Withholding Taxes: North Carolina
Federal law and guidance on this subject should be reviewed together with this section.
Author: Vicki M. Lambert, The Payroll Advisor
- Residents of North Carolina are subject to North Carolina income tax withholding on all wages earned both inside and outside of the state. Nonresident employees are subject to North Carolina withholding on any part of wages paid for services performed in North Carolina. See Withholding on Residents, Nonresidents and Expatriates.
- All employees must complete and submit to their employer when hired Form NC-4, Employee's Withholding Allowance Certificate. Federal Form W-4 is not acceptable. Employers must send copies of Forms NC-4 to the state Department of Revenue in certain circumstances. Form NC-4 NRA, Nonresident Alien Employee's Withholding Allowance Certificate, must be completed and submitted by nonresident alien employees. See Employee's Withholding Allowance Certificate.
- The method of withholding on supplemental wages differs depending on whether the supplemental wage payment is paid at the same time as regular wages in a single payment with the amount of each payment specified, or paid separately from regular wages. See Supplemental Wages.
- In North Carolina, all severance pay is now subject to income tax withholding. See Severance Pay.
- North Carolina employers must keep certain withholding tax records for at least three years. See Recordkeeping Requirements.