The NC-4 form, known as the Employee’s Withholding Allowance Certificate, is essential for North Carolina employees. It helps employers determine the correct amount of state income tax to withhold from an employee's paycheck. Without this form, employers are obligated to withhold taxes as if the employee is single with zero allowances, which may not accurately reflect the individual's tax situation.
The NC-4 form, officially known as the Employee’s Withholding Allowance Certificate, plays a crucial role in determining the amount of state income tax withheld from an employee's paycheck in North Carolina. This form must be completed and submitted to the employer to ensure accurate withholding based on individual circumstances. Without an NC-4, employers are mandated to withhold taxes as if the employee is single with zero allowances, potentially leading to higher tax payments throughout the year. The form includes various sections, including the NC-4 Allowance Worksheet, which helps employees calculate their withholding allowances based on factors such as filing status, income adjustments, and applicable deductions. There are different versions of the form, such as the NC-4 EZ for those claiming standard deductions and the NC-4 NRA for nonresident aliens. Additionally, the form outlines specific instructions regarding how to fill it out correctly, emphasizing the importance of using blue or black ink and avoiding dollar signs or commas. Employees must also be aware that if their circumstances change—such as a decrease in allowances—they are required to submit a new NC-4 within ten days. Understanding the intricacies of the NC-4 form is essential for ensuring that the correct amount of state tax is withheld, which can significantly affect an individual’s financial planning and tax obligations.
What is the purpose of the NC-4 form?
The NC-4 form is used to help your employer withhold the correct amount of North Carolina state income tax from your paycheck. If you don’t submit this form, your employer will withhold taxes as if you are single with zero allowances, which may result in higher tax deductions from your pay.
Who should use the NC-4 EZ form?
If you plan to claim only the North Carolina Standard Deduction or the North Carolina Child Deduction Amount without any other deductions or tax credits, you can use the NC-4 EZ form. This simplified version makes it easier for qualifying taxpayers to report their withholding allowances.
What if I am a nonresident alien?
If you are a nonresident alien, you must use the NC-4 NRA form. Nonresident aliens are individuals who are not U.S. citizens and do not meet the green card test or the substantial presence test. Using the correct form ensures that your tax withholding is calculated properly.
How do I determine the number of allowances to claim?
To figure out your withholding allowances, complete the NC-4 Allowance Worksheet. This worksheet will guide you based on your income, deductions, and any applicable tax credits. You can choose to claim fewer allowances if you want to have more tax withheld throughout the year.
What should I do if my situation changes?
If your withholding allowances decrease, you need to submit a new NC-4 form to your employer within 10 days of the change. However, if you stop being the “Head of Household,” you don’t have to file a new form until the next tax year.
How should I handle multiple jobs?
If you have more than one job, use one NC-4 Allowance Worksheet to determine the total number of allowances you can claim across all jobs. It's generally best to claim all your allowances on the form for your highest-paying job and to claim zero allowances for the others to ensure accurate withholding.
What if I have nonwage income?
If you receive a significant amount of nonwage income, like interest or dividends, consider making estimated tax payments using Form NC-40. This can help you avoid underpayment penalties at tax time. You can find Form NC-40 on the North Carolina Department of Revenue’s website.
Can married couples file jointly or separately?
Yes, married couples can choose to file either jointly or separately. Both spouses need to agree on how to complete the NC-4 Allowance Worksheet. If filing jointly, you should consider both incomes and deductions. If filing separately, each spouse should only consider their own income and deductions.
What happens if I provide incorrect information on the NC-4?
Providing incorrect information that leads to less tax being withheld can result in penalties. If the North Carolina Department of Revenue finds that the information has no reasonable basis, you could face a penalty of 50% of the amount that was not properly withheld.
Understanding the NC-4 form is essential for ensuring that the correct amount of state income tax is withheld from your paycheck. Here are some key takeaways to keep in mind:
Filling out the NC-4 form correctly not only simplifies your tax experience but also helps you manage your finances effectively throughout the year. Stay informed and proactive to ensure that you meet your tax obligations without any surprises come tax season!
This is not true. If an employee does not submit the NC-4 form, employers are required to withhold taxes as if the employee is single with zero allowances, which may lead to higher tax withholding than necessary.
While it is advisable to review and update the form as personal circumstances change, it is not mandatory to complete a new NC-4 annually unless there is a change in withholding allowances.
The NC-4 EZ is a simplified version and is only for those claiming the North Carolina Standard Deduction or the N.C. Child Deduction Amount without any additional deductions or credits. Not everyone qualifies for this form.
This is incorrect. The instructions clearly state that only blue or black ink should be used to avoid processing issues.
While the form provides guidance for those with multiple jobs, it is necessary for all employees to ensure proper tax withholding regardless of their employment status.
This is a misunderstanding. The instructions specify that mixing form types is not allowed, which could lead to complications in tax withholding.
In reality, the filing status selected on the NC-4 significantly influences the amount of tax withheld from an employee's paycheck. Accurate selection is crucial.
This is false. If an employee’s situation changes, such as a decrease in allowances, a new NC-4 must be submitted within 10 days to adjust the withholding accordingly.
Contrary to this belief, if an employee provides false information that results in insufficient tax withholding, they may face a penalty of 50% of the amount not properly withheld.
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11-19
NC-4
Employee’s Withholding Allowance Certificate
PURPOSE - Complete Form NC-4 so that your employer can withhold the correct amount of State income tax from your pay. If you do not provide an NC-4 to your employer, your employer is required to withhold based on the filing status, “Single” with zero allowances.
FORM NC-4 EZ - You may use Form NC4-EZ if you plan to claim either the N.C. Standard Deduction or the N.C. Child Deduction Amount (but no other N.C. deductions), and you do not plan to claim any N.C. tax credits.
FORM NC-4 NRA - If you are a nonresident alien you must use Form NC-4 NRA. In general, a nonresident alien is an alien (not a U.S. citizen) who has not passed the green card test or the substantial presence test. (See Publication 519, U.S. Tax Guide for Aliens, for more information on the green card test and the substantial presence test.)
FORM NC-4 BASIC INSTRUCTIONS - Complete the NC-4 Allowance Worksheet. The worksheet will help you determine your withholding allowances based on federal and State adjustments to gross income
including the N.C. Child Deduction Amount, N.C. itemized deductions, and N.C. tax credits. However, you may claim fewer allowances than
you are entitled to if you wish to increase the tax withheld during the tax year. If your withholding allowances decrease, you must file a new NC-4 with your employer within 10 days after the change occurs. Exception:
When an individual ceases to be “Head of Household” after maintaining the household for the major portion of the year, a new NC-4 is not required until the next year.
TWO OR MORE JOBS - If you have more than one job, determine the total number of allowances you are entitled to claim on all jobs using one Form
NC-4 Allowance Worksheet. Your withholding will usually be most accurate when all allowances are claimed on the NC-4 filed for the higher paying job and zero allowances are claimed for the other. You should also refer to the
“Multiple Jobs Table” to determine the additional amount to be withheld on Line 2 of Form NC-4 (See page 4).
NONWAGE INCOME - If you have a large amount of nonwage income, such as interest or dividends, you should consider making estimated tax
payments using Form NC-40 to avoid underpayment of estimated tax interest. Form NC-40 is available on the Department’s website at www.
ncdor.gov.
HEAD OF HOUSEHOLD - Generally you may claim “Head of Household” filing status on your tax return only if you are unmarried and pay more than 50% of the costs of keeping up a home for yourself and your dependent(s)
or other qualifying individuals.
SURVIVING SPOUSE - You may claim “Surviving Spouse” filing status only if your spouse died in either of the two preceding tax years and you meet the following requirements:
1.Your home is maintained as the main household of a child or stepchild for whom you can claim a federal exemption; and
2.You were entitled to file a joint return with your spouse in the year of your spouse’s death.
MARRIED TAXPAYERS - For married taxpayers, both spouses must agree as to whether they will complete the NC-4 Allowance Worksheet based on
the filing status, “Married Filing Jointly” or “Married Filing Separately.”
•Married taxpayers who complete the worksheet based on the filing status, “Married Filing Jointly” should consider the sum of both spouses’ income, federal and State adjustments to income, and State tax credits to determine the number of allowances.
•Married taxpayers who complete the worksheet based on the filing status, “Married Filing Separately” should consider only his or her portion of income, federal and State adjustments to income, and State tax credits to determine the number of allowances.
All NC-4 forms are subject to review by the North Carolina Department of Revenue. Your employer may be required to send this form to the North Carolina Department of Revenue.
CAUTION: If you furnish an employer with an Employee’s Withholding Allowance Certificate that contains information which has no reasonable basis and results in a lesser amount of tax being withheld than would have been withheld had you furnished reasonable information, you are subject to a penalty of 50% of the amount not properly withheld.
Cut here and give this certificate to your employer. Keep the top portion for your records.
WebEmployee’s Withholding Allowance Certificate
10-17
1.Total number of allowances you are claiming
(Enter zero (0), or the number of allowances from Page 2, Line 17 of the NC-4 Allowance Worksheet)
2. Additional amount, if any, withheld from each pay period (Enter whole dollars)
,.00
Social Security Number
Filing Status
Single or Married Filing Separately
Head of Household
Married Filing Jointly or Surviving Spouse
First Name (USE CAPITAL LETTERS FOR YOUR NAME AND ADDRESS)
M.I.
Last Name
Address
County (Enter first five letters)
City
State
Zip Code (5 Digit)
Country (If not U.S.)
Employee’s Signature
Date
I certify, under penalties provided by law, that I am entitled to the number of withholding allowances claimed on Line 1 above.
NC-4 Allowance Worksheet
PART I
Answer all of the following questions for your filing status.
Single -
1.
Will your N.C. itemized deductions from Page 3, Schedule 1 exceed $13,249?
Yes
o
No
2.
Will your N.C. Child Deduction Amount from Page 3, Schedule 2 exceed $2,499?
3.
Will you have federal adjustments or State deductions from income?
4.
Will you be able to claim any N.C. tax credits or tax credit carryovers?
If you answered “No” to all of the above, STOP HERE and enter ZERO (0) as total allowances on Form NC-4, Line 1.
If you answered “Yes” to any of the above, you may choose to go to Page 2, Part II to determine if you qualify for
additional allowances. Otherwise, enter ZERO (0) on Form NC-4, Line 1.
Married Filing Jointly -
Will your N.C. itemized deductions from Page 3, Schedule 1 exceed $23,999?
5.
Will your spouse receive combined wages and taxable retirement benefits of
less than $8,250 or only retirement benefits not subject to N.C. income tax?
Married Filing Separately -
Will your portion of N.C. itemized deductions from Page 3, Schedule 1 exceed $13,249?
Head of Household-
Will your N.C. itemized deductions from Page 3, Schedule 1 exceed $18,624?
Page 1
Surviving Spouse -
Will your N.C. itemized deductions from Page 3, Schedule 1 exceed 23,999?
If you answered “No” to all of the above, STOP HERE and enter FOUR (4) as total allowances on Form NC-4, Line 1.
If you answered “Yes” to any of the above, you may choose to go to Part II to determine if you qualify for additional
allowances. Otherwise, enter FOUR (4) on Form NC-4, Line 1.
NC-4 Part II
Enter your total estimated N.C. itemized deductions from Page 3, Schedule 1
.....................................................
_______________________$
.
Enter the applicable
{
$10,750 if Single
N.C. standard deduction
$21,500 if Married Filing Jointly or Surviving Spouse
based on your filing status.
$10,750 if Married Filing Separately
$16,125 if Head of Household
Subtract Line 2 from Line 1. If Line 1 is less than Line 2, enter ZERO (0)
Enter an estimate of your total N.C. Child Deduction Amount from Page 3, Schedule 2
Enter an estimate of your total federal adjustments to income and State deductions from
federal adjusted gross income
................................................................................................................................
6.
Add Lines 3, 4, and 5
7.
Enter an estimate of your nonwage income (such as dividends or interest)
$_____________________
8.Enter an estimate of your State additions to federal adjusted gross
income
8.
$
9.
Add Lines 7 and 8
10.
Subtract Line 9 from Line 6 (Do not enter less than zero)
11.
Divide the amount on Line 10 by $2,500 . Round down to whole number
_______________________
Ex. $3,900 ÷ $2,500 = 1.56 rounds down to 1
12.
Enter the amount of your estimated N.C. tax credits
13.
Divide the amount on Line 12 by $134. Round down to whole number
Ex. $200 ÷ $134 = 1.49 rounds down to 1
14. If filing as Single, Head of Household, or Married Filing Separately, enter zero (0) on this line. If filing as Surviving Spouse, enter 4.
If filing as Married Filing Jointly, enter the appropriate number from either (a), (b), (c), (d), or (e) below.
(a)Your spouse expects to have combined wages and taxable retirement benefits of $0 for N.C. purposes, enter 4. (Taxable retirement benefits do not include: Bailey, Social Security, and Railroad retirement)
(b)Your spouse expects to have combined wages and taxable retirement benefits of more than $0 but less than or equal to $3,250, enter 3.
(c)Your spouse expects to have combined wages and taxable retirement benefits of more than $3,250 but less than or equal to $5,750, enter 2.
(d)Your spouse expects to have combined wages and taxable retirement benefits of more than $5,750 but less than or equal to $8,250, enter 1.
(e)Your spouse expects to have combined wages and taxable retirement benefits of more than
$8,250, enter 0
14.
15. Add Lines 11, 13, and 14, and enter the total here
15.
16. If you completed this worksheet on the basis of Married Filing Jointly, the total number of allowances determined
on Line 15 may be split between you and your spouse, however, you choose. Enter the number of allowances
from Line 15 that your spouse plans to claim
16.
17. Subtract Line 16 from Line 15 and enter the total number of allowances here and on Line 1 of your
Form NC-4, Employee’s Withholding Allowance Certificate
17.
Page
2
NC-4 Allowance Worksheet Schedules
Important: If you cannot reasonably estimate the amount to enter in the schedules below, you should enter ZERO (0) on Line 1, NC-4.
Schedule 1
Estimated N.C. Itemized Deductions
Qualifying mortgage interest
Real estate property taxes
Total qualifying mortgage interest and real estate property taxes*
Charitable Contributions (Same as allowed for federal purposes)
Medical and Dental Expenses (Same as allowed for federal purposes)
Total estimated N.C. itemized deductions. Enter on Page 2, Part II, Line 1
*The sum of your qualified mortgage interest and real estate property taxes may not exceed $20,000. For married taxpayers, the $20,000 limitation applies to the combined total of qualified mortgage interest and real estate property
taxes claimed by both spouses, rather than to each spouse separately.
Schedule 2
Estimated N.C. Child Deduction Amount
A taxpayer who is allowed a federal child tax credit under section 24 of the Internal Revenue Code is allowed a deduction for each dependent child unless adjusted gross income exceeds the threshold amount shown below.
The N.C. Child Deduction Amount can be claimed only for a child who is under 17 years of age on the last day of the year.
Deduction
No. of
Amount per
Estimated
Adjusted Gross Income
Children
Qualifying Child
Single
Up to
20,000
Over
30,000
40,000
50,000
60,000
MFJ or SS
80,000
100,000
120,000
HOH
45,000
75,000
90,000
MFS
_____________
2,500
______________
2,000
1,500
1,000
500
-
Page 3
Multiple Jobs Table
Find the amount of your estimated annual wages from your lowest paying job(s) in the left hand column. Follow across to find the amount of additional tax to be withheld for each pay period. Enter the additional amount to be withheld on Line 2 of your Form NC-4.
Additional Withholding for Single, Married, or Surviving Spouse with Multiple Jobs
Estimated Annual Wages
Payroll Period
At Least
But Less Than
Monthly
Semimonthly
Biweekly
Weekly
0
1000
1
2000
7
3
3000
11
6
5
4000
16
8
4
5000
20
10
9
6000
25
12
7000
29
14
13
8000
33
17
15
9000
38
19
10000
42
21
10750
46
23
Unlimited
48
24
22
Additional Withholding for Head of Household Filers with Multiple Jobs
11000
47
12000
51
26
13000
56
28
14000
60
30
15000
65
32
16000
69
35
71
36
Page 4
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Using the Wrong Ink Color: Many individuals mistakenly use red ink instead of the required blue or black ink. This can lead to the form being rejected or delayed.
Including Punctuation: Some people add dollar signs, commas, or other punctuation marks when entering amounts. This is not allowed and can cause confusion in processing.
Incorrect Page Scaling: Failing to set the page scaling to "none" can result in a form that is improperly sized and may not be accepted.
Mixing Form Types: Individuals sometimes mix different types of forms, which can lead to complications. Each form type must be submitted separately.
Claiming Inaccurate Allowances: Some filers claim more allowances than they are entitled to, which can result in under-withholding and potential penalties.
Not Updating the Form: If an individual's circumstances change, such as a decrease in allowances, they often forget to submit a new NC-4 within the required timeframe.
Neglecting to Use the Allowance Worksheet: Failing to complete the NC-4 Allowance Worksheet can lead to incorrect calculations and ultimately affect tax withholding.
Submitting Copies Instead of Originals: Some individuals mistakenly submit copies of their forms instead of the original, which can result in processing delays.
When filling out the NC-4 form, it is essential to follow specific guidelines to ensure accuracy and compliance. Here are six things you should and shouldn't do:
The IRS Form W-4, also known as the Employee's Withholding Certificate, serves a similar purpose to the NC-4 form. Both forms allow employees to indicate their withholding allowances to ensure the correct amount of federal income tax is withheld from their paychecks. Like the NC-4, the W-4 requires employees to consider their filing status and any deductions or credits they may qualify for. Failure to submit a W-4 can result in the employer withholding taxes at the highest rate, which can lead to a larger tax bill or refund at year-end.
The IRS Form 1040 is the individual income tax return form that taxpayers file annually. While the NC-4 is used to determine withholding allowances throughout the year, the 1040 is used to report total income, calculate tax liability, and claim deductions and credits. Both forms require accurate reporting of personal information and financial data, but the 1040 is submitted after the tax year has ended, whereas the NC-4 is submitted to the employer at the start of employment or when changes occur.
The NC-4 EZ form simplifies the process for individuals who qualify for the North Carolina Standard Deduction or the N.C. Child Deduction Amount without additional deductions or credits. Similar to the NC-4, it allows taxpayers to specify withholding allowances, but it is designed for those with straightforward tax situations. This form streamlines the process for individuals who may find the full NC-4 complex or unnecessary for their needs.
The IRS Form 1099 is used to report various types of income other than wages, salaries, and tips. While the NC-4 focuses on withholding allowances for state income tax, the 1099 form informs the taxpayer and the IRS about income that may require estimated tax payments. Both forms play a crucial role in tax compliance but serve different functions in the overall tax reporting process.
The IRS Form 4868 is an application for an automatic extension of time to file a federal tax return. While the NC-4 is used to manage withholding throughout the year, the 4868 allows taxpayers to extend the deadline for submitting their 1040 forms. Both documents require timely submission to avoid penalties, but they address different aspects of the tax process—one for withholding and the other for filing extensions.
The NC-40 form is utilized for making estimated tax payments in North Carolina. Similar to the NC-4, it is relevant for taxpayers who need to manage their tax liabilities throughout the year. The NC-40 is particularly important for individuals with nonwage income, as it allows them to avoid underpayment penalties. Both forms require careful calculations to ensure compliance with state tax obligations.
The IRS Form 8862 is used to claim the Earned Income Credit after it has been disallowed in a previous year. While the NC-4 focuses on withholding allowances, the 8862 is a means for taxpayers to reclaim credits that can significantly reduce their tax burden. Both forms require accurate reporting of personal circumstances and eligibility criteria, highlighting the importance of understanding tax benefits.
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The IRS Form 8880 allows taxpayers to claim a credit for contributions to retirement savings accounts. Similar to the NC-4, which helps determine tax withholding, the 8880 form can impact the overall tax liability by providing credits that reduce the amount owed. Both forms require detailed information about financial status and eligibility for specific benefits.
The NC-3 form is the annual reconciliation of North Carolina income tax withheld. It summarizes the total amount withheld from employees' wages throughout the year, similar to how the NC-4 determines withholding allowances. Both forms are essential for ensuring compliance with state tax laws, but the NC-3 is submitted after the tax year to report total withholding rather than to establish it.
The IRS Form 1040-SR is a version of the 1040 designed for seniors. Like the NC-4, it allows taxpayers to report income and claim deductions and credits, but it is tailored to meet the specific needs of older individuals. Both forms facilitate the tax filing process, but the 1040-SR includes features that cater to the unique financial situations of senior taxpayers.