What’s New for Tax Year 2020
N.C. Standard Deduction Amount Increased
The N.C. standard deduction for each filing status increased for tax year 2020. To determine the N.C. standard deduction amount for your filing status, see North Carolina Standard Deduction or North Carolina Itemized Deductions.
New Forms
Form D-400 Schedule A – If you itemize North Carolina deductions, you must complete new Form D-400 Schedule A, 2020 N.C. Itemized Deductions. For more information on Form D-400 Schedule A, see North Carolina Standard Deduction or North Carolina Itemized Deductions.
Form D-400 Schedule PN-1 – If you were not a full-year resident of North Carolina during tax year 2020, you may be required to complete new Form D-400 PN-1, 2020 Other Additions and Other Deductions, to report North Carolina additions and deductions that relate to gross income not specifically listed on Form D-400 Schedule PN. (For more information on Form D-400 Schedule PN-1, see the 2020 North Carolina Individual Income Tax Instructions.
Adjustments to Federal Adjusted Gross Income (“AGI”)
Additions – North Carolina did not follow all of the provisions of the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). To the extent these provisions result in items of income that are not included in federal AGI but are taxable to North Carolina, you must complete Form D-400 Schedule S, Part A. For more information on additions to federal AGI, see the 2020 North Carolina Individual Income Tax Instructions.
Deductions – The North Carolina General Assembly enacted legislation that provided a payment of $335 to individuals who were eligible to receive a grant under the Extra Credit Grant program. If you included the payment in the computation of federal AGI, you may deduct the payment from N.C. taxable income by completing Form D-400 Schedule S, Part B. For more information on deductions from federal AGI, see the 2020 North Carolina Individual Income Tax Instructions.
N.C. Itemized Deductions
Charitable Contribution Limitation – North Carolina does not allow an individual to deduct qualified contributions of up to 100% of federal adjusted gross income (“AGI”). For N.C. income tax purposes, an individual may only deduct qualified contributions of up to 60% of AGI. For more information on charitable contributions, see the 2020 North Carolina Individual Income Tax Instructions.
Medical and Dental Expense Deduction – North Carolina allows an individual to deduct medical and dental expenses that exceed 7.5% of federal adjusted gross income. For more information on medical and dental expenses, see the 2020 North Carolina Individual Income Tax Instructions.
Underpayment of Estimated Tax Interest
In general, the Secretary is required to assess interest on an underpayment of estimated tax. However, because of the COVID-19 pandemic, the Secretary will waive the accrual of interest between April 15, 2020, and July 15, 2020, (collectively the COVID Period) on estimated tax payments due during the COVID Period. For more information on estimated tax, see the 2020 North Carolina Individual Income Tax Instructions.
Other 2020 Legislative Changes
For information on other legislative changes that affect tax year 2020, see the 2020 Tax Law Changes publication.