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To Comply with New Tax Law, Employees Must Fill Out Withholding Allowance Certificate by Dec. 31

Dec. 27, 2013. Employees must fill out new withholding allowance certificates by the end of the year to comply with state law.

The North Carolina General Assembly recently enacted the Tax Simplification and Reduction Act which becomes effective for taxable years beginning on or after Jan. 1, 2014. Under this new law, all taxpayers will pay a lower rate and be granted a higher standard deduction. See key updates and forms below.

To conform to the lower rates and adjusted allowance structure, employers and payers of pensions must obtain new withholding certificates from their employees and pension payment recipients. The collection of new withholding certificates and application of new withholding rate tables must be completed to ensure the correct amount of state income tax is withheld for any payments made on or after Jan. 1.

For any employee who does not provide a new NC-4 EZ or NC-4, employers must withhold state income tax at the rate of single with zero allowances. For any pension recipient who does not provide an updated NC-4P, the pension payer must withhold at the rate of married with three allowances.

The North Carolina Department of Revenue (NCDOR) recently notified all employers, as well as pension payers, about this upcoming requirement. Copies of all forms, as well as support information such as frequently asked questions, can be found by visiting NCDOR’s website atwww.dornc.com.

For taxpayers who require assistance completing the forms, please contact NCDOR at 1-877-252-4487. This toll free number is staffed by specially trained NCDOR employees and will be available until Feb. 28. 

Changes to N.C. Standard Deduction Rates: 

  • Married, filing jointly: From $6,000 in 2013 to $15,000 in 2014
  • Head of Household: From $4,400 in 2013 to $12,000 in $2014
  • Single: From $3,000 in 2013 to $7,500 in 2014
  • Married, filing separately: From $3,000 in 2013 to $7,500 in 2014

Remaining N.C. Itemized Deductions (Individual Income)

  • Charitable Contributions Deduction: May not exceed federal limit
  • Combined Qualifying Home Mortgage Interest and Property Taxes on Real Estate: May not exceed $20,000

If employers or pension payers have questions, they may call this special help number: 1-877-252-4487. The number will be available until Feb. 28, 2014.