Does North Carolina have a credit or deduction similar to the federal Child Tax Credit?
Yes, the NC Child Deduction can be claimed by NC resident and part-year resident filers with eligible dependent(s). Per the NC DOR: "An individual may claim a child tax credit for each dependent child for whom a federal child tax credit was allowed under section 24 of the [Internal Revenue] Code."
In tax year 2017 and prior, NC had a "Credit for Children." This was repealed and replaced with the new "Child Deduction" starting in tax year 2018.
This deduction is non-refundable and appears on NC D-400, page 2, line 10.
In Drake Tax, any child who is entered on federal screen 2 that meets the requirements for federal CTC will be counted for the purposes of the NC Child Deduction. An override is available on the NC > PMTS screen. Check the box To disallow credit for all dependents on the return. To disallow the deduction for select dependents, enter a value for specify number of dependents to disallow.
The credit is subject to phase-out limits based on the federal AGI and filing status:
|
Filing Status
|
Federal Adjusted Gross Income
|
Deduction Amount Per Qualifying Child
|
|
Married, filing jointly/Surviving spouse
|
Up to $40,000
|
$2,500.00
|
|
Over $40,000
Up to $60,000
|
$2,000.00
|
|
Over $60,000
Up to $80,000
|
$1,500.00
|
|
Over $80,000
Up to $100,000
|
$1,000.00
|
|
Over $100,000
Up to $120,000
|
$500.00
|
|
Over $120,000
|
$0.00
|
|
Head of Household
|
Up to $30,000
|
$2,500.00
|
|
Over $30,000
Up to $45,000
|
$2,000.00
|
|
Over $45,000
Up to $60,000
|
$1,500.00
|
|
Over $60,000
Up to $75,000
|
$1,000.00
|
|
Over $75,000
Up to $90,000
|
$500.00
|
|
Over $90,000
|
$0.00
|
|
Single/Married, filing separately
|
Up to $20,000
|
$2,500.00
|
|
Over $20,000
Up to $30,000
|
$2,000.00
|
|
Over $30,000
Up to $40,000
|
$1,500.00
|
|
Over $40,000
Up to $50,000
|
$1,000.00
|
|
Over $50,000
Up to $60,000
|
$500.00
|
|
Over $60,000
|
$0.00
|
Review the NC Instructions for more information on this deduction. For the federal definition of a qualifying child, see Publication 972 and Related Links below.