How to File Your North Carolina Tax Return for 2023: Step-by-Step Guide for Individuals and Small Businesses

Filing your North Carolina tax return for the 2023 tax year may seem overwhelming, especially if you're unsure which forms to use or what information you need. Whether you're an individual, a senior, someone with a disability, or a small business owner, understanding how to file correctly can help you avoid penalties and claim any refund you're owed. This guide walks you through the process step-by-step using updated instructions from the North Carolina Department of Revenue.

North Carolina requires most taxpayers to report their income annually, even if they also file a federal tax return. Filing requirements depend on your income, age, and residency status. In addition to income tax, the state may assess other taxes, such as property taxes or those based on county-level services. Knowing what applies to your situation is essential before completing and submitting your return.

This article includes clear instructions on how to file, where to send your forms, how to pay if you owe taxes, and how to track your refund. You'll also learn about deductions, exemptions, and the current state tax rate. Whether you’re filing for the first time or simply need a refresher, this guide is designed to provide the essential information you need in one place.

Overview of North Carolina State Income Tax for 2023

Understanding how North Carolina taxes apply to your situation is the first step toward accurately completing your state tax return. This section outlines who must file, how residency status affects filing, when the deadline is, and the most important tax law changes for the 2023 tax year.

Who Needs to File

You must file a North Carolina tax return for 2023 if your gross income meets or exceeds the minimum thresholds based on your filing status. These thresholds apply whether or not you must file a federal tax return.

• Single: $12,750
  
  
• Married Filing Jointly: $25,500
  
  
• Married Filing Separately (spouse does not claim itemized deductions): $12,750
  
  
• Married Filing Separately (spouse claims itemized deductions): $0
  
  
• Head of Household: $19,125
  
  
• Qualifying Widow(er): $25,500
  
  
• Nonresident Alien: $0
  
  

If you had North Carolina income tax withheld during the year, you must still file a return to claim any refund, even if your income is below the required threshold.

Residency Status and Filing Requirements

Your residency status affects which income is taxable and which forms you must file. North Carolina recognizes three categories:

• Resident: You lived in North Carolina permanently or were domiciled for all or part of the tax year. A person in the state for more than 183 days is generally presumed to be a resident.
  
  
• Part-Year Resident: You moved into or out of North Carolina during the year and received income in and out of the state.
  
  
• Nonresident: You lived outside North Carolina but received income from North Carolina sources.

Residents must report all income, while part-year residents and nonresidents report only income earned in North Carolina. You may also be eligible for certain deductions or exemptions depending on your age, disability status, or income level.

Filing Deadline

For the 2023 tax year, the deadline to file your North Carolina state tax return is April 15, 2024. If your return is based on a fiscal year rather than the calendar year, it is due on the 15th day of the fourth month following the end of that fiscal year.

Missing the deadline may result in penalties and interest, so filing or requesting an extension before the due date is essential.

Key Changes for the 2023 Tax Year

North Carolina updated several tax provisions for the 2023 filing period. These changes affect both individual taxpayers and small business owners:

• Reduced Tax Rate: The state income tax rate decreased from 4.99 percent in 2022 to 4.75 percent in 2023.
  
  
• Revised Pass-Through Entity Rules: S corporations and partnerships may now elect to pay taxes at the entity level, changing how income and deductions are reported.
  
  
• Expanded Eligibility for Taxed Partnerships: Partnerships with corporate or partnership members may now qualify for taxed partnership status.
  
  
• Business Recovery Grant Deduction: Taxpayers may deduct proceeds received from the Business Recovery Grant program retroactively for tax years beginning on or after January 1, 2020.
  
  
• Internal Revenue Code Update: North Carolina’s tax code now conforms to the Internal Revenue Code as of January 1, 2023.

What Forms You’ll Need

Before completing your North Carolina tax return, gather the correct forms. The state uses specific forms based on income type, residency status, and available deductions or credits. Filing with the proper documents helps avoid delays and ensures the North Carolina Department of Revenue can process your return efficiently.

Main Tax Form

• Form D-400: This is the standard North Carolina individual income tax return. All residents, part-year residents, and nonresidents with North Carolina income must use this form.

Common Schedules and Attachments

Depending on your situation, you may need to attach additional forms:

• Schedule S: Report additions or deductions to your federal adjusted gross income, such as retirement exemptions or business recovery deductions.
  
  
• Schedule A: Itemize deductions for state income tax purposes if you choose not to use the standard deduction.
  
  
• Schedule PN: Part-year residents and nonresidents are required to allocate North Carolina-source income.
  
  
• Schedule TC: Claim eligible tax credits, including child care, education, and property taxes paid to a county.
  
  
• Schedule AM: Used to amend a previously filed state tax return.
  
  
• Form NC-NOL: Determine your North Carolina net operating loss carryforward.
  
  
• Form D-400V: Include this payment voucher if you owe taxes and pay by check or money order.
  
  
• Form D-410: Submit this to request an extension of time for filing.

These forms are available on the North Carolina Department of Revenue’s website and at local revenue offices.

Step-by-Step Instructions to Complete Your Return

Filing your North Carolina tax return involves several steps, especially for those with income from multiple sources or those claiming deductions or credits. Follow this order to reduce errors and avoid missed requirements.

1. Gather Required Documents

Before starting your return, collect the following:

• Your completed federal tax return (Form 1040 or 1040-SR)
  
  
• All W-2s and 1099s are showing North Carolina tax withholding.
  
  
• Records of estimated payments made to the state
  
  
• Documentation for deductions, exemptions, or credits
  
  
• Social Security numbers for all individuals listed on your return

2. Complete Your Federal Return First

Your federal adjusted gross income is the starting point for your North Carolina return. You must complete your federal tax return before filling out Form D-400.

3. Fill Out Form D-400

• Enter your personal information, including address, Social Security number, and filing status.
  
  
• Report your federal adjusted gross income on Line 6.
  
  
• Use Schedule S to report additions or deductions specific to North Carolina taxes.
  
  
• Calculate your state taxable income by applying the 4.75 percent state tax rate.
  
  
• Claim eligible credits on Schedule TC.
  
  
• Include North Carolina income tax withheld and any estimated payments made.
  
  
• Determine your refund or amount owed.

4. Complete Additional Schedules if Required

Use Schedule A if you itemize deductions. If you lived in or moved out of North Carolina during the year, use Schedule PN to apportion income. Include supporting forms as needed, especially if claiming exemptions for age, disability, or property losses.

5. Review for Common Errors

• Double-check that all Social Security numbers, names, and addresses are correct and consistent across your forms.
  
  
• Before filing, verify all math calculations, confirm banking details for direct deposit, and ensure all required signatures are included.

How to File Your Return

You can file your North Carolina tax return either electronically or by mail. Electronic filing is recommended for most taxpayers because it reduces errors and speeds up refund processing.

Electronic Filing (e-File)

The most efficient option is to e-file your return through the North Carolina Department of Revenue’s approved providers. Benefits include:

• E-filing through an approved North Carolina provider reduces errors and results in faster refunds than paper filing.
  
  
• This option also confirms that your return and personal information were received.

Free e-File Options

Eligible taxpayers may qualify for free filing through NC Free File providers:

• 1040.com: Available to those with adjusted gross income between $17,100 and $84,000, including active-duty military.
  
  
• FreeTaxUSA and Online Taxes are available to those earning $48,000 or less, or $84,000 or less for military households.

Visit the NC Free File page on the NCDOR website to see if you qualify.

Paper Filing

If you prefer to file by mail:

• If you file by mail, complete your return in blue or black ink only and avoid using symbols like dollar signs or commas.
  
  
• Please include all required attachments, sign the return, and use the appropriate mailing address depending on whether you expect a refund or owe taxes.

Filing by paper may result in longer processing times, especially during peak tax season.

How to Make a Payment

You can choose from several payment methods if you owe taxes on your North Carolina tax return. It’s essential to pay the full amount by the filing deadline to avoid penalties and interest, even if you request an extension to file.

Online Payment Options

• You can pay through the North Carolina Department of Revenue website using an electronic bank draft from your checking or savings account, with no additional fee.
  
  
• You may also pay using a credit or debit card (Visa or Mastercard); however, the third-party processor will charge a processing fee of $2 for every $100 paid.
  
  
• To make a secure online payment, visit the “Pay” section of the NCDOR website and follow the prompts based on your payment method.
  
  

Paying by Check or Money Order

• If you prefer to pay by mail, make your check or money order payable to “N.C. Department of Revenue,” write “2023 D-400” along with your name, address, and the last four digits of your Social Security number on the memo line.
  
  
• Include a completed Form D-400V payment voucher with your check and submit it with your tax return to the address for returns with payment.
  
  
• The check or money order must be drawn on a U.S. bank and payable in U.S. dollars.

Payment Deadline and Penalties

• Your tax payment is due by April 15, 2024, regardless of whether you file an extension to submit your return later.
  
  
• Late payments are subject to interest charges and a penalty of 5 percent of the unpaid tax amount.
  
  
• If you fail to file your return on time, an additional penalty of 5 percent per month, up to 25 percent, may be added.

How to Track Your Refund or Balance Due

After completing and submitting your North Carolina tax return, you can track the status of your refund or confirm any remaining balance you owe.

Tracking Your Refund

• Use the “Where’s My Refund?” tool on the North Carolina Department of Revenue website to check the status of your refund.
  
  
• You’ll need your Social Security number (or ITIN) and the exact refund amount shown on your tax return to use the tool.

Refund Tracking by Phone

• You can call 1-877-252-4052, a toll-free automated refund inquiry line available 24 hours a day, seven days a week.
  
  
• Have your Social Security number and refund amount ready when calling to receive an update.

Refund Processing Timeframes

• Returns filed electronically with direct deposit are typically processed within 2 to 3 weeks.
  
  
• Paper-filed returns or those requesting paper refund checks may take 6 to 8 weeks or longer to process.

Reasons for Refund Delays

• Refunds may be delayed if your return has errors, is incomplete, or requires additional verification by the department.
  
  
• Refunds can also be reduced or offset to pay outstanding state or federal tax balances or debts owed to other government agencies.

Final Filing Checklist

Before submitting your North Carolina tax return, use this checklist to ensure everything is accurate and complete. This step can help avoid processing delays or penalties.

• I have completed my federal tax return before starting my North Carolina return.
  
  
• I have entered my correct name, address, and Social Security number(s) on all forms.
  
  
• I have selected the correct filing status and attached the required schedules and supporting documents.
  
  
• For accuracy, I have reviewed my income, deductions, exemptions, and calculations.
  
  
• I have included all W-2s, 1099s, and other tax forms showing North Carolina tax withheld.
  
  
• I have completed Form D-400V and enclosed the payment if I owe taxes. I am mailing a check or money order.
  
  
• I have signed and dated my return; if I am filing jointly, my spouse has also signed it.
  
  
• I have verified my bank account information to request a refund by direct deposit.
  
  
• I have copied my entire return for my records.
  
  
• I will mail my paper return to the correct address or have received confirmation of an e-filing submission.

FAQ: North Carolina State Tax Filing

What happens if I miss the deadline to file my North Carolina tax return?

If you miss the deadline to file your North Carolina tax return, the North Carolina Department of Revenue may assess penalties and interest. The penalty for failing to file is up to five percent of the unpaid monthly tax each month, with a maximum penalty of 25 percent. Even if you cannot pay your full balance, you should still file your return on time to minimize penalties and protect your refund eligibility for this tax year.

Can I file my North Carolina taxes for free?

Many taxpayers can file their North Carolina taxes for free using NC Free File. This program is available to eligible individuals based on income, age, or military status. The state partners with online providers to help people complete and file their returns at no cost. Visit the North Carolina Department of Revenue website for updated information and see which option applies to your income.

Are there any commonly missed deductions or exemptions?

Yes, many taxpayers overlook available deductions and exemptions. Common examples include property tax deductions, deductions for disability-related expenses, and exemptions based on age or income limits. Others miss adjustments related to additions or deductions from their federal tax return. Completing Schedule S and reviewing eligibility for Schedule A will ensure you receive every benefit allowed under North Carolina state tax laws.

How do I pay my state tax balance in North Carolina?

To pay your state tax balance in North Carolina, you can use the North Carolina Department of Revenue’s online system to make a bank draft or credit card payment. Payments by check or money order must include Form D-400V and be mailed to the correct office. Whichever method you choose, submit payment by the due date to avoid penalties. Payment options may vary depending on income, location, or county of residence.

Do I need to include my federal tax return with my state filing?

You must include a copy of your federal tax return with your North Carolina tax return if your federal return does not show a North Carolina home address or if you are filing by paper. This helps the state confirm your reported income, deductions, and exemptions. The North Carolina Department may return your filing if required federal information is missing, which can delay your refund or result in additional taxes owed.

Does North Carolina have an estate tax or other taxes I should know about?

North Carolina does not currently have an estate tax, but you may still be subject to federal estate tax laws if applicable. The state also collects other taxes, such as sales tax, gasoline tax (per gallon), and property taxes at the county level. Some of these taxes are based on percentage rates that differ by locality. Taxpayers should check for updates each tax year to understand what applies to their situation.

What should older individuals or those with disabilities know before filing?

Older adults and persons with disabilities may qualify for special exemptions or deductions on their North Carolina tax return. These benefits may apply based on age, disability status, income level, or limited ability to pay. Review the eligibility requirements listed in the official instructions when completing your return, or visit a local North Carolina Department of Revenue office for assistance. Accurate filing ensures you receive all the tax relief you're entitled to.

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