Individual Income Tax (North Carolina)
Individual Income Tax (North Carolina)
Personal income tax or individual income tax refers to the levied tax on personal income. Here, individual refers to a person, non-juristic body of person, an ordinary person or an individual estate. For an individual to be liable for personal income tax, one has to compute file tax returns, compute tax liability as well as pay the indicated tax as according to the calendar of the year. The individual tax income differs in different states with each state having its own rights of running the tax provided by its residents. This research would look closed at North Carolina department of revenue. Their table tax table, bill of rights, tax rate schedules, how to get started with the state income tax and the tax return for the residents of North Carolina.
North Carolina's individual income tax system contains three types of brackets as well as a rate of 7.75%. That top rate can be ranked 10th among the highest in states levying on an individual income tax. The State of North Carolina's income tax contribution and collections per individual were $961 within 2010, and it got ranked 18th highest in America (Walden, 2009).United States provides its citizens with Tax Freedom Day, which is a day when Americans have earned conclusive money to clear their annual tax bill. In 2013, the state of North Carolina taxpayers worked up to April 10th to clear their entire tax bill. On the other hand, Tax Freedom Days of states neighboring are: Tennessee, April 2nd (3rd earliest nationally); then Georgia, April 9th and its ranked 18th earliest in America; then South Carolina, comes at April 3rd and also ranked the 4th earliest nationally and finally Virginia, that comes at April 20th and ranked at position10 nationally.
First, it would be important to understand Taxpayers’ Bill of Rights that people of this state enjoy. As a taxpayer, one can always be entitled to professional, fair, courteous as well as prompt services from this department revenue. This would be with respect with applying the laws relevant for a fair share of North Carolina individual income tax. These rights include examination, representation, protection of privacy, requests and review, penalties and interest, departmental review and final determination, hearing, collections, taxpayers’ assistance and refunds.
Protection privacy would offer one a chance to access information of the financial situations, tax history and assessments. Violators of these rights are a subject to criminal persecution as well as hefty fines. An individual who discloses tax information can be dismissed from the place of work. The department of North Carolina performs through examination to the individuals to ensure they comply with the supposed statutes. The examination can be done on the returns through mail personal interviews and questionnaires performed by well qualified auditors. Therefore, an individual needs to undergo fair examination where they do not need additional resources. However, in case the case closed, one can receive the refunds. This is followed by representation by an accountant, attorney or a renowned agent. In case, an individual executes power of attorney, he/she can be represented. This provides sufficient security for the examination process in case of fraud or any other form of vice like forgery.
The department of revenue of North Carolina is required, by law, to assess penalties as well as interest for the delay in payment of taxes, late filing of returns, fraud, and negligence as well as bad EFT Payment. This makes the people have the right to request to have their penalties to be waived. This can be done through penalty waiver policy, but it can be done on paid taxes only (Institute, 2012). After consideration of all those rights, it would be the opportunity for an individual to get started. For a person to get started, a set process needs to be followed along with some crucial considerations. For an individual to be eligible to State’s Earned Income Tax Credit, one should file a state return followed by determination of adjusted federal gross income that represent the starting point of the State individual or personal income tax return. This process has full protection under the bill of rights guaranteed by the government of United States and the department of revenue of North Carolina.
Once an individual determines all that, one should review certain points like instructions for filling the state taxes, gathering the correct records in advance. This would make an individual have all the required records in order including earning and wage statements collected from employers and dividend and interest statements collected from the financial institutions. Copies should be saved for filling. The right forms should be at hand like form D-400, which represent the North Carolina Personal Income tax return. Form D-400 TC should be attached if an individual claims tax credit. The forms should be collected from the North Carolina Department of Revenue. From that point, one can now learn on the tax credit that is eligible that should be applied to qualify for the income tax of North Carolina.
For the individual to have well planned income tax, one should consider various tips in the preparation of the taxes. This comes out before filling out tax forms. Therefore, one should take time before filling up the forms to avoid unnecessary mistakes in the maths. It can be followed by double checking the math’s to verify the individual information, social security numbers as well as address. These avoid the small errors that are incurred in tax returns. An individual can also consider filling the information electronically since it is quick, secure, and convenient for filling State taxes as well as federal taxes. Finally, an individual is advised not to panic. This encourages members to be free enough to ask questions from the NCDOR and IRS through their customer care for sufficient information before taking any step.
Individual income tax is eligible for taxpayers who can be classified as the resident as well as non-residents. Resident taxpayer refers to individual that reside in North Carolina for a period or aggregated period of over 180 days within any tax year. These individuals have to pay their taxes from sources or employments in North Carolina and also from the foreign portions. Non-resident, on the other hand, refers to those not residing in this state. Non-resident is subject on income tax from North Carolina. The residents are of great benefit to this process as they are able to enjoy all the rights and confer by law with all the needed documents in North Carolina. Income that is chargeable to the Personal Income Tax can be referred to as “assessable income”. This term represents income in cash as well as any other kind. Thus, any benefits given by an employer a well as any other persons, for instance, as a rent from free house or set amount of tax provided by the employer for the sake of the employee or worker, can as well be considered as assessable income of the worker for the purpose of individual Income Tax. The assessable income can be divided into 8 different categories. These categories include:• The income incurred from personal services provided to employers; • The income achieved through the virtue of jobs, positions as well as rendered services;• The income provided by franchise, copyright, other rights, annuity, goodwill, or income of nature of annual payments calculated from a will or other juristic Act as well as a court judgment; • The income through the nature of dividends or interest on deposits with financial institutions in Northern Carolina, sharing of profits and other benefits from a juristic partnership, juristic company, or mutual fund, a bonus, payments received as a result of the reduction of capital, high capital holdings, achievement from amalgamation, gain or dissolution of juristic organizations or partnerships, as well as gains from share transfers and partnership holdings;
- The income achieved from letting of property as well as from contracts breaches, installment sales and hire-purchase contracts;
- The income retrieved liberal professions;
- The income acquired from construction or other contracts of work;
The income got from business, industry, commerce, agriculture, transport and any activity not specified earlier. Individuals in North Carolina also enjoy credit returns for their Income taxes. Credit returns refers to the amount of money paid by the taxpayer, and it is subtracted from the tax that the people owe to the government of United States. Therefore, the value of a tax credit would depend on the reason the credit is being given, as well as other types of tax credits, granted to persons or businesses in certain locations, classifications or rather industries.
For instance, the residents of North Carolina enjoy refundable Earned Income tax credit where one is entitled to income tax credit under section 32 of internal Revenue Code. For example in 2013, the credit was ranked at 4.5% of the money earned income credit tax which e is qualified for a federal return. These credits expire after one year. There are also offers on the credit for the qualified business investments. These businesses are made for their equity securities as well as subordinated debts for those businesses that are qualified. This would either decrease the tax owed or increase the amount o tax that should be refunded. These two types of the income tax credit are among many others that the residents of North Carolina enjoy in their State (Hoffman & Smith, 2013). The individuals, who enroll, on income tax, need to have some protective rights over the refunds expected from their individual tax. For instance, there is the protective refund claim. A protective refund claim refers to a claim that is filed to protect a taxpayer’s right to confirmed refund that are based on a contingent for a taxable time for which the state of disadvantages could be about to expire. Therefore, protective claim is based on contingencies like those of pending litigation as well as an ongoing audit of income tax in a different state.
Therefore, the Department of Revenue would accept a protective claim meant for the refund as long as they have these qualities; (1) the refund is filed just before the expiration of statutory refund claim; (2) as long as it shows and describes those contingencies that affect the claim; (3) as long as they are clear and definite sufficiently to alert or inform the Department of Revenue as to the important aspect of the claim and; finally, it is able to identify the tax that is expected and the certain year through which the protective claim gets filed. Within the six-month period, the Department should take action through which this claim for refund would not start protective claim up to the time the amended return perfecting the claim gets filed.
Thus, it could not be essential for the person paying the tax to put a protective refund claim for the period under examination by Internal Revenue Service since, in North Carolina law, a taxpayer possess six months meant to file an amended return to federal changes reporting. Al this protects the individual income tax for the residents of North Carolina and; therefore, they should be taken for consideration since they are important.
So what could happen to the people who happen to lose their refund checks? If an individual loses the refund check, it gets destroyed or its gets lost, one should file a suit to the North Carolina Department of Revenue requesting for another check. The department should have written authorization just before providing a stop payment or initiating forgery sentences. If someone files a joint return, both spouses should sign the letter. One should be make sure he includes current address, the social security number, tax year as well as a statement requesting to stop payment or for the Department to initiate forgery proceedings. The department will, therefore, notify the person in drafting within a period of 30 days after having the letter that advice that person to stop payment or forgery procedures. From that time, another check can be issued between 30 and 60 days period from the time the Department receives your letter. If the check is already cashed by someone else, forgery proceedings take 120 days or less to be completed.
In conclusion, Individual Income Tax refers to the tax that is imposed or levied on personal income. In North Carolina, it is well structured to benefit its residents. The State is in ranked the highest in imposing taxes on it residents as compared to the other states in United States of America. There are bills of rights that guard the people on their income tax. These rights guards the people over the application, representation, presentation, examination, protection of privacy, refunds of overpaid taxes, taxpayer assistance, collections, hearing as well as requests for review. All this right have positive effects on the individual over the period of time, and they are guarded by the government. The state provides that anyone can get a refund when the tax is at its peaks and also in case the check is lost; there is a procedure to secure another one under the Department of Revenue of North Carolina. The Sate also provides its people with income tax credit, where a customer can withdraw the money while in need. This credit varies according to the mode at which the person registered is willing to part with, (for instance the case with children income credit tax).
References
Hoffman, W., & Smith, J. (2013). South-Western Federal Taxation 2014: Individual Income
Taxes. Stanford: Cengage Learning.
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Walden, M. L. (2009). North Carolina in the Connected Age: Challenges and Opportunities in a
Globalizing Economy: Challenges and Opportunities in a Globalizing Economy. North
Carolina: Univ of North Carolina Press,.
