North Carolina muni bond interest add back

Forum|Forum|5 years ago
February 19, 2021
4 replies
22 views

Has anyone noticed that North Carolina will not add back non-NC muni dividends unless it is entered on the interest screen? It also appears that it is also not handling US Bond interest correctly either for NC. NC has updated their forms this year and there no longer is a generic add back field so cannot use that option.

Lacerte Tax

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S

SCrawford

Level 2

Yes....I've noticed the first issue. My client was below the filing threshold and I thought this may have something to do with it. Thank you for sharing!

L

lmoshinskiAuthor

Level 3

This also appears to be happening with US bonds too.

N

NAHC

Level 2

I have contacted Lacerte about this and they are supposed to be working on it. however, I don't think they know the complexity of this problem. They will also need to add lines in the modifications screen for interest income from obligations of states other than NC (addition) and interest income from obligations of the US or US possessions (deduction) so we can add these items coming from K-1's. I hope they are seeing this and will fix everything because I am sitting on returns waiting for this fix.

L

lmoshinskiAuthor

Level 3

Thank you for your reply. I am hoping this will be resolved quickly.

C

Cathlean

Level 2

I am having the same problem. I am using the work around of entering information on the Interest screen (Screen Page 11), and then making a note in the client files about the work around. At a minimum, I think Lacerte should have a diagnostic about this until fixed.

Also, if you do enter data on the interest screen in order to get the correct add-back in NC, be careful that the tax-exempt interest on 1040 Page 1 still reflects the accurate amount of total tax exempt interest because that will affect the clients' MAGI for calculations such as their Medicare premiums.

L

lmoshinskiAuthor

Level 3

Thanks for the reminder about Medicare. Have you found a work around for the critical diagnostic for Form D-422 still not being included in the program?

C

Cathlean

Level 2

I was able to file a return yesterday - even with that critical diagnostic. I have also removed the penalty from a return, and then told the client that they may receive a bill for estimated tax penalty. In both of those cases, the total underpayment penalty was less than $50.

L

laccpa

Level 4

I feel like this was working a week or so ago on the dividends input screens. Today, I can't get a muni addback on the dividend screen or the interest screen. I can't print to my printer and I can't get a call through to support. Looking like a banner day. Oh but RN support said they would look at my printers in a couple of days. So I guess all of my clients who can't manage a computer will just have to wait a few days for their paper copy.