How to Compute Interest on Back State Taxes in North Carolina

If you owe state taxes in North Carolina and you don't pay them on time, you are subject to interest and penalties on your total tax liability. You can calculate the interest and penalties on your back tax payment before you send in the payment, so you don't have to wait for the state to calculate the figure for you.

• 1

  Go to North Carolina's Department of Revenue website and download form D-422 (see "Resources").

• 2

  Enter your total tax liability from the individual income return, form 400, line 14. Provide any tax credits from line 17 of form 400. Subtract the credits from the tax liability and enter the amount on line 3.

• 3

  Multiply the figure from line 3 by .9 and enter this figure on line 4. Provide the withholding taxes on line 5. The tax withholding figure is found in form 400, line 21a and b. Subtract line 5 from line 3. Enter the tax amount from line 14 and 15, form 400. Compare lines 4 and 7. Enter the smaller amount on line 8. If line 5 equals or is larger than line 8, no back tax interest is charged.

• 4

  Copy line 5's figure into line 9. Provide the total estimated tax payments made on line 10. Add these two lines together and put the result into line 11. Subtract this line from line 8 to determine how much you still owe in taxes and put it in line 12. Multiple this figure by .03325. If you paid the tax liability in line 12 after April 15, 2009, but before April 15, 2010, multiple line 12 by .00014, then multiply this result with the number of days prior to April 15, 2010 ,you paid it. Enter this figure on line 14.

• 5

  Subtract line 14 from line 13 to determine the total back tax interest amount.