Income Tax Withholding Tables And Instructions For Employers Page 3
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69Instructions and Explanations
1. General Information
North Carolina law requires withholding of income tax
until the Department of Revenue authorizes a change to
from:
a new filing frequency. An employer who in a later tax
year is required to deduct and withhold an average which
(a) Salaries and wages of all North Carolina residents
would change the employer to a different filing frequency,
regardless of where earned,
should contact the Department to request a change in filing
(b) Wages of nonresidents for services performed in North
frequency. The employer must continue on the same filing
Carolina,
frequency until written authorization to change is received
(c) Non-wage compensation paid to nonresidents
from the Department of Revenue.
for certain personal services performed in North
Carolina,
Use the preaddressed forms which will be mailed
(d) Pension payments paid to North Carolina residents if
to you after you are registered. If the coupon booklet is
federal withholding is required on the payments,
misplaced, request a new one from the Department. If
(e) Contractors identified by an Individual Taxpayer
a blank form is used, show the name and North Carolina
Identification Number (ITIN) if the contractor performs
withholding identification number exactly as they appeared
services in North Carolina for compensation other than
on previous reports.
wages, and
If you go out of business or cease to pay wages
(f) Winnings of $600 or more paid by the North Carolina
permanently, complete the “Out of Business Notification”
State Lottery Commission at the rate of 7 percent.
and include it with the final report. You can also let us
Each employee must complete a North Carolina
know that you are out of business by calling 1-877-252-
Withholding Allowance Certificate, Form NC-4. To
3052 (toll free) and selecting Business Taxes. Follow
determine the amount of tax to be withheld, select the
the menu instructions under withholding tax to close your
table in this book which corresponds with the employee’s
withholding account. Within 30 days of the last payment of
filing status and your payroll period; i.e., weekly, biweekly,
wages, file the annual reconciliation (Form NC-3 or Form
etc.; locate the gross wages in the left-hand column and
NC-3M) with Departmental copies of the wage and tax
then follow across to the column which corresponds to
statements. Provide copies of wage and tax statements
the number of withholding allowances claimed by the
to all employees.
employee. The tax withheld can also be computed by
At the end of each year, you must prepare W-2 and
using the Percentage Method or Annualized Wages
1099 statements, furnish copies to the employees for
Method.
use in filing their income tax returns and send copies
When you determine that you will begin paying wages,
to the Department of Revenue along with the annual
non-wage compensation, or pension payments subject to
reconciliation of income tax withheld.
North Carolina income tax withholding, you must file Form
The principal duties of employers are outlined in the
NC/BR (Business Registration Application for Income
calendar on page 2, and the requirements concerning
Tax Withholding, Sales and Use Tax, and Machinery
withholding, reporting and paying North Carolina income
and Equipment Tax) with the Department of Revenue to
tax are summarized in this booklet. North Carolina
obtain a North Carolina withholding identification number.
procedures and practices are similar to those of the federal
See section 3 for applying for a North Carolina withholding
government, with some differences which are explained
identification number.
in the following sections. For additional information
The tax must be withheld from each payment of wages,
contact the North Carolina Department of Revenue,
and the amount is considered to be held in trust until it
Taxpayer Assistance-Withholding Tax, P.O. Box
is paid to the Department. North Carolina does not use
25000, Raleigh, North Carolina 27640-0001 or you may
a depository system for income tax withheld. A report
call 1-877-252-3052.
of the tax withheld must be filed and the tax paid by the
required due date. You are required to report and pay
2. Who are Employers?
the tax withheld on a quarterly, monthly, or semiweekly
basis. Your initial filing frequency is determined by your
An employer is any person or organization for whom
an individual performs any service as an employee. The
average monthly withholding as indicated on Form NC/
BR. An employer required to file a certain frequency
term includes federal, state, and local governmental
(semiweekly, monthly, or quarterly) because of his
agencies as well as religious, charitable, educational, and
average monthly withholding, must continue on that basis
other nonprofit organizations even though they may be
Page 3
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