Terry D EA Posted February 7, 2015 Report Posted February 7, 2015 NC has many tax law changes this year. The one that I am questioning is the charitable contributions. In the past if you could not itemize deductions on the Federal 1040 you could take a percentage of charitable contributions on form NC D400. Correct me if I am wrong, this year it appears that if you take the NC standard deduction the option of claiming any Federal non-deductible charitable contributions is gone. The NC D400S has the line for the contributions, mortgage interest and RE taxes but an input isn't allowed. Input is allowed if you itemize on Sch A. Then and only then is an input of charitable contributions allowed. The instructions from the state don't make any reference to the change and the only time you have a choice between the standard deduction and itemizing is if the Federal Sch A is used or itemized deductions are forced. Am I correct? NC really beat folks up this year with all the changes and non-allowances that had been there for years. Quote
jklcpa Posted February 7, 2015 Report Posted February 7, 2015 Weird, that's not really the way the instructions read though. Is it the filing status causing a problem? Quote
JohnH Posted February 7, 2015 Report Posted February 7, 2015 The contributions credit for non-itemizers has been eliminated. Here is a good summary of all the changes form the NCDOR web site:http://www.dor.state.nc.us/taxes/individual/ind_whatsnew.html Quote
jklcpa Posted February 7, 2015 Report Posted February 7, 2015 John, I read that too. To be clear, if the Fed uses the standard, aren't NC residents allowed to itemize for state purposes within those stated limits?. It sounds like what Terry is asking is why he isn't allowed to itemize on NC unless sch A is present on the Fed return also, because he said his input was greyed out. That's what I thought was weird and why I asked about the filing status, wondering if it was an MFS status causing his problem. Quote
joanmcq Posted February 7, 2015 Report Posted February 7, 2015 Don't know about the NC input because my only NC client itemizes, but for CA, in some circumstances one can itemize for CA but is under the threshold for federal, but to do so, I've got to include the Sch. A, even if it isn't being used for federal. Quote
jklcpa Posted February 7, 2015 Report Posted February 7, 2015 Joan might be correct. Is there a box to check to force itemizing for the federal to allow the Sch A input for the state? I have to do that with Delaware because it also allows the Fed to use the standard and itemized for state. In those cases, I e-file the federal in one transmission with the higher standard deduction, and then I go back and check the box to force itemizing to allow the Sch A to be included and then I transmit the state in a second e-file. The IRS doesn't care because it's already processed the 1040. If I don't do it this way, the Sch A isn't sent with the state return and the processing is held up while the state sends the client a letter requesting that the schedule be mailed or faxed in. Quote
Terry D EA Posted February 7, 2015 Author Report Posted February 7, 2015 One problem I found here is I am using OltPro (OneDesk) and they have the 2013 instructions which totally confused me while I was preparing the return. So, note to self, don't trust the instructions in the software. Also, the instructions from the NC DOR ( on their website) don't make the distinction very clear. They do lead you to believe that you can take only the three deductions mentioned earlier but don't give you a choice when claiming either the standard deduction. After further reading the three Federal deductions I mentioned are the only ones allowed from the Federal Sch A period. The choice of standard or itemizing comes into play when itemizing Federal only. I plan on contacting OneDesk regarding the outdated instructions. Quote
Terry D EA Posted February 7, 2015 Author Report Posted February 7, 2015 Joan might be correct. Is there a box to check to force itemizing for the federal to allow the Sch A input for the state? I have to do that with Delaware because it also allows the Fed to use the standard and itemized for state. In those cases, I e-file the federal in one transmission with the higher standard deduction, and then I go back and check the box to force itemizing to allow the Sch A to be included and then I transmit the state in a second e-file. The IRS doesn't care because it's already processed the 1040. If I don't do it this way, the Sch A isn't sent with the state return and the processing is held up while the state sends the client a letter requesting that the schedule be mailed or faxed in. Judy, I tried that as well and in doing so does allow the Sch A input to NC. But....kills the Federal refund and increases the NC due for this client so it is not a good choice. The old tax law in NC allowed a person to take a percentage of the charitable deductions that couldn't be claimed on the Federal. That is what has changed here and is no longer allowed. Sorry if I made this confusing. Quote
JohnH Posted February 7, 2015 Report Posted February 7, 2015 I didn't address the issue of using standard deduction on Federal and itemizing on NC because I can't think of a situation in which that would happen. The NC standard deduction is much higher than Federal across-the-board. It seems to me that the charitable contributions credit (and maybe a few other adjustments) are the only issues at stake. For the most part, NC has "simplified" by raising rhe standard deduction, lowering the marginal rates, and eliminating many adjustments to income and credits. They pitched this as being of little consequence to most taxpayers, but I'm still not convinced that is the reality. Quote
joanmcq Posted February 8, 2015 Report Posted February 8, 2015 CA doesn't require the Sch A to go with the return, so I don't have to force it, just have to remember to check the box for it to print. Quote
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