NC Employers Face End-of-Year Employee Withholding Form Mandate

Changes to North Carolina’s tax law taking effect January 1st, including reductions in the individual income tax rate and simplification and eliminations of deductions and exemptions, necessitated changes to the basic paperwork used to register employees with their employers for payroll deduction of state income tax payments.

Guidance issued mid-November by the North Carolina Department of Revenue requires all employers in North Carolina to have their employees complete and submit new Withholding Allowance Certificates (NC-4 and NC-4 EZ Forms) by December 31st.

The DOR’s guidance included the following overview:

Under this new law, all taxpayers will pay a lower rate and be granted a higher standard deduction. Taxpayers may no longer claim a personal exemption for themselves, their spouse, children, or any other qualifying dependents. Additionally, many deductions and tax credits that impact North Carolina withholding tax are no longer available for tax years beginning on or after January 1.

…The new form must be completed by the employee and provided to the employer so the correct amount of State income tax is withheld for any payment periods beginning on or after January 1, 2014.

Likewise, all recipients of pension or annuity payments must complete and provide to their payer a new Withholding Certificate for Pension or Annuity Payments, Form NC-4P ,(Revised 11/25/13) in order to withhold the correct amount of State income tax for any pension payment periods beginning on or after January 1, 2014.

The NC Department of Revenue set up a special page on their website (click here) with all relevant information regarding these changes. Employers should consult the formal notification packet, which includes the revised NC-4 EZ, NC-4 and NC-4P forms and instructions.

Employers and pension payers with questions are encouraged to call 1-877-252-4487 to receive special assistance. This number will be active until February 28th.