Beginning with your first payroll dated in 2014, employees may notice changes in their paychecks due to updated 2014 federal and state tax laws.

As a result of a new tax law enacted in North Carolina, every employer must have all employees provide a new Employee’s Withholding Allowance Certificate, either Form NC-4 EZ or Form NC-4. The new form must be completed by the employee and provided to the employer so the correct amount of State income tax is withheld for any payment periods beginning on or after January 1, 2014.

Failure by your employees to complete this new NC-4 form could result in a reduction in your employees’ net paychecks.

We anticipate the simpler Form NC-4 EZ will likely suffice for most employees. This form can be used even if employees plan to itemize deductions for their tax filing. Form NC-4 is an extended withholding form that may provide more precise withholding figures, but will require historical tax information and estimation of 2014 income, deductions, and credits from the employee.

If an employee fails to provide the employer with the applicable updated form(s), the employer is required to withhold North Carolina tax based on the filing status of “single” with no allowances.

Copies of the forms, as well as instructional materials, are available on the North Carolina Department of Revenue’s website at http://www.dor.state.nc.us/downloads/wh_forms.html. The IRS’ Form W-4 is available at http://www.irs.gov.

Please call us if you or your employees have any questions concerning the new forms or need assistance completing them.