I worked in the state of North Carolina for 2 years and never owed the state money. But now, for the past 2 years, I've owed the state money. What am I doing wrong? Do I fix this via my W-4?
Hello!
You need to increase your state withholdings. Please contact your (Human Resources) HR department and ask for the state withholding declaration. HR will have the correct forms you need. You need to increase this so they take out a little more for the state.
Thank you for using TurboTax!
While NC does not tax Social Security benefits, they do tax other retirement income at a flat 4.99%. If you find that you are owing NC, you can have state income taxes withheld from your retirement plan distributions.
Enjoy retirement!
You're not really doing anything wrong.
For one thing, most employees need to complete a Federal Form W-4, but not everyone needs to complete a state Form W-4. In addition, a Federal Form W-4 tells you how much Federal income tax to withhold from each employee's pay. A state Form W-4 tells you how much state income tax to withhold. This is 1 option.
If your income is about the same year over year you could simply divide the tax you owed to the state n 2022 and divide that by the numbers of paycheck left in the year. You could then set up estimated payments for the state in 2023. Then you want to remember how much you paid so you can indicate that you paid estimated taxes for 2023 when you prepare your 2023 return.