North Carolina’s corporate tax rate of 2.5% is among the lowest in the United States. The state’s individual income tax rate is also favorable at 4.5%.
Understanding the cost of apportionment in the state can help you accurately report earnings to the IRS and local government.
Corporations
- Filing Requirements. Every corporation doing business in North Carolina and every inactive corporation chartered or domesticated here must file an annual franchise and income tax return using the name reflected on the corporate charter if incorporated in this State, or on the certificate of authority if incorporated outside this State.
- Allocation & apportionment. The state uses the sales factor in sourcing receipts from the performance of services to the state.
Partnerships
Filing Requirements. Partnerships doing business in North Carolina that are required to file a federal partnership return must file a North Carolina information return for the taxable year. The term “partnership” includes a limited-liability company that is classified for federal income tax purposes as a partnership, as well as, a publicly traded partnership whereby the partners’ distributive share of the partnership’s net income during the tax year is more than five hundred dollars ($500.00).
Employees & individual filers
Filing Requirements. Every resident of North Carolina must file a state income tax return if their gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for their filing status. This includes income from all sources, both within and outside of North Carolina. Additionally, non-residents and part-year residents who earned income from North Carolina sources are also required to file a state income tax return. It’s important to note that even if your income is below the filing threshold, you should file a return if you qualify for certain tax credits or if North Carolina state taxes were withheld from your pay and you are eligible for a refund.
Ensuring Accurate Tax Filings
Consulting an expert CPA can help you keep a handle on different laws and tax implications.
At Fusion CPA we can help you take the stress out of tax season. This means that you can focus on what really matters.
To see how we can help you with a proactive tax strategy to save you time and money, schedule a Discovery Call with one of our CPAs.
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This blog article does not provide legal, accounting, tax advice, or other professional services. Our content is based on current or proposed tax rules at the time of publishing. Older don’t always reflect tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog. We also disclaim the same in relation to use or interpretation of this information. You should not rely on the information on this website as being all-inclusive.