The structure of inclusions and their influence on surface morphology, local strain, and basal plane dislocations were investigated in silicon carbide (SiC) epitaxial layers grown on 4°offcut substrates. On high-resolution x-ray topography images, strain fields were observed surrounding the inclusions. Ultraviolet photoluminescence images revealed the presence of strain-induced dislocations around the inclusions. Micro-Raman and microphotoluminescence spectroscopy showed that the inclusions exhibited a complex structure that consisted of 3C polytype regions and misoriented 4H polytype regions. The resulting lattice deformation typically propagates in the step-flow growth direction and causes distorted surface morphology.