Did you or your dependent(s) have educational expenses during 2010? If so, you may have inadvertently missed a valuable North Carolina income tax deduction (especially if you relied on tax software to prepare your return).
Generally, North Carolina income tax law attempts to mirror federal income tax law. However, the North Carolina General Assembly has to enact legislation each year to keep up with the federal changes. Unfortunately, due to the federal income law changes that occurred during late December 2010, the NC General Assembly has not yet had a chance to meet to enact the federal changes related to education deductions and credits.
Fortunately, per the North Carolina Department of Revenue, “it is highly anticipated the General Assembly will adopt the tuition and fees deduction and the educator expense deduction included in the federal acts. Therefore, taxpayers may go ahead and claim those deductions and no adjustments to federal taxable income will be required on state returns. Similarly, individuals who claim the Lifetime Learning or American Opportunity Tax Credit in lieu of the deduction for tuition and fees are allowed a deduction of up to $4,000 on the 2010 North Carolina individual income tax return”.
One word of caution however – “if for some reason the 2011 General Assembly chooses not to adopt the federal extension of the higher education expense deduction or the educator expense deduction, individuals who claimed these deductions on their 2010 tax return will need to file an amended 2010 North Carolina individual income tax return”.
Generally speaking, for most taxpayers the benefit of taking this credit will outweigh the costs of potentially having to file an amended return. Please speak to a trusted tax advisor should you have any questions regarding your particular tax situation.
Please visit the Simply Taxes, LLC for more valuable tax information.
Source: NC Department of Revenue Notice Dated February 15, 2011