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Wage Allocation on Form W-2
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For Minnesota residents, you must allocate wages to Minnesota in box 16 of federal Form W-2, regardless of where they physically performed the work. Include all wages the resident earned while working in Minnesota and another state.
For non-Minnesota residents, you must also allocate wages to Minnesota for work physically performed in the state. Do not allocate wages to Minnesota for Michigan or North Dakota residents who provide you a completed Form MWR, Reciprocity Exemption/Affidavit of Residency.
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Daniel is a Minnesota resident working 50% in Minnesota and 50% in Iowa for your business. Daniel’s annual wages are $52,000. He earned $26,000 in Minnesota and $26,000 in Iowa.
As a Minnesota resident, Daniel pays Minnesota tax on income earned inside and outside of his home state. You must allocate $52,000 to Minnesota. Since Daniel also performed work and earned $26,000 in Iowa, you must allocate $26,000 to Iowa.
Complete Daniel’s Form W-2 State Detail as follows:| Box 15 - State | Your State ID Number | Box 16 - State wages, tips, etc. |
|---|
| MN | XXXXXX | 52,000.00 |
| IA | XXXXXX | 26,000.00 |
Mary is a Minnesota resident working 100% in Iowa for your business. Mary’s annual wages earned in Iowa are $52,000.
As a Minnesota resident, Mary pays Minnesota tax on income earned inside and outside of her home state. You must allocate $52,000 to Minnesota. Since Mary also performed work and earned $52,000 in Iowa, you must allocate $52,000 to Iowa.
Complete Mary’s Form W-2 State Detail as follows:| Box 15 - State | Your State ID Number | Box 16 - State wages, tips, etc. |
|---|
| MN | XXXXXX | 52,000.00 |
| IA | XXXXXX | 52,000.00 |
Nathan is a North Dakota resident working 100% in Minnesota for your business. Nathan’s annual wages earned in Minnesota are $52,000. Minnesota and North Dakota have a reciprocity agreement. Nathan provides you a completed Form MWR.
Nathan’s wages earned in Minnesota are only taxable to his home state of North Dakota. You will allocate all his wages to North Dakota and none to Minnesota.
Complete Nathan’s Form W-2 State Detail as follows:| Box 15 - State | Your State ID Number | Box 16 - State wages, tips, etc. |
|---|
| ND | XXXXXX | 52,000.00 |
Matthew is a Minnesota resident working 100% in North Dakota for your business. Matthew’s annual wages earned in North Dakota are $52,000. Minnesota and North Dakota have a reciprocity agreement. Matthew completed and provided you Form NDW-R (North Dakota’s equivalent of Form MWR).
Matthew’s wages earned in North Dakota are only taxable to his home state of Minnesota. You will allocate all his wages to Minnesota and none to North Dakota.
Complete Matthew’s Form W-2 State Detail as follows:| Box 15 - State | Your State ID Number | Box 16 - State wages, tips, etc. |
|---|
| MN | XXXXXX | 52,000.00 |
Charlotte is a Minnesota resident working 100% in Texas for your business. Texas does not impose a state income tax on wages earned in the state. Charlotte’s annual wages earned in Texas are $52,000.
As a Minnesota resident, Charlotte pays Minnesota tax on income earned inside and outside of her home state. You must allocate the full $52,000 to Minnesota. You will not allocate any wages to Texas because they do not tax Charlotte’s wages.
Complete Charlotte’s Form W-2 State Detail as follows:| Box 15 - State | Your State ID Number | Box 16 - State wages, tips, etc. |
|---|
| MN | XXXXXX | 52,000.00 |
