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North Carolina Tax Update

North Carolina Enacts Income Tax Deduction for Educator Expenses

Legislation was enacted in North Carolina providing for an educator expense deduction against personal income taxes.  Under the measure, educators are able to deduct up to $250 in certain work-related expenditures from their state taxable income for tax years starting after Dec. 31, 2011. The deduction is allowed only for amounts not deducted when determining federal adjusted gross income.  The legislation took effect June 26.

North Carolina Enacts Changes to Offer in Compromise Process

With many taxpayers continuing to struggle with the long-term effects of the recession, the North Carolina Department of Revenue is making it easier to participate in the Offer in Compromise program.  The program allows taxpayers to submit an offer, requesting NCDOR accept a lump sum payment that may be less than what is owed.  The department reviews a taxpayer’s complete financial situation in order to determine if an offer can be accepted.  The goal is to resolve tax liabilities in a way that is helpful to both the state and the taxpayer.  Changes to the program will reduce the number of criteria a taxpayer must meet to qualify and will use IRS standards that are more favorable to the taxpayer when determining disposable income, which is one of the considerations for accepting an offer.  In most cases, NCDOR will also provide taxpayers with a counter offer when an original offer in compromise is denied.

Please contact our office if you need more information on either of these topics.