Form NC-4 Withholding Allowance Certificate

Form NC-4 Withholding Allowance Certificate: Key Takeaways

All new employees in North Carolina must submit Form NC-4 or NC-4 EZ before starting work; absence of the form defaults withholding to single with zero allowances
Employers must forward NC-4 forms claiming over 10 allowances or exemptions along with withholding reports to the NCDOR
Military spouses can claim exemption from NC withholding tax using Form NC-4 EZ plus specific documentation, renewable annually

Form NC-4 is mandatory for specifying state income tax withholding in North Carolina. It helps align employee tax payments with actual liability to avoid under- or overpayment.

This article provides a clear understanding of the NC-4 form, employer duties, and special cases like military spouse exemptions.

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Understanding Form NC-4 Withholding Allowance Certificate

Form NC-4, also known as the Employee's Withholding Allowance Certificate, is required by the North Carolina Department of Revenue (NCDOR) for all employees to indicate their withholding allowances. These allowances help employers determine the correct amount of state income tax to withhold from wages.

By accurately completing Form NC-4, employees ensure that their employer deducts tax amounts that reflect their actual tax liability, preventing issues like owing taxes at year-end or having excessive amounts withheld throughout the year.

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Mandatory Submission and Form Variants of NC-4

Submission Requirements for New Employees in North Carolina

All new hires in North Carolina must complete and sign Form NC-4 or, if eligible, the simpler Form NC-4 EZ before starting their employment.

If an employee does not submit either form, employers are legislatively required to withhold state taxes as if the employee were single with zero withholding allowances.

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Different Versions of NC-4 Forms

NC-4 EZ: Simplified certificate for employees with straightforward tax situations, such as no dependents and a single job.
NC-4 NRA: Special form for nonresident alien employees to properly address their unique tax withholding status under federal and state tax laws.

Duration and Updating of NC-4 Withholding Allowance Certificate

Once an employee submits Form NC-4 or its variants, it remains effective until the employee submits a newer form, reflecting any life changes.

Employees should update their form whenever personal circumstances change significantly, such as marriage, divorce, or having children. This helps maintain accurate withholding throughout the year and avoids tax surprises.

Submission of Certain NC-4 Certificates to the NCDOR

Employers must submit copies of any Form NC-4 where the employee claims more than 10 withholding allowances or claims exemption from withholding, provided these employees regularly earn over $200 per week.

These copies are sent with the employer's regular quarterly or monthly withholding tax reports to the North Carolina Department of Revenue.

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Record Retention Requirements for Employers

Employers are required to retain the original completed Form NC-4 in their payroll records for compliance and audit purposes.

Special Considerations to Claim Exemption from North Carolina Withholding Tax

A particularly notable exemption applies to military spouses under the Military Spouse Residency Relief Act.

Military spouses may be exempt from NC withholding tax if they furnish their employer with these items:

A completed Form NC-4 EZ
A copy of the military spouse's identification card
The servicemember's most recent leave and earnings statement

This exemption is not permanent. It must be renewed yearly by submitting a new Form NC-4 EZ along with updated documentation.

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Tips for Employees and Employers on Using Form NC-4 Effectively

Employees should carefully evaluate their tax situations before completing Form NC-4, considering financial and family status changes that affect withholding allowances.

Employers should educate employees on the importance of submitting accurate withholding certificates and keep comprehensive records to maintain compliance with state tax regulations.

Both parties benefit from regular reviews of withholding status to avoid unexpected tax bills or excessive withholdings.

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