Fisher Stark - No More Personal Exemptions NC

The New Year brings new requirements for businesses located in North Carolina. Effective January 1, 2014, North Carolina taxpayers may no longer claim a personal exemption on their taxes for themselves, their spouse, their children or any other qualifying dependents.  Because of this recently enacted legislation, House Bill 998, every North Carolina employer must have all employees provide new withholding allowance certificates. In North Carolina this form is known as Form NC-4EZ or Form NC-4.  Please click the link for Form NC-4EZ or Form NC -4 to download the forms in PDF format.

Every employer in the State of North Carolina should provide these forms to their employees before January 1, 2014.  Regardless of who provides the form, every employee in the State of North Carolina is required to complete the form and provide it to their employer before any compensation payments are made for any compensation period beginning on or after January 1, 2014.  All North Carolina employers are required to have the correct form so that the correct amount of North Carolina State income tax is withheld for any payment periods beginning on or after January 1, 2014.

The new forms bring new questions. Which form is the right form for each employee? Form NC-4EZ should be used for employees who plan to claim the North Carolina standard deduction and plan to claim no tax credits (unless the only tax credit is the credit for children).  This form is also appropriate for people that qualify and claim exempt status, or for employees who prefer to not go through the time and expense of completing the extended form NC-4.  An employee can still file Form NC-4EZ even if they plan to later claim itemized deductions for their tax filing.  Form NC-4 is a much more complicated document. Employees that don’t qualify for filing the NC-4EZ form are required to fill out the NC-4 form which provides for precise withholding figures and requires historical tax return information and estimation of 2014 income, deductions, and credits.

New North Carolina tax deduction forms are not just required for employees. All recipients of a pension or annuity payments must complete and provide to their payor a new withholding certificate for pension or annuity payments.  Recipients of pension or annuity payments must complete and return Form NC-4P in order to have the correct amount of State income tax withheld for any pension or annuity payment periods beginning on or after January 1, 2014.

Employers are required to act even if their employees do not provide them with updated withholding forms. In the absence of a form being returned by an employee, the employer must withhold North Carolina tax for their employees based on the following status: employees who fail to file Form NC-4EZ or Form NC-4 will be withheld based on “single” with “No allowances”. Pension recipients who fail to file Form NC-4P will be deemed to have “married” with three allowances as their filing designation. Copies of the forms, as well as instructional materials to assist employees and employers through the process, are available at the Fisher Stark, P.A. website, or at the North Carolina Department of Revenue’s website.  If you need additional assistance please feel free to call the business attorneys at Fisher Stark. The Asheville attorneys at Fisher Stark, P.A. are committed to helping businesses help their customers.

Last updated 7/5/2015