CD-429B: Underpayment of Estimated Tax by C-Corporations (2024)
North Carolina · North Carolina DOR · Used for tax years 2024
North Carolina Form CD-429B helps C-corporations determine whether they owe interest on underpaid estimated tax for 2024 and calculate the amount. It compares required installments with payments and credits for each payment period. Keep the form for your records rather than attac
Who files this form
C-corporations use Form CD-429B to determine whether they owe interest on underpaid estimated tax and to calculate that interest. Do not attach this form to the corporation’s tax return. Keep it for your records.
A corporation must make estimated tax payments if it reasonably expects North Carolina income tax liability of $500 or more after tax credits. Payments are not required if its tax year is less than four months.
Generally, interest applies if the income tax due on the 2024 return is $500 or more and the corporation did not timely pay at least the smaller of:
- 90% of the income tax due on its 2024 return.
- 100% of the income tax due on its 2023 return.
For a large corporation, as defined in IRC Section 6655, the test is based on 90% of the 2024 tax, not the smaller of the two years’ amounts.
Line 4 specifically says not to complete the form if 90% of the 2024 net tax due is less than $500. In that case, the corporation does not owe interest on the underpayment of estimated tax.
When it's due
For the 2024 tax year, Line 7 lists estimated tax installment due dates as the 15th day of the 4th, 6th, 9th, and 12th months of the corporation’s tax year.
For the 2024 underpayment calculation, Line 16 uses the payment date or the 15th day of the 4th month after the close of the tax year, whichever is earlier.
What you'll need
Have these forms and details available:
- 2024 Form CD-405, Schedule B: Line 23 for net income tax and Line 24e for tax credits.
- 2023 Form CD-405, Schedule B: Line 23 minus Line 24e for prior-year net tax due. Large corporations instead enter the amount from CD-429B Line 4 on Line 5.
- The corporation’s legal name, federal employer ID number, and tax-year dates.
- Estimated tax amounts paid or credited for each period, plus payment dates.
If using the annualized income installment method, attach a schedule showing the installment computations and retain your computations for future reference.
How to file
Do not attach Form CD-429B to the corporation’s tax return. Retain it for your records.
Complete Part 1 to check for an underpayment in each payment period. If Line 12 shows an underpayment in any column, complete Part 2 to calculate the interest.
Add Lines 18 through 21 and enter the total on Line 22. Also enter that amount on Form CD-405, Schedule B, Line 31.
Common mistakes
- Attaching CD-429B to the tax return: The instructions say to keep it for your records instead.
- Completing the form when Line 4 is less than $500: The form says to stop because no underpayment interest is owed.
- Working across columns too soon: For Lines 10 through 13, complete one column before moving to the next.
- Assuming a later payment or refund eliminates earlier interest: Interest is calculated separately for each installment due date, so earlier underpayments can still result in interest.
- Applying a payment only to the current installment: Payments first cover any previous installment underpayment. If there is more than one payment for an installment, make separate computations for each payment.
- Leaving out annualized-income computations: If using that method, attach a schedule showing the computations and retain them for future reference.
Questions people ask
Can the corporation owe underpayment interest even if it gets a refund?
Yes. Interest is calculated separately for each installment due date. A later payment or a refund when the return is filed does not necessarily eliminate interest for an earlier underpayment.
Can the annualized income installment method reduce interest?
Yes. The instructions say this method may reduce or eliminate underpayment interest. Enter the computed installments on Line 8, attach a schedule showing the computations, and retain your computations for future reference.
Where can I find the interest rate?
The rate is set semiannually by the Secretary of Revenue under G.S. 105-241.21(a). The instructions direct you to visit ncdor.gov and search for “interest rate.”
How are estimated tax payments applied?
A payment first covers any previous underpayment of a required installment, regardless of which installment the payment was intended to cover.
Should I send CD-429B with the corporation’s return?
No. Keep CD-429B for your records. Enter the total from Line 22 on Form CD-405, Schedule B, Line 31.