Minnesota Income Tax Withholding - Minnesota Department Of Revenue

Withholding Requirements

If you employ anyone who works in

Even though you are not required to with-

Withhold From Income

Minnesota or is a Minnesota resident and

hold income tax for the reciprocity state, we

Assignable to Minnesota

you are required to withhold federal income

encourage you to do so as a courtesy to your

employee. If the employee requests that you

tax from that employee’s wages, you are also

Minnesota Residents

withhold tax for their state of residence,

required to withhold Minnesota income tax

You may be required to withhold Minnesota

contact the Michigan or North Dakota

in most cases.

income tax from wages paid to a Minnesota

revenue department for information.

resident regardless of where the work is

If you are not required to withhold federal

performed, even if the work is performed

For details, see Fact Sheet 20.

income tax from the employee’s wages, you

outside the United States. See information

are not required to withhold Minnesota

Interstate Carrier Companies

on page 5 to determine Minnesota tax to

income tax in most cases.

If you operate an interstate carrier company

withhold.

and have employees who regularly perform

You can find the rules for determining if

Residents of Another State

assigned duties in more than one state (such

you are required to withhold federal taxes

If you are required to withhold federal

as truck drivers, bus drivers, or railroad

in federal Circular E, IRS Publication 15

income tax from a nonresident employee’s

workers), withhold income tax for the

( ).

wages for work performed in Minnesota,

employee’s state of residence only.

you are also required to withhold

If you pay any employee—including your

Interstate Air Carrier Companies

Minnesota income tax in most cases.

spouse, children, other family members,

If you operate an interstate air carrier

friends, students, or agricultural help—to

Exceptions: You are not required to with-

company and have employees who perform

perform services for your business, with-

hold Minnesota tax if either of the following

regularly assigned duties on aircraft in more

holding is required. A worker is considered

are true:

than one state, you must withhold income

an employee if you control what they do

tax for the state of residence as well as any

• The employee is a resident of Michigan

and how they do it.

state in which more than 50 percent of their

or North Dakota and meets the

Any officer performing services for a corpo-

compensation is earned. An employee is

reciprocity agreement provisions (see

ration is an employee, and their wages are

considered to have earned more than 50

“Reciprocity for Residents of Michigan

percent of his or her compensation in any

subject to withholding.

or North Dakota” on this page)

state in which scheduled flight time in that

For details, see Fact Sheet 6.

• The amount you expect to pay the

state is more than 50 percent of total sched-

employee is less than the minimum

uled flight time for the calendar year.

You must withhold Minnesota income tax

income requirement for a nonresident to

from the wages you pay employees and

Nonresident Entertainer Tax

file a Minnesota individual income tax

send the amount withheld to the depart-

Compensation paid to nonresident enter-

return, which is $10,400

ment. You must withhold tax even if you

tainers for performances is not subject to

Note: Wages earned while a taxpayer was a

pay employees in cash or give them other

regular Minnesota income tax. Instead,

Minnesota resident, but received when the

goods or services in exchange for working

there is a 2 percent (.02) nonresident

taxpayer was a nonresident, are assignable

for you. Goods and services are subject to

entertainer tax on the gross compensation

to Minnesota and are subject to Minnesota

Minnesota withholding tax to the same

the entertainer or entertainment entity

withholding tax. Wages include all income

extent they are subject to federal with-

receives for performances in Minnesota.

for services performed in Minnesota

holding tax.

Nonresident entertainer tax does not

(such as severance pay, equity based

apply to residents of Michigan or North

For details, see Fact Sheets 9 and 10.

awards, and other non-statutory deferred

Dakota due to reciprocity agreements (see

compensation).

Employee or Independent Contractor

“Reciprocity for Residents of Michigan or

The proper classification is a matter of law,

North Dakota” on this page).

For details, see “Form W-2 Wage

not choice. The factors considered when

Allocation” on page 12 and Fact Sheet 19.

The term entertainers includes, but is not

evaluating worker classification fall into

limited to, musicians, singers, dancers,

Reciprocity for Residents of Michigan or

three main categories: the relationship of

comedians, actors, athletes, and public

North Dakota

the parties, behavioral control, and financial

speakers.

Minnesota has income tax reciprocity

control.

agreements with Michigan and North

The law defines an entertainment entity as

An employer who misclassifies an employee

Dakota. Under the agreements, you are not

any of the following:

as an independent contractor is subject to

required to withhold Minnesota income

• An entertainer who is paid for provid-

a tax equal to 3 percent (.03) of the wages

tax from the wages of an employee who is

ing entertainment as an independent

paid to the employee. The employee may

a resident of Michigan or North Dakota,

not claim the tax as a credit (withholding)

contractor

works in Minnesota, and gives you a prop-

on their Minnesota individual income tax

• A partnership that is paid for entertain-

erly completed Form MWR, Reciprocity

return.

ment provided by entertainers who are

Exemption/Affidavit of Residency, each year.

partners

You must send us copies of the forms you

For details see Fact Sheet 8.

• A corporation that is paid for entertain-

received from your employees.

ment provided by entertainers who are

shareholders of the corporation

Minnesota Income Tax Withholding - Minnesota Department Of Revenue - 2017 Page 4

Related Articles

Related forms

Related Categories