Guides a sole proprietor or single-member LLC owner through the full NC self-employment tax cycle: federal Schedule C and SE tax, NC Form D-400 with Schedule S additions/deductions, the §179 and bonus depreciation conformity adjustments, child deduction, estimated payments on Form NC-40, and optional PTET planning for entities electing into the NC pass-through entity regime.
Confirm the client's filing status, residency (full-year vs. part-year NC resident), and entity type. A sole proprietor reports on federal Schedule C; a single-member LLC disregarded for federal purposes also flows through to Schedule C with no NC franchise tax obligation. Verify whether a formal LLC was formed and whether any federal entity elections (Form 8832 or 2553) are in effect, because an LLC electing S-corp status shifts the return to Form CD-401S and triggers NC franchise tax.
Gather all self-employment gross receipts and deductible business expenses to complete federal Schedule C. Compute net self-employment income, then calculate SE tax on Schedule SE — the SE tax deduction (50% of SE tax) feeds into federal AGI, which is the starting point for NC Form D-400. Confirm §179 expensing and bonus depreciation claimed federally, as NC will require add-backs.
NC does not conform to federal bonus depreciation (§168(k)) or the expanded federal §179 limit — NC caps §179 at $25,000 per year. Any amount expensed federally above $25,000 under §179, plus 100% of federal bonus depreciation claimed, must be added back on D-400 Schedule S Part A. NC then allows a ratable recovery deduction in future years. Also add back interest from other states' bonds. Apply allowable NC-specific subtractions (e.g., Social Security benefits excluded under NC law, certain military pay) on Schedule S Part B.
Compute NC taxable income: federal AGI plus Schedule S additions minus Schedule S deductions, then subtract the NC standard deduction (or NC itemized deductions via D-400 Schedule A) and the child deduction if applicable. Apply the flat 4.25% rate for tax year 2025. Subtract any credits from D-400TC — including the NC child tax credit, credit for income tax paid to another state, and any other applicable credits — to arrive at net NC tax due.
Self-employed clients typically owe NC estimated taxes if their expected liability exceeds $1,000 (after withholding). NC quarterly estimated payments are made on Form NC-40 with the same calendar-year due dates as federal (April 15, June 15, September 15, January 15). Compute the current-year underpayment and project the next year's installments based on 100% of the prior-year NC tax or 90% of the current-year estimate, using the NC safe-harbor rule under N.C.G.S. § 105-163.15.
For self-employed clients with net income above approximately $50,000–$80,000, evaluate whether forming an S-corp (or making a Form 2553 election on an existing LLC) reduces self-employment tax federally and whether the NC pass-through entity tax (PTET) election under N.C.G.S. § 105-153.9A provides a federal SALT-cap benefit. The PTET rate follows the corporate phase-down (2.25% for 2025, declining to 0% by 2030), so the window for SALT savings is narrowing. Also review business structure for liability, retirement contribution limits, and health insurance deduction optimization.
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nc-corporate-tax
nc-income-tax
Use this skill whenever asked about North Carolina individual income tax for self-employed
nc-estimated-tax
Use this skill whenever asked about North Carolina individual quarterly estimated income t
nc-return-assembly
Final capstone orchestrator that assembles the complete federal + North Carolina filing pa