NC & SC Individual tax returns

[mircpa]

Hello

I have a client who was W2 employed in NC for whole year of 2017 & will continue to be employed in NC for 2018. In 2017 he was resident of NC from 01/01 until 10/31. He bought a house in SC moved  in 11/01. Going forward for 2018 it will be NC NR & SC resident take credit for taxes paid in NC.

My question, I would be mentioning SC address in 2017 tax return but no SC source income would it trigger audit issue from SC. I want to file part year NC 01/01 until 10/31 all W2 income allocated to NC & part year SC from 11/01 until 12/31 with no SC income. Is this OK or any of you would be suggesting some other route.

Edited February 13, 2018 by mircpa
W2

[JohnH]

I think you'll need to report the income for 11/1 - 12/31 on the NC return and also on a SC return, then attach a SC schedule TC to claim a credit for the tax paid to NC. The SC income allocations worksheet will walk you through it once you decide on the actual amounts to enter, and the TC will calculate the correct amount of the credit.  NC tax rate is higher than SC, so you'll more than likely net out with no tax due to SC.

Your approach is much cleaner, accomplishes the same thing,  and might make it through. But don't be surprised if SC sends an inquiry a couple of years from now.

[mircpa]

Thanks John

I followed that approach & sent each other's tax return to both so that it can be clear for them.