Get instructions for claiming the North Carolina Extra Credit Grant on a 1040 return using CCH Axcess Tax

The following information about claiming the North Carolina Extra Credit Grant was shared in an email distributed on September 25, 2020, to CCH Axcess Tax customers who are registered to receive CCH Software News.

"On September 4, 2020, North Carolina passed a law that includes the North Carolina Extra Credit Grant program providing $335 to North Carolina families with qualifying dependent children. Original or amended returns must report qualifying dependents on Form D-400, Line 10a, by October 15, 2020, or the grant cannot be claimed.

The automatic payment of the credit relies on Form D-400, Line 10a, the number of dependents qualifying for the federal child tax credit. Line 10a is used to calculate a North Carolina child deduction, which phases out at $60,000 for single filers/$120,000 for joint returns. Our software reports zero (0) qualifying dependents on Line 10a when the deduction is phased out on Line 10b.

This is a presentation error in our software that does not result in an incorrect tax return calculation, but is now critical at the phase-out level due to the Extra Credit Grant program.

For returns yet to be filed, the preparer can manually override Form D-400, page 2, line 10a in the current software using a government form override and either file on paper or electronically. The result from page 2, line 10a automatically flows to D-400, page 1, line 10a.

North Carolina Department of Revenue provided instructions to file amended returns if the return has been filed. This can be done in the current software by manually overriding Form D-400, page 2, Line 10a with the number of dependents qualifying for the federal child tax credit. This will flow to the corresponding scannable field on Form D-400, page 1, Line 10a. Amended returns should be paper filed, as follows:

1. Complete an amended 2019 Form D-400, along with the required Form D-400 Schedule AM.
2. On the amended 2019 Form D-400, make the necessary changes to the original 2019 Form D-400, page 2, line 10a using a government form override to indicate the number of qualifying children for whom you were allowed a federal child tax credit. The number of dependents entered automatically flows to Form D-400, page 1, line 10a.
3. On Form D-400 Schedule AM, fill in the “Other” circle as the reason for amending your tax return and write in “Extra Credit Grant Program” as the detailed explanation for the change.
4. Provide a copy of your 2019 federal tax return and any accompanying federal form or statement that supports the changes made to Line 10a on the 2019 Form D-400. The supporting documentation must include the name, age, and social security number of each qualifying child for whom you were allowed a federal child tax credit for tax year 2019.
5. Write “Extra Credit Grant Program” at the top right hand corner of the return using General > Returns Options > Form Printing Options > Form Heading Message.

Note: The amended 2019 Form D-400 and any accompanying documents must be postmarked on or before October 15, 2020.

Scans to identify impacted returns are now available in Return Manager > Utilities > CCH Scan.

If you would like to subscribe to CCH Software News announcements, subscribe here.