North Carolina State Tax Routine (NCTX)

The North Carolina State Tax Special Routine Processing utilizes the following steps:

Line 1

Multiply the employee’s gross wages for the current payroll period by the number of payroll periods in a year to obtain their Annualized Gross Income (GI).

Line 2

Determine the employee’s deductions:

Standard Deduction
Withholding Allowances*

Line 3

Determine the Taxable Amount by subtracting Lines 2A and 2B from Line 1.

Line 4

Using the Marginal Tax Rates (DEDX) entries for the North Carolina State Tax deduction, compute tax on the Taxable Amount (Line 3).

Line 5

Divide the amount on Line 4 by the number of payroll periods in a year to determine the employee’s North Carolina Withholding Tax for the pay period.

*Determine the Withholding Allowance Amount

Take the Maximum Standard Deduction Amount on the Tax Parameters (TAXP) entry for the employee’s North Carolina State Tax deduction and Marital Status * the number of State Tax Allowances on the employee’s Employee Tax Parameter (TAX). Add the Annual Exemption Amount from the TAXP entry to the resulting amount to determine the Withholding Allowance Amount.

Data Setup Considerations

Sites will need to ensure they have implemented the following Business Process/Data Setup changes at their site prior to using the North Carolina State Tax Routine.

Tax Parameters (TAXP) Setup for North Carolina State Tax Deductions:

The Annual Exemption Amount is the Standard Deduction Amount.
The Maximum Standard Deduction Amount is the Withholding Allowance Amount.

Deduction Plan (DPLN) setup for North Carolina State Tax Deductions.

If the Amount/Percent 5 value is 0, the state tax value is calculated at the actuals.
The Amount/Percent 5 value is 1, the state tax value per pay period will be round off to the nearest whole dollar value.

Note - This set up is applicable to Next Generation Payroll Services only.

Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes a North Carolina State Tax Deduction).

The State Tax Allowance field is the Withholding Allowance count.

Note - The point 3 functions if the MULTI_STATE_TAX parameter is set to N as part of the Application Parameter (APPCTRL) page, if the parameter is set to Y, then the system functions as per point 4.

Employee enrolled in the State Tax Enrollment (TAXS) (Note: this only applies to employees enrolled in the State Tax Class (TAXCS) that includes a North Carolina State Tax Deduction).
The State Tax Allowance field captures the employee's claim for the number of exemptions.