Form Nc-30 - Income Tax Withholding Tables And Instructions For Employers - North Carolina - 2017 Page 7
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46business, pays a nonresident individual or a nonresident
the payer expects to pay a contractor more than $1,500
entity compensation for personal services performed in
during the year, the payer should withhold from each
North Carolina.
payment even if the first payment does not exceed
$1,500.
(e) Personal services income. Non-wage
compensation.
How and when to pay the tax withheld. If you pay
personal services income to a nonresident contractor
(f) Withholding agent. An employer or a payer.
and you do not already have a withholding account
identification number, you must complete Form NC-BR.
Withholding requirement. If, in the course of
your trade or business, you pay compensation of more
If you withhold from both personal services income
than $1,500 during the calendar year to a nonresident
and wages, you must report the withholding from
contractor for personal services performed in North
personal services income with the wage withholding.
Carolina, you must withhold North Carolina income tax
You must report and pay the tax withheld from
at the rate of 4 percent from the compensation.
nonresident personal services income on a quarterly,
monthly, or semiweekly basis depending on the average
The tax must be withheld from any nonresident
amount withheld per month. (See numbers 15, 16 and
individual and from any nonresident entity (C or S
17 for determining the basis on which to file.)
corporation, partnership, or limited liability company)
receiving personal services income in connection with
Form NC-1099PS and annual reconciliation
requirement. If you withhold tax from a nonresident
a performance, an entertainment or athletic event, a
speech or the creation of a film, radio, or television
contractor, you must give the contractor Form
program.
Tax is not required to be withheld from a
NC-1099PS, Personal Services Income Paid To A
corporation or limited liability company that has obtained
Nonresident, showing the amount of compensation
a certificate of authority from the Secretary of State
paid and the amount of North Carolina income tax
or from a partnership that has a permanent place of
withheld during the calendar year. Federal Form
business in North Carolina.
1099-MISC may be filed in lieu of Form NC-1099PS
if it reflects the amount of North Carolina income tax
No tax is required to be withheld from an entity that is
withheld. Form NC-1099PS must be given to the
exempt from North Carolina corporate income tax under
contractor by January 31 following the calendar year
G.S. 105-130.11. This includes any organization that
in which the compensation was paid. If the personal
is exempt from federal income tax under the Internal
services are completed before the end of the calendar
Revenue Code. The entity must provide documentation
year and the contractor requests the form, it is due
of its tax exemption to the payer, such as a copy of
within 30 days after the last payment of compensation
the organization’s federal determination letter of tax
to the contractor.
exemption or a copy of a letter of tax exemption from
the Department of Revenue.
The Annual Withholding Reconciliation (Form
NC-3) that reconciles the amount withheld from
Tax is not required to be withheld from personal
each contractor must be filed with the Department
services income paid to an individual who is an ordained
on or before January 31 following the year in which
or licensed member of the clergy or who is a resident
the compensation was paid. Payers who report only
of North Carolina. The payer must obtain from any
personal services withholding must file the annual
individual from whom the payer does not withhold
reconciliation report and include the withholding
because the individual is a resident of this State the
statements. Payers who are subject to both wage
individual’s address and social security number and
withholding and withholding from personal services
retain this information in its records.
income must file one annual reconciliation report that
includes the two types of withholding statements.
Withholding is only required if the contractor is
paid more than $1,500 during the calendar year. No
Amounts withheld in error. If you withhold an
tax is required to be withheld if a payment is $1,500 or
amount in error and the amount is refunded to the
less and, at the time the payment is made, the payer
contractor before the end of the calendar year and
does not believe that the total compensation to be paid
before you give the NC-1099PS to the contractor, do not
to the personal services provider during the year will
report the refunded amount on the NC-1099PS or the
exceed $1,500. If additional compensation paid later
annual reconciliation statement. If the amount withheld
in the year causes total compensation for the year to
in error has already been paid to the Department,
exceed $1,500, the payer is not required to withhold
reduce your next withholding payment accordingly.
tax from the additional compensation to make up for
Amounts are considered withheld in error if they are
the compensation from which no tax was withheld. If
withheld from a person who is not a contractor, if it is
Page 7
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