When income is taxed by North Carolina for a period during which you were a legal resident of North Carolina and the same income is also taxed by another state or country because it was earned in or derived from sources within that state or country, a tax credit may be claimed, but not on the basis of a withholding statement alone. Important: No credit is allowed for income taxes paid to a city, county, or other political subdivision of a state or country or to the federal government. Nonresidents are not entitled to this tax credit.
North Carolina residents complete Form D-400 and include all income both within and outside the State. Compute North Carolina income tax as though no credit is to be claimed. Then, complete Part 1 of Form D-400TC to determine the amount of allowable tax credit. Note: If you wish to claim a tax credit for taxes paid to more than one state or country, do not complete Lines 1 through 6. Instead, use the “Out-of-State Tax Credit Worksheet” to determine the amount of allowable tax credit for each state or country.