Part Time Residence in NC and Your Tax Situation

Many individuals and couples will relocate to North Carolina with “pre-retirement” intentions.   They may find another career opportunity, or may want to work in North Carolina and “tele-commute”.  This has been a popular method of extending the opportunity to gain income or benefits while getting a jump on your retirement relocation.  Please be aware of some of the general tax rules in North Carolina.   We always encourage you to discuss state taxation with a certified account in the State of North Carolina.

Information for Part-Year Residents and Nonresidents

If you move your legal residence into or out of North Carolina during the tax year, you are a resident of two different states during two different periods of the tax year.

You are a nonresident if you maintain your legal residence in another state or country even though you may temporarily reside in North Carolina. If you reside in North Carolina for more than 183 days of a tax year, you are presumed to be a resident for income tax purposes in the absence of factual proof of residence in another state.

However, your absence from North Carolina for more than 183 days raises no presumption that you are not a resident. If you file a joint federal return and your spouse is a nonresident of North Carolina and had no North Carolina taxable income, you may file a joint State return. However, you still have the option of filing your State return as married filing separately.

If you choose to file a separate North Carolina return, you must complete either

·        a federal return as married filing separately reporting only your income, deductions, and exemptions or a schedule showing the computation of your separate federal taxable income and attach it to your North Carolina return. You must also include a copy of your joint federal return unless your federal return reflects a North Carolina address. (Note: Itemized non-business deductions of a husband and wife may be claimed by a spouse only if that spouse was obligated to pay the items and actually paid the amount during the year).

·        In the case of a joint obligation (such as mortgage interest and real estate taxes), the deduction is allowable to the spouse who actually paid the item. Part-year residents and nonresidents receiving income from North Carolina sources must determine the portion of their federal taxable income that is subject to North Carolina income tax by completing Lines 54 through 56 on Page 4 of Form D-400. See the instructions for Lines 54 through 56 on Page 14.

A part-year resident receiving partnership income from a partnership doing business in North Carolina

If you live in one or more other states must prorate his share of the partnership’s income attributable and not attributable to North Carolina between his periods of residence and non-residence in accordance with the number of days in each period. Include on Line 54 your share of partnership income determined for the period of residence and your share of the partnership income attributable to North Carolina during the period of non-residence.

If you have income from sources within another state or country while you are a resident of North Carolina and the other state or country taxes you on such income, you may be eligible to claim a tax credit on your North Carolina return. See “Credit for Tax Paid to Another State or Country” on Page 15 of Form D-400 for additional information.

If you make your Purchases in your “Home State” or “State of Origin

Like all states that have a sales tax, North Carolina has a use tax on out-of-state purchases.

The use tax applies to purchases made outside the State for use inside the State.

Individuals in North Carolina are responsible for paying use tax on their out-of-state purchases, especially if they are doing business part-time or full-time in North Carolina.

An individual in North Carolina owes use tax on an out-of-state purchase when the item purchased is subject to the North Carolina sales tax and the retailer making the sale does not collect sales tax on the sale.

Items that are subject to sales tax include

  • computers
  • electronic equipment
  • canned software
  • books, audio and video tapes
  • compact discs, records
  • clothing
  • appliances
  • furniture and other home furnishings
  • sporting goods
  • jewelry

Effective January 1, 2010, certain digital property is subject to sales tax and more details may be found at

Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the internet, and retailers located outside North Carolina. When an out-of-state retailer does not collect sales tax, the responsibility of paying the tax falls on the purchaser.


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