North Carolina taxpayers may be required to make estimated income tax payments throughout the year using Form NC-40, North Carolina Individual Estimated Income Tax. Estimated tax payments help taxpayers avoid a large balance due when filing their annual return and may reduce the risk of interest charges for underpayment.
When Is Form NC-40 Required?
You are required to pay estimated North Carolina income tax if the tax due on your return, after reducing it by:
- North Carolina tax withheld, and
- Allowable tax credits,
is $1,000 or more, regardless of the amount of income that is not subject to withholding.
Using Form NC-40
Navigation: State Section > Miscellaneous Forms > Estimated Payment Vouchers Form NC-40
North Carolina Tax Extension (Form D-410, Application for Extension for Filing Individual Income Tax Return)
If you need more time to file your North Carolina tax return, you may qualify for an automatic extension. In many cases, North Carolina automatically grants an extension to taxpayers who receive an automatic federal tax extension.
Do I Need to File a North Carolina Extension?
If You Received an Automatic Federal Extension
North Carolina automatically grants a state filing extension if you received an automatic extension to file your federal individual income tax return.
Important: To receive the automatic North Carolina extension, you must indicate that you received a federal extension on your North Carolina return. This is done by completing the Federal Extension option on Form D-400.
In the program, go to: State Section > Basic Information > Were you granted an automatic extension to file your federal income tax return? Select Yes if you received an automatic federal extension.
Because North Carolina recognizes the federal extension, Form D-410 is generally not required when you have a valid automatic federal extension.
What If I Didn't Receive a Federal Extension?
If you did not receive an automatic federal extension, you can request additional time to file your North Carolina return by submitting Form D-410, Application for Extension for Filing Individual Income Tax Return.
Form D-410 must be filed on or before the original due date of your North Carolina return. You can access the extension form in the program by visiting State Section > Miscellaneous Forms
Important
If you do not have a valid North Carolina extension and file after the due date, your return is considered delinquent and may be subject to:
- Interest charges
- Late filing penalties
- Other applicable penalties under North Carolina law
Do I Need to Pay My Tax by the Due Date?
Yes. An extension gives you more time to file your return, but it does not give you more time to pay your taxes. If you expect to owe North Carolina tax, you should pay as much as possible by the original due date to reduce interest and potential penalties.
Extension payments can be made in the program at: State Section > Payments
What Happens If I Pay Late?
If your full tax balance is not paid by the original due date:
- Interest will accrue on the unpaid amount.
- Penalties may also apply.
Out of the Country on the Due Date?
If you are out of the country on the return due date, North Carolina grants an automatic four-month extension to file your state return.
To qualify, you must indicate this status on Form D-400. In the program, go to: State Section > Basic Information > Was the Taxpayer or Spouse out of the country on April 15?
What Does "Out of the Country" Mean?
You qualify if:
- You live outside the United States and Puerto Rico and your main place of work is outside the United States and Puerto Rico, or
- You are serving in the military outside the United States and Puerto Rico.
Payment Rules for Taxpayers Out of the Country
The time to pay your tax is also extended. However, interest will still accrue on any unpaid tax from the original due date until the tax is paid.
NC Schedule K-1 (Partnership/SCorporation/Estate)
The NC Schedule K-1 is used to report a taxpayer's share of North Carolina income, deductions, additions, subtractions, and credits from a partnership, S corporation, estate, or trust. The information reported on the NC K-1 is used to complete the taxpayer's North Carolina individual income tax return. Some entities may also provide an NC K-1 Supplemental Schedule that contains North Carolina-specific adjustments not included on the federal Schedule K-1.
If the taxpayer receives an NC K-1 Supplemental Schedule, enter the North Carolina-specific amounts as shown on the form. These adjustments may differ from the amounts reported on the federal Schedule K-1 and are used to calculate the correct North Carolina tax liability.
State Section > Income > Schedule K-1 (Partnership/S Corporation/Estate & Trust)
NC Form D-422 Underpayment Penalty
Form D-422 is used to calculate a North Carolina underpayment penalty when a taxpayer has not paid enough tax throughout the year through withholding or estimated tax payments. The program supports both the Short Method and Regular Method calculations.
State Section > Miscellaneous Forms > Underpayment Penalty (Form D-422)
Short Method vs. Regular Method
Short Method (Default)
The program requires:
- Prior Year Tax Liability
- Farmer or Commercial Fisherman indicator
- Date Payment Was Made
Regular Method
Select Yes for "Do you want to use the Regular Method?" if the taxpayer needs a more detailed underpayment calculation.
The program allows entry of:
- Date Payment Was Made
- Income Installment Method
- 25% Method (equal quarterly installments)
- Annualized Method (income varies during the year)
If the Annualized Method is selected, additional quarterly information can be entered:
- AGI per Quarter
- Itemized Deductions per Quarter