Law Change for Individual Construction Contractors - 2 Percent Withholding Repealed
After June 30, 2012, businesses are no longer required to withhold 2 percent from payments made to individual construction contractors.
For details, see "Law Change for Individual Construction Contractors."
From January 1, 2009 - June 30, 2012
If you made payments to independent contractors, report any 2 percent withholding on your Withholding Tax return as follows:
Include any 2 percent withholding in the “total Minnesota income tax withheld” amount.
Report your 2 percent withholding amount separately on the appropriate line.
If you did not withhold 2 percent from individual construction contractors, enter zero on the appropriate line.
Definitions
When completing your Withholding Tax return, the following definitions apply:
Employees
The number of employees to whom you issued a Form W-2. Do not include individuals to whom you issued a Form 1099.
Individual Construction Contractor (payee)
Any individual carrying on a trade or business as a sole proprietorship described in industry code numbers 23 through 238990 of the North American Industry Classification System. Look up NAICS codes on the U.S. Census Bureau website.
Tax Withheld
The total Minnesota income tax you withheld for that quarter. Include tax withheld from individual construction contractors.
Wages
The gross wages you paid to employees who received a W-2 form. Do not include payments to individuals who received a 1099 form.
