North Carolina allows a deduction for the following two kinds of military retirement payments to the extent the income is included in the taxpayer's federal AGI:
- Retirement pay for service in the Armed Forces of the United States to a retired member that either (a) served at least 20 years, or (b) medically retired under 10 U.S.C. Chapter 61. (This deduction does not apply to severance pay received by a member due to separation from the member's armed forces.)
- Payments of a plan defined in 10 U.S.C. § 1447 to a beneficiary of a retired member eligible to deduct retirement pay under sub-subdivision a. of this subdivision.
To deduct military retirement income from the North Carolina individual tax return in TaxSlayer Pro, from the North Carolina Return menu select:
Deductions from Taxable Income
- Retirement Benefits (Military Retirement)
- Additional Retirement Benefits (Military Retirement) - If the military income did not automatically pull to the menu line "Calculated Retirement Benefits (Military Retirement)", enter the military retirement as a positive number on the adjustment line.
Additional Information:
NC DOR: Deduction For Certain Military Retirement Pay and Survivor Benefit Plan Payments
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