How to Calculate North Carolina State Withholding

North Carolina is one of the many states that require employers to withhold state income tax from employees' paychecks. The North Carolina Department of Revenue administers the state's tax withholding laws. The employer makes the withholding according to the agency's regulations, which includes giving new employees a state withholding allowance certificate --- an NC-4 form --- to complete. This form helps the employer calculate the withholding amount.

Things You'll Need

• NC-4 form
• Publication NC-30

Instructions

1. Obtain the employee's state withholding details from her NC-4 form. Check the top portion of the form for her filing status. Obtain her number of allowances from line 1 and any extra amount she wants withheld from each paycheck from line 2.

2. Use the state withholding tax tables in Publication NC-30 to figure the withholding amount. Suppose the employee claims single status and three allowances on his NC-4 form and is paid $1,150 biweekly. According to Page 24 of Publication NC-30, his biweekly withholding is $47.

3. Add additional withholding shown on line 2 of the NC-4 form to the withholding amount obtained from Publication NC-30, if applicable. The result is the employee's total withholding for each pay period.

Tips & Warnings

• If the employee claims she's exempt on her NC-4 form, do not withhold North Carolina income tax. North Carolina employees are subject to federal withholding taxes, including federal income tax, Social Security tax and Medicare tax. Consult the Internal Revenue Service's Circular E (Employer's Tax Guide) for federal tax withholding guidelines.

• File quarterly withholding tax returns and make your payments quarterly to the North Carolina Department of Revenue if you withhold less than $250 per month. File monthly returns and make monthly payments if you withhold at least $250 per month but less than $2,000. If you withhold $2,000 or more per month, make payments at the same time the IRS requires you to make payments for federal income tax purposes, which usually is semiweekly.

References

• North Carolina Department of Revenue: Income Tax Withholding Tables and Instructions for Employers
• StateW4: Employee's Withholding Allowance Certificate (NC-4)
• Internal Revenue Service: Circular E