Yes. North Carolina allows you to claim North Carolina itemized deductions even if you claimed the federal standard deduction on your federal return. North Carolina itemized deduction rules differ from federal rules, so your allowable North Carolina itemized deductions may not match the amount shown on your federal Schedule A.
To determine your North Carolina itemized deductions, complete the Itemized Deductions section of your federal return, even if you ultimately claim the federal standard deduction. Entering this information allows the program to determine whether your North Carolina itemized deductions provide a greater benefit than the North Carolina standard deduction.
The program will automatically apply the deduction method that results in the lowest North Carolina tax based on the information entered in the return.
What Itemized Deductions Are Allowed in North Carolina?
North Carolina itemized deductions are not the same as federal itemized deductions. Generally, only certain categories of deductions are allowed for North Carolina purposes, including:
- Qualified mortgage interest
- Real estate property taxes, subject to North Carolina limitations
- Charitable contributions
- Medical and dental expenses
- Repayment of claim of right income
These deductions must be computed using North Carolina rules and limitations.
Repayment of Claim of Right Income
You may qualify for a North Carolina deduction if you repaid income that:
- Was included in your federal adjusted gross income (AGI) in a prior year, and
- Was originally received under a claim of right because you reasonably believed you had an unrestricted right to the income.
The deduction is allowed only to the extent the repayment was not already deducted in calculating federal AGI.
If the Repayment Exceeds $3,000
If the amount repaid is greater than $3,000, the deduction is generally equal to the repayment amount allowed under North Carolina law.
If Federal Itemized Deductions Were Claimed
If you claimed federal itemized deductions, enter the applicable amount reported on Schedule A.
If the Repayment Is $3,000 or Less
If the repayment is $3,000 or less, use the applicable worksheet provided by the North Carolina Department of Revenue to determine the allowable deduction.
Important: Keep documentation supporting the repayment, including records showing the original income and the amount repaid.
Program Entry
To enter a repayment of claim of right deduction:
Navigation
- State
- Edit North Carolina (three dots)
- Itemized Deductions
Married Filing Separately
If you are Married Filing Separately, North Carolina generally requires special consideration when choosing between standard and itemized deductions.
Important: If one spouse claims North Carolina itemized deductions, the other spouse may not be eligible to claim the North Carolina standard deduction. Review the current North Carolina filing instructions to determine the proper deduction method for your filing situation.