Doing Payroll in North Carolina? Here’s a Basic Guide to Withholding Tax in North Carolina
If you are opening a business in North Carolina and plan to have employees, you must register for a North Carolina Withholding Tax Identification Number. You can do this by completing Form NC-BR and submitting it electronically or mailing it to:
N.C. Department of Revenue
Post Office Box 25000
Raleigh
27640
Form NC-BR is a business registration application that covers income tax withholding, sales and use tax, machinery, equipment and manufacturing fuel tax. All taxpayers required to register for any of these taxes can do so by submitting Form NC-BR. Applicants that register online will receive their account numbers instantly.
What do I need to do when I hire a new employee?
For each new employee hired, obtain a North Carolina Employee’s Withholding Allowance Certificate, Form NC-4. Employees should complete Form NC-4 to determine the amount of tax to be withheld. Withhold North Carolina income tax in accordance with the employee’s withholding allowance certificate and the applicable withholding tax table. You can download the income tax withholding tables here. You should retain the original certificates on your files and submit copies to the N.C. Department of Revenue if:
• An employee claims more than 10 withholding allowances
• An employee claims exemption from withholding and the employee’s wages would normally exceed $200 per week.
If an employee refuses to provide a N.C. Employees Withholding Allowance Certificate then withhold as if he or she is single with no allowances.
Filing Frequency
Withholding tax returns are filed semi-weekly, monthly or quarterly depending on the average amount of tax you withhold each month. This table summarizes the N.C. requirements for filing frequency:
| Amount | Frequency |
| Any employer that files an average of less than $250 of N.C. income tax per month. | Quarterly |
| An employer who withholds an average of at least $250 but less than $2000 of N.C. income tax per month. | Monthly |
| An employer who withholds an average of $2000 or more of N.C. income tax per month. | Semi-weekly |
How do I file my Withholding Tax Reports and Pay Withholding Tax?
You can file your N.C. withholding return and pay the tax online at www.dornc.com. Payments can be made by bank draft, Mastercard or Visa. If you pay an average of at least $20,000 each month in N.C. withholding taxes, you are required to pay by electronic funds transfer (EFT).
Due Dates
| Employers that file: | Due Date |
| Quarterly | The last day of the month following the end of the calendar quarter. |
| Monthly | The 15th day of the month following the month in which the tax was withheld. |
| Semi-weekly | At the same time you are required to pay the tax withheld on the same wages for federal income tax purposes.
Sat, Sun, Mon, Tues Payroll – due the following Friday of the same week. Wed, Thur, Fri Payroll – due the following Wednesday. |
If the due date falls on a Saturday, Sunday or holiday then the return is due the first business day following the Saturday, Sunday or holiday.
Penalties
There is a 10% penalty for late payment of tax due. There is also a penalty of 5% per month (max 25%) for failure to file the report when due.
The information provided above is a basic guideline for withholding tax in North Carolina. You should bear in mind that there are a number of withholding requirements that have been omitted from this guide, e.g.:
- The treatment of nonresident employees.
- Withholding from pensions, annuities and deferred compensation.
- Withholding from nonresidents for personal services performed in North Carolina.
- Withholding on contractors identified by an individual ITIN.
- Payments exempt from withholding.
The North Carolina Department of Revenue provides instructions for handling the above in publication, NC-30 - Income Tax Withholding Tables and Instructions for Employers.
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