Minnesota Income Tax Withholding Instruction Booklet And Tax Tables

Withholding Requirements

If you employ anyone who works in

Even though you are not required to with-

Withhold From Income

hold income tax for the reciprocity state,

Minnesota or is a Minnesota resident and

Assignable to Minnesota

we encourage you to do so as a courtesy to

you are required to withhold federal income

your employee. If the employee requests

tax from that employee’s wages, you are

Minnesota Residents

that you withhold tax for their state of

also required to withhold Minnesota income

You may be required to withhold Minnesota

residence, contact the Michigan or North

tax in most cases.

income tax from wages paid to a Minnesota

Dakota 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,

outside the United States. See information

you 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 Minnesota

If you pay any employee—including your

Interstate Air Carrier Companies

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 fol-

regularly assigned duties on aircraft in more

holding is required. A worker is considered

lowing 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 cor-

compensation is earned. An employee is

reciprocity agreement provisions (see

poration is an employee, and their wages

considered to have earned more than 50

“Reciprocity for Residents of Michigan

percent of his or her compensation in any

are 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 Compensation

file a Minnesota individual income tax

send the amount withheld to the depart-

paid to nonresident entertainers for perfor-

return, which is $10,650

ment. You must withhold tax even if you

mances is not subject to regular Minnesota

pay employees in cash or give them other

Note: Wages earned while a taxpayer was a

income tax. Instead, there is a 2 percent

goods or services in exchange for working

Minnesota resident, but received when the

(.02) nonresident entertainer tax on the

taxpayer was a nonresident, are assignable

for you. Goods and services are subject

gross compensation the entertainer or enter-

to Minnesota and are subject to Minnesota

to Minnesota withholding tax to the same

tainment entity receives for performances in

withholding tax. Wages include all income

extent they are subject to federal with-

Minnesota. Nonresident entertainer tax does

for services performed in Minnesota (such

holding tax.

not apply to residents of Michigan or North

as severance pay, equity based awards, and

Dakota due to reciprocity agreements (see

For details, see Fact Sheets 9 and 10.

other non-statutory deferred compensation).

“Reciprocity for Residents of Michigan or

Employee or Independent Contractor

North Dakota” on this page).

For details, see “Form W-2 Wage

The proper classification is a matter of law,

Allocation” on page 12 and Fact Sheet 19.

The term entertainers includes, but is not

not choice. The factors considered when

limited to, musicians, singers, dancers,

Reciprocity for Residents of Michigan or

evaluating worker classification fall into

comedians, actors, athletes, and public

North Dakota

three main categories: the relationship of

speakers.

Minnesota has income tax reciprocity

the parties, behavioral control, and financial

agreements with Michigan and North

control.

The law defines an entertainment entity as

Dakota. Under the agreements, you are not

any of the following:

An employer who misclassifies an

required to withhold Minnesota income

• An entertainer who is paid for providing

employee as an independent contractor

tax from the wages of an employee who is

entertainment as an independent contrac-

is subject to a tax equal to 3 percent (.03)

a resident of Michigan or North Dakota,

tor

of the wages paid to the employee. The

works in Minnesota, and gives you a prop-

• A partnership that is paid for entertain-

employee may not claim the tax as a credit

erly completed Form MWR, Reciprocity

(withholding) on their Minnesota individual

ment provided by entertainers who are

Exemption/Affidavit of Residency, each

income tax return.

partners

year. You must send us copies of the forms

• A corporation that is paid for entertain-

For details see Fact Sheet 8.

you received from your employees.

ment provided by entertainers who are

shareholders of the corporation

Minnesota Income Tax Withholding Instruction Booklet And Tax Tables - 2018 Page 4

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