I have a client who paid child care in 2012, she qualifies for the credit, but didn't get it on Federal because no taxable income after deductions. My tax software didn't count it on the 400tc since not on federal, but thinking should override and get on 400TC because does have taxable income for NC????? Would this be correct?
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Just moving to the top, the instructions as well as NCDOR is vague, as they just say "if you qualify for a federal credit"---well she does qualify EXCEPT she didn't have taxable income, overriding my tax software is scary to me unless I completely understand and can justify why I'm doing it! Any experience with this in NC? -
ok, I checked the qualifications for the federal credit which state requires to meet. She meets all those requirements, it says nothing about "taxable income" although does mention earned income which she has. So I'm thinking yes, override the software and get the NC 400TC credit. Anyone agree?Comment
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Check here
Expecting a response in only a couple of hours on these boards on a Monday is....pushing things....
Be that as it may: What number appears on line 34 of NC Form D-400TC? That line limits the credit to the amount of NC tax (it's not a refundable credit).
Does your client have other NC tax credits? The presence of any such could be a factor.
FEComment
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Child Care
is not a refundable credit, no tax no credit T.B. 11-2Comment
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There is a child credit and earned income credit, there is tax on state--line 34 of 400TC is 302.00--enough to cover credit
Originally posted by FEDUKE404 View PostComment
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I know it's not refundable on fed--questioning state of NC where there is taxable income and tax. Thanks though!
Originally posted by arlo View PostComment
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Other things to check
Did you carefully go through the STATE Q&As?Originally posted by Super Mom View Post
Since NC has a different credit based upon the age of the person(s) receiving the dependent care, sometimes you first have to answer those questions to activate the state dependent care credit.
I still think the answer lies in the second page of Form D-400TC. Have you gone through it line by line ?? Software error messages or alerts ??
When/if I have some spare time, I will play around with some low income/DCC "what ifs" with my NC software.
FEComment
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Have figured out that is solely having to be overridden because no credit on federal. I figured this out, by overriding a doing taxable income in Fed. just to see what happened on the 400TC and there it was! So I feel comfortable overriding those 400TC fields now. Thanks for all of your help! The qualifying dependant is only 7
Originally posted by FEDUKE404 View PostComment
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There still may be issues
I am ALWAYS very leery of overriding something as fundamental as a yes/no calculated entry. NCDOR is pretty rigorous about testing their approved software vendors.Originally posted by Super Mom View Post
FWIW: Just exactly WHAT line(s) did you override on Page 2 of D-400TC ? Virtually every number there is a transferred number. I cannot follow the logic where "no credit on federal" would have any impact on Part IV of NC Schedule TC.
OTOH, if the number you had to override is Part II, line 8 (from zero to a number?) I would probably first need a reliable explanation from someone in NCDOR as to the "entitled to claim....on your federal return" issue. NC has some weird tax rules (have you ever run the gauntlet for taking long-term care expenses as a credit on the state?) and it is quite possible that zero federal dependent care expenses will, by statute, automatically translate into zero state dependent care expenses. That could well be the case here, absent your override. (Logic is not of great importance in such scenarios...)
What is your software? Did you run the question by them for a possible explanation? In matters like this, I would much prefer to be "slow" (waiting for an answer) than to be "wrong."
FEComment
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A bit more
No, I'm not a lawyer (thank goodness!) but this is what I found in NC General Statutes:
§ 105‑151.11. Credit for child care and certain employment‑related expenses.
(a) Credit. – A person who is allowed a credit against federal income tax for a percentage of employment‑related expenses under section 21 of the Code shall be allowed as a credit against the tax imposed by this Part an amount equal to the applicable percentage of the employment‑related expenses as defined in section 21(b)(2) of the Code. In order to claim the credit allowed by this section, the taxpayer must provide with the tax return the information required by the Secretary.
The correct interpretation may well may be "An allowable percentage of ZERO" which equals.....zero.
Good luck.....
FEComment
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Thanks, I overrode nothing on page 2 of 400TC just the amount paid and the credit on page 1 lines 9 & 10. What do you mean run the gauntlet on long term care? Have had those credits, no overrides necessary of course, wondering if I should check something further?Comment
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taking a different look at this scenario: no tax liability so no credit but you mentioned "no taxable income after deductions" what kind of deductions? schedule A? if a schedule A i would try deleting it and use the child care credit instead.Comment
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Overrides versus necessary input
The relevant number would appear to be that on line 8 of the TC form?? It is a transferred number from the federal return. What appears there on your tax return, sans override? As for the amount on line 9, that is an additional input specific to NC. There may even be a supporting worksheet: How much for child under age 7, and how much for child age 7 and up. I cannot imagine how/why/if you would ever have to override it....answer it is more appropriate! As I mentioned above, if you do not go through the Q&A or worksheets for NC issues, that line may well be null until YOU provide the correct answer elsewhere, and then it is a transferred number.Originally posted by Super Mom View Post
IIRC, the issue with the LTC credit for NC was an individual who had listed, but not used, any Sch A medical expenses due to the 7.5% floor. Since he had "claimed a deduction for medical expenses" (sound familiar?) on Sch A, the credit was blocked. Solution was to delete everything from Sch A medical, and NC LTC credit passed. You also have to tap dance to figure out how much LTC was paid but not deductible due to age. And then if you make "too much" money, the credit disappears. Again, this is all a fuzzy memory but, like you with the dependent care stuff, at times I thought I was running in circles.
I've spent way too much of my limited time on this. Hope you get things resolved to your satisfaction.
FEComment
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Thanks for your time! I REALLY appreciate all your help! Hope I can return the favor sometime!!
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