, since most states apply everything pro-rata.

@rehelton