Employers in North Carolina are required to report the state income taxes withheld from their employees’ wages that are at least $500 but not more than $2,000 for every month. The tax form used for reporting these payments is the NC-5, Withholding Return.
Update: The Department of Revenue in North Carolina changes the way the NC-5 Form is filed. Rather than filing a PDF file and printing out a paper copy, you will now enter your information on the agency’s webpage and the form will be generated automatically.
It’s a simple yet very important tax document that every employer must file with the State Tax Department. It shouldn’t take you more than ten minutes to compute the total amount of North Carolina income taxes withheld from wages and file it with the state.
In order, you will enter the total amount of tax withheld during the course of the month and calculate any penalties and interest that you owe as an employer. The penalties are subject to the employers who are late filing and late paying these state income taxes.
NC-5 Withholding Penalties
The withholding penalties are there for a reason. If an employer doesn’t withhold the necessary amount, a 10 percent penalty is imposed on top of the amount required. There is also another penalty. Employers that withheld the right amount of North Carolina state income tax from their employees’ wages but didn’t report with the NC-5 are subject to a 5 percent penalty, up to 25 percent. Calculate these penalties if you owe any and pay them via the tax withheld but indicate the amount of penalty on Line 2 of the form.
NC-5 Withholding Interests
Aside from the penalties, there is interest if you’re late. The same as the late payment penalty, you’ll be subjected to a certain percentage of the payment in penalties. The interest payments are the standard rate set by the North Carolina State Tax Department.