In most cases you are required to withhold Minnesota income tax and file a return if:
- you employ anyone who works in Minnesota or is a Minnesota resident; and
- you are required to withhold federal income tax from their wages.
If you are not required to withhold federal income tax from the employee's wages, in most cases you are not required to withhold Minnesota income tax.
The rules for determining if you are required to withhold federal taxes are in Federal Circular E, IRS Publication 15 (available at www.irs.gov).
Employees can include family members, friends, or students who you pay to work for your business, agricultural workers and corporate officers. For more information, review:
Fact Sheet 3, Agricultural Workers
Fact Sheet 6. Corporate Officers
You must withhold Minnesota income tax from the wages you pay employees and then remit the amount withheld to the department. You must withhold tax even if you pay the employees in cash or give them other goods or services in exchange for working for you. Goods and services are subject to Minnesota withholding tax to the same extent they are subject to federal withholding tax. For more information, review:
Fact Sheet 9, Definition of Wages
Fact Sheet 10, New Employer Guide.
Register for a Minnesota Tax ID number electronically
Log in to e-Services to file a Withholding Tax return